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This Article is designed to be of general interest. The specific techniques and information discussed may not apply to you. Before acting on any matter contained herein, you should consult with your personal adviser.

The toughest question in forming any estate plan is who should be nominated as the guardian of minor children. This is a question we cannot answer, and can give only limited guidance as to common situations and concerns.

There are two types of Guardians:

  1. one for financial management of the minor's assets;
  2. the other for actually raising the child.

These duties may be performed by the same person, or you may choose different people for each role. Since their responsibilities (namely, providing for the children's upbringing) are connected, if you decide to use different individuals, they should be compatible.

The Financial Guardian should be someone with common sense and sound judgment, rather than a financial wizard. [If necessary, professional managers can be hired for extra expertise.] Most parents desire a "safe and sane" approach to investment, to ensure that there is money available for schooling, rather than trying to maximize return by making riskier investments.

The issue requiring sensitivity by the Financial Guardian is discretionary spending. If your child wants something, who decides whether he gets it? As the Financial Guardian controls spending, it is up to that person, who should weigh the appropriate facts and circumstances and reach a decision in the child's best interest.

No one can replace a parent. The Guardian of the Person should be a person who knows your philosophy of life and will raise your children to appreciate that philosophy. The Guardian does not have to share your ideas, but must be willing to teach those ideas to your children.

An example of a conflict which may arise when the same person is appointed to both roles is that Aunt Susan now has her own three children, and your 2. Before, she was able to raise her kids without extra help, but now, with 5 in the house, she needs an au pair to help out. Does the entire cost come from the Trust? Does a proportional amount (40%) come from the Trust? If Aunt Susan is in charge, she must decide what is fair.

Alternatively, if Aunt Susan is going to raise your children, and Cousin Bob is in charge of finances, what happens when Susan wants to send your children to private school and the Financial Manager does not understand the necessity?

If you decide to have different people, one solution is to require a minimum annual amount paid to the Guardian of the Person.

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