If I recall correctly, the status-quo-ante estate tax is 55% of everything over $1M. So a $3.5M estate would be $2.125M after taxes. (Note that the Obama Administration is willing to support a $3.5M exemption, but that’s not enough for the Republicans.)

I did a quick check at vanguard.com, and mutual funds that deal in intermediate-term bonds are yielding in the 6.5% to 7.5% range. So whoever gets guardianship of your kids would be able to feed, house, and educate them from an income stream of over $130K per year (presumably that income would be subject to capital gains tax).

I am sure that your untimely death would cause great suffering for your children, but I really don’t see them suffering in a financial sense.