8 tips for grandparents raising grandchildren
CHICAGO — A lack of experience is not generally a problem for grandparents who find themselves raising their grandchildren. They probably haven't forgotten the basics.
But taking the right precautions and making all the necessary financial and legal moves without guidance can be daunting.
"Many of the people we deal with are retirees who are looking forward to those enjoyable years in life only to find out that all of the sudden they are responsible for the care of a six-month-old baby," said Elizabeth Reinsch, coordinator of a network of grandparent support groups in the St. Louis area.
Here are some tips on how new grandparent guardians should proceed:
1. Seek out a support group for help from people in similar situations or just for solidarity. An Internet search or an inquiry to a local social services agency should get you started. AARP (www.aarp.org), Generations United (www.gu.org) and the National Committee of Grandparents for Children's Rights (www.grandparentsforchildren.org) all are helpful sites, and the government lists some other resources at http:www.usa.gov/Topics/Grandparents.shtml.
2. If you have adopted the child, provisions should be made in your will to make sure the child's interests are taken care of and to provide for a guardian. Without a will, assets may go to another relative who may not have the child's best interests in mind. "This could effectively disinherit the grandchild which, if not intended, would be a grave error," says Howard Hook, a certified financial planner in Roseland, N.J.
3. If you have not adopted, consider contacting an attorney to secure your rights to raise the child and then your ability to appoint a guardian in the event of your death or disability.
4. Check beneficiary designation forms on retirement accounts. Not naming anyone could result in accelerated taxation of benefits, throwing away thousands of dollars of taxes needlessly.
5. Consider setting up a trustee or contingent beneficiary for your under-age grandchild through your life insurance rather than naming the child as the direct beneficiary, as most grandparents who raise grandchildren do, according to the National Association of Insurance Commissioners. A minor generally cannot receive an insurance payout, which means the amount could get tied up in probate and not be readily available to the surviving child.
6. Consider increasing your automobile liability insurance to make sure you are covered in case of a car accident, since you will likely take on additional driving responsibilities when caring for your grandchild and his or her friends. The NAIC says you may also want to consider purchasing a liability umbrella policy to protect your assets.
7. Be sure to name your grandchild as a secondary driver on your policy if he or she is old enough to drive your car.
8. Update your homeowners insurance policy to make sure that the child's valuable belongings such as computers, music systems and other high-dollar items are covered.