Choosing your kid's guardian is hard, but adding a trust may help

In her Fiscally Fit column in today's Wall street Journal, Terri Cullen offers a first-hand report on the difficulty of choosing the right guardian for a child. What if the best choice isn't necessarily the most affluent or financially responsible member of the family?

After some deliberation, Gerry and I decided to update our will and name Melissa and Joe as Gerald's guardians. Still, we worried that they might be in over their heads when it came to managing Gerald's inheritance. Pulling yourself out of a few thousand dollars in debt is one thing; managing hundreds of thousands of dollars in assets over decades of our son's lifetime is something else.

Estate-planning attorney Stuart Schneider recommended that we take the additional step of setting up a testamentary trust -- a trust whose terms are set within a will, and which doesn't take effect until you die. Should we die, assets such as our retirement savings and life-insurance payout, as well as proceeds from the sale of our home and other physical assets, would be held in trust and managed by a family member or another trusted person as trustee. The trustee would decide on a budget for Melissa to pay Gerald's continuing costs, and decide whether requests for larger expenditures make sense.

Terri notes that she and her husband had found it easy to put off estate planning, until September 11, 2001. More than three dozen residents of their New Jersey town died in the World Trade Center.