Naming Guardians and Beneficiaries
When you are responsible for children under the age of 18, two of the most important decisions you make are these:
Who is the beneficiary of my insurance policies and retirement plans?
Whom do I want to take care of my children in the event of my death?
Anyone you name as a beneficiary on insurance policies or retirement plans will remain the beneficiary, no matter what you express verbally or even what you record in a formal will. It's vital to review your choices every five years, or whenever your circumstances change, to make sure you have the names and the proportions the way you want them.
If you have minor children, when it comes to naming a guardian or guardians, there are two primary questions you need to answer:
Who will take day-to-day physical custody of my children?
Who will manage their money and property (including insurance proceeds)?
Oftentimes one person will fulfill both of these roles, but if not, you need to specify the delineation in your will. Also, you may not want your children to assume control of the money and property at age 18, in which case you may want to create a trust that oversees the financial aspects until they finish college or reach milestones, such as age 21 or 25.
Essential
Upon your death, your children inherit your net worth — any assets you own minus liabilities against them, including credit card debt. The first step in safeguarding your children is to know your net worth, and then to protect them through proper planning and strategic choices. Begin at the beginning — compute your net worth, and then work toward raising your net worth.
In most cases, the remaining parent assumes custody of the minor children, but you can establish a guardian for their financial and property inheritance. You may also want to name a guardian in case your ex-husband dies before the children reach 18.
If you do not want the children's father to gain full custody, you can name a guardian and then write a letter explicitly stating your reasons for doing so. In the event of your death, the court would review the documents and make a decision about whether your children would be better off under the care of your named guardian. If you are adamant that your children's legal father should not have custody, consult with a lawyer.
