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Estate Planning: Bringing Up a Child

As any parent knows, caring for a child involves a huge amount of responsibility. Infants and toddlers need full-time attention, yet even when a child grows and becomes more independent, the parent often has to shoulder more and more expenses. A successful estate plan must ensure that no matter what happens to the parent, there is a plan in place to care for the child's needs.

The two most important questions a parent must answer are the following:

1. Who will take responsibility for my child if I can't?

2. How can I best provide for my child's well-being after I'm gone?

Naming a guardian for your child
Courts strongly protect children's best interests. If something happens to a child's parents, a court will step in to ensure that the child receives necessary care and support by naming a guardian, who then takes on parental responsibilities for the child under court supervision.

As a parent, you have the right to recommend a person whom you want to act as guardian of your child. Although the court may choose someone else, the courts do generally respect the parent's wishes. The best place for a parent to make such a recommendation for a guardian is in the parent's will. It is a good idea to name more than one choice so that if circumstances prevent your first choice from accepting, you have a contingency plan in place. The important thing to bear in mind is that without a recommendation, guardianship proceedings can become contentious and threaten the child's welfare.

Providing for your child's financial needs
Naming a guardian does not automatically give that person access to money to help meet your child's expenses. In the absence of other arrangements, a court may name a person or institution, sometimes called a conservator, to take responsibility over a child's money. The conservator must obtain court approval for major expenditures and work closely with the child's guardian to ensure that the child's financial needs are being addressed.

Another option involves setting up a trust for your child. You can choose who will manage the trust's assets (the trustee) and can give detailed instructions on the amount and purpose of any distributions for your child's benefit. Using a trust can avoid the full scrutiny of court supervision. Trusts let you share your values and wishes for your child and help those who care for your child to honor those wishes.

Two things are crucial. First, you must ensure that your child will have enough money to meet his or her needs. For most couples without large amounts of assets, life insurance is the most common way to meet that goal. Second, you must communicate with your intended guardian and trustee to make sure they are willing to take on this task for you. It is far easier to deal with finding other suitable candidates before an unforeseen event occurs.

Are you at a different place in your life from what you've read here? No problem -- our series addresses estate-planning needs for a variety of life stages. Just go back to the beginning and let the links take you where you want to go.

Robert Brokamp of ourRule Your Retirementservice had an estate plan before graduating from junior high school. If you need help planning your retirement, take Rule Your Retirement forafree trial run today.

Fool contributor Dan Caplinger welcomes your comments.

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Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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