As you make preparations for your child’s future, you may have already designated a person to be a guardian for your child in the event you and your spouse are incapacitated or pass away. You might also be considering setting up a trust for the child and are looking for a person to be an Iowa trustee. Then it hits you: why not name the person that would be your child’s guardian as the trustee? It seems like a logical step, but you should be careful as you consider this choice.
At first glance, naming the guardian to oversee your child’s trust appears to be a wise move. If you trust a person to take care of your child, then you likely would not see a problem handing that person responsibilities over your child’s financial inheritance. In some cases, a guardian can make a good trustee. However, in other instances it may be prove to be a problem.
For one thing, a trustee must be able to make financial and legal decisions concerning the trust. The FamilyConnect website warns that a guardian might not possess the skills necessary to handle a trust. If a trustee mishandles a trust and deprives the beneficiary of the trust of some or all of the assets, the trustee could be sued or held liable for the loss. You should make sure that a guardian is competent enough to handle a trust.
Additionally, naming a guardian as a head of a trust gathers a lot of power in the hands of a single person. While some people might be trustworthy enough to handle both guardianship and trusteeship duties, it is possible that a person with that much authority could abuse it. Think about whether your child’s prospective guardian can handle the sudden responsibility of overseeing money. Could that person resist the temptation to abuse the authority of a trustee?
On the other hand, naming a different person to be a trustee can form a kind of committee that oversees your child. Power is split between a guardian exercising welfare responsibilities over your offspring and a trustee that takes care of the finances. With this arrangement, you have two people working in tandem to care for your child. This also offers accountability, as each person can monitor the actions of the other person.
Please be aware that while this article offers information on guardianships and trusts, it does not offer any legal advice.