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A story in the March 2008 edition of Reader’s Digest poses a difficult dilemma for foster/adopt children and their guardians.
In the story, a child was placed into a foster home a few months before his second birthday. He was never adopted by the foster family, but lived with them until he was eighteen, and continued to be part of the family even as an adult.
After both of his foster parents passed, his ability to claim anything in the estate was contested. The court ruled he had no right to any portion of the estate because he had not been legally adopted.
Our children can be in a similar situation if something happens to us before they can be legally adopted. Unfortunately, there is not much we can do to protect our children before finalization. Until then, social services remains the guardian of the child and would therefore take custody if the death of a foster parent or parents meant that the child needed to be moved. You can not assign a guardian for your child, since social services is the guardian.
You can set up financial provisions in your will to care for the child after your death, if you so choose. You can also name the child as a beneficiary. This is something to think long and hard about. If both foster parents pass away before the finalization, any money provided for the child could be misused if proper measures are not put into place.
Another issue is purchasing life insurance on your child. You will need to check with your insurance agent or company as to whether or not you can purchase life insurance on your child before finalization. Most companies require you to have an “insurable interest” in the person that you are purchasing insurance for. Whether or not they consider a foster child as someone that you have an “insurable interest” in, can vary from company to company.
Once an adoption has been finalized, you have all the rights of a birth parent and can purchase life insurance on your child, name them as a beneficiary and set up trusts to provide for their future.
Be sure to check with your financial planner or insurance agent as to the best way to protect and provide for your child.
