By: Richus Nel, a financial adviser from PSG Wealth
The world has changed dramatically, and the Covid-19 pandemic has highlighted just how rapid change can be. Preparing as much as possible to protect what we have is essential. September being Heritage Month is a great reminder to get our ducks in a row too.
Parents particularly have many considerations to create enough of a safety net and plan for their children. A huge part of that is appointing a guardian. Here are some top tips:
First and foremost; get finances affirmed
All families can understand the financial burdens that can exist in simply getting through the everyday from schooling to the weekends. The single non-negotiable factor for a guardian appointment, should be sufficient financial provision (available to the guardian) to support your children’s well-being. The financial provision should be absolute, without any contingencies or strings attached (e.g. financial support from a going-concern business/ farm/ grandparent/ selling of assets, etc). Contingencies like these can push your children’s guardians into financial misery, so a guaranteed plan for financial assistance will make all the difference.
A testamentary / inter vivos trust is still one of the most effective mechanisms to provide for minor children’s financial needs, but it is essential that you consult an estate planning specialist to align your wishes to the right plan.
The details do matter
Each situation will be different, but a lot of parental preference can be discussed upfront, to help guide some future guardian decisions. Carefully consider the practicalities around schooling and lodging of your children. Appointing guardians in a different town (or even suburb), might require your child to move schools away from their friends and familiar surroundings. This is not a light-hearted decision, and you also need to have tertiary studies tallied into your plans. There might be extra-mural activities or pets to consider too.
Money habits are unique to each family. Discuss age-appropriate allowances/benefits to each child and discuss your family’s money habits with your chosen guardian. Also discuss certain lifestyle decisions (e.g. sleepovers, sport, etc.) with both guardians and children (if age appropriate).
Your back-up needs a back-up
Appointing your guardian should also take succession into account. A second tier of guardianship truly covers you. Consider specifics like what happens to your children should your appointed guardian get divorced or emigrate as well. The second tier of guardians should be discussed with your appointed guardians for inclusion in their will, upon your death.
Make it official as soon as possible
Appointing guardians is a rather complicated matter as replacing yourself in the picture is a tough concept. It can, however, be simplified by discussions (perhaps in writing) between parents and guardians and even including your children, where age appropriate. Your financial adviser can assist you in this journey, to ensure your plan is well thought out, and ready should you need it.