Wednesday, December 28, 2011

Considerations in Naming a Non-Citizen as Your Child's Guardian

Naming a guardian can be one of the most important parts of your estate plan. With increasing movement between countries, the person you trust most to raise your child in your absence might be a non-citizen. What, if any, additional concerns does that raise?

1. Will a court agree?
Naming a guardian in a will lets a probate or family court know what your wishes are as to who should care for your child. In any case, a Minnesota court is going to look at the best interests of the child. Your choice will be a weighty consideration for a judge. They will balance any other issues the citizenship status of your named guardian raises.

2. Will and should your child be as mobile as their guardian?
The lack of US citizenship ultimately means that either your guardian does not live in the United States or there is a chance that they may not be able to renew their residency. Should that occur, will it be possible for your child reside in the guardian's home country? Is that desirable? These questions should be considered before deciding on a guardian. You should also factor the cost of your child's possible immigration into your life insurance.

3. Should your guardian be the trustee of your child's trust?
Most estate plans for parents with minor children include a trust. Most of those parents name the guardian as the trustee for that trust. That normally makes sense. If you trust someone enough to raise your child, you trust them enough to control your child's finances. However, current IRS rules place a heavy burden on trusts that benefit US citizens, but are controlled by non-citizens. Will your named guardian be savvy enough to deal with burdensome IRS reporting regulations or do you need to make other plans? Additionally, if your guardian resides abroad, being a trustee may create tax implications in their own country.

If the person you most trust to raise your child is not a US citizen, there are many additional issues to consider. While ultimately you may still want to name them as your child's guardian, you want to address any issues their citizenship status creates.