Who’s the nominated guardian for your kids? How did you decide on that person?

Estate planning (i.e. having a Will, enduring power of attorney, health directive, etc) is a vitally important part of a good financial plan. It determines what happens to your stuff if something happens to you. I’m going to cover wills, life insurance and so forth over the next few blogs and today I thought I’d look at one specific area of estate planning: nominating guardians for your kids. In other words, who would look after your kids if you and your partner passed away?

Well over 60% of parents with children under the age of 18 don’t have a Will. So that means that while you might be comfortable assuming that your parents or sister or best friend will happily take on the responsibility of your kids if you died – things might not necessarily work out that way. And if it hasn’t been pre-planned then the transition is going to be way more chaotic than it needs to be – which is a huge emotional face-slap to be giving your kids at what would be an already devastating time for them.

So – who to nominate as guardian? It’s not a decision to make lightly. Obviously there’s never a perfect solution, but some considerations include:

•Financial. Can your preferred guardian afford to look after your children or would it place them in financial stress? (I’m going to talk about life insurance next week, which is the easiest way to overcome this issue. It’s important, with a recent ING report called “Picking up the Pieces” finding that losing a parent as a child was not only devastating, but caused further detriment psychologically, educationally and socially, if financial stress was added to the equation.

•Age. What is the current age of your preferred guardian? Would they have the maturity to care for your children if something were to happen to you tomorrow and are they at an appropriate life stage to do so? Conversely, are they young enough to cope with the care of your children not just now but over the next 18 years?

•Lifestyle. Will your preferred guardian be willing to instill in your children the values and outlook that are important to you?

•Geography. Obviously this can change suddenly, but at the moment is your preferred guardian likely to live in a location that would enable your children to retain contact with other friends and family members?

•Family considerations. It is important to consider and acknowledge the competing demands of the guardian’s own children. What if they don’t get along? If it changes the “pecking order” in the house? While many people choose a family member to act as guardian, that doesn’t have to be the case and depending on your family circumstances it may not always be practical. Some people choose a family friend instead on the understanding that their children will maintain constant contact with family members. At the end of the day the choice of guardian may be influenced by what you feel will be best for your child, irrespective of familial ties (which is a nice way of saying that if your nearest relative has a gambling problem, drug problem or you simply don’t get along with them then blood doesn’t necessarily have to be thicker than water), although it is always good if family are aware of your decision and understand the reasons for it.

And don’t forget that you can always change it (and in fact should review it from time to time). The most important thing though is doing it to start with. So – have you nominated guardians for your kids? If so, who did you choose? And why?