If both parents were to pass away, the assets in their estates will pass to their children, but minor children cannot manage this money. Generally, the person who serves as guardian will also serve as trustee for these assets until the children reach the age of majority, which is 18 in nearly every state.
A trustee has a broad range of powers regarding these assets; this person can buy the kids' clothes and books, fund a private school education, invest money in a college fund, start a small stock portfolio in their names, and so on. Or, the trustee could purchase only the most expensive gadgets for the kids, neglect to sock money away for college, or -- in the sad case of a dear friend -- raid the assets in order to buy illegal drugs.
If you know that your pick as guardian will do a bang-up job caring for them, but you also suspect that he will not make sound financial decisions, you can still name this guardian while naming an additional person to be the trustee of the assets. You can also provide directions for the use of the assets: for example, the guardian can only make unapproved purchases under a certain amount; the trustee must use the assets to send the children to a certain school; the trustee must make regular deposits from the estate assets into a college 529 plan; and so on.
Make no mistake, this arrangement could cause some debates between the guardian and the trustee. But it's preferable to allowing someone to squander your children's assets. You can prepare an arrangement that gives you maximum peace of mind.
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