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Probably the most important issue for you as the parent of young children is naming a guardian in your Will.  A guardian serves as a substitute parent and will be responsible for the care and moral training of your child.  The second most important issue is deciding who you want to handle your child’s inheritance until they mature enough to handle it themselves.

Raising the child should not be a financial burden for the guardian, and a candidate’s lack of finances should not be the deciding factor. The parent should provide enough money (from assets and/or life insurance), in trust, to provide for your child.

Naming someone other than the guardian to serve as trustee of the money can provide a check and balance, though the person should tend toward being cooperative, rather than miserly.  There is also the distinct possibility of the money being a temptation to the guardian to use the money for their own purposes.

Another perspective is that having the same person raise the child and handle the money can make things simpler because the guardian would not have to ask someone else for money.  The skills needed for raising a child are not the same skills needed for handling the inheritance.  Deciding who will make the best financial decisions with your child’s inheritance is important, but thankfully, it is only the second-most important decision you’ll make as the parent of young children.