How to set-up Guardianship for Minors

 

Parents giving piggyback ride to kids at beach. Close up of smiling family having fun at summer vacation. Portrait of happy family looking at camera at beach.

This article primarily addresses establishing guardianship as part of estate planning and NOT the case of parents who are living but unable to “Parent”.

Who is a guardian?

A guardian is someone who has full legal responsibility for a minor child.  Guardians are appointed by a Court according to the wishes of the deceased through a Last Will and Testament (LWT) or appointed by the Court if there is no Will (LWT).  Guardians can also be appointed in case the parents are unfit to take care of a child.

What is guardianship?

Guardianship is usually granted by the Probate Court or a Juvenile Court and in some states these courts are called various names like Superior Court, Family Court or something similar.

Guardianship can be granted in case of death or if the parent or parents are unfit to take care of the child, abandon the child or are incarcerated, abusive or have addiction problems or other similar reasons…

Guardianship can be temporary or permanent and only is valid only until the child reaches 18 years of age, dies before 18, or the court appoints a different guardian.  Guardianship may be extended in some special cases such as a special needs child or special refugee or asylum cases.

In the case of estate planning, you will be naming a permanent guardian – i.e. Guardian of the person and Guardian of Property as explained below.

Guardian Roles

There are two guardian roles and both are necessary.  You can name one person to both roles which would be ideal.  

Guardian of the Person

A guardian of the person makes day-to-day decisions for the child.  The guardian is responsible for food, clothing, safety, schooling, health care, finances and love and support.  If the guardian moves across the country, your child will move with them.  If the child wants to play rugby, the guardian makes that decision.  If the guardian has other children, your child becomes an unofficial sibling.  You get it, right?

It is as if the guardian took on the role of “Parent”.  Think of it as “What I would do for my own child”.  

Guardian of Property or Guardian of Estate or Trustee

A guardian of property, estate or Trustee is someone you pick to manage your child’s money.  The money you left the child.  

Most of the time, these roles are held by the same person.  Ideally, you have named the person who will perform these roles in your Will and the Judge simply rubberstamps your choice.

Having two different people serve in these capacities may cause delays in making decisions and raise conflicts between the two decision-makers trying to protect your child.  The only reason to select two different people is if for example, your kids get along great with your sister and she adores them, but, she’s terrible at managing money or something like that.

Why is naming a guardian in your Will important?

Naming a guardian in your Will (LWT) lets everyone know that you have planned for a situation that might arise and you have selected someone you feel can competently care for your child.  Of course, you have discussed this possibility with the person you chose, as I am sure you don’t want them to be surprised!  Ideally, you also named an alternate guardian, in case your primary guardian is no longer able to take care of your child.  Also, make sure you name a guardian and an alternate for EACH of your minor children.

A Judge’s interest is always focused around what is in the best interest of the child.  So, if you selected his aunt or uncle instead of his dreaded step-mother who he doesn’t get along with or his crochety grandmother, it is a good idea to note why you did that.  Unless of course, his step-mother has already legally adopted him (See below).

[Graphic] The step-mother from hell

What are some characteristics that you might look for in a guardian?

At a minimum, the guardian has to be a legal adult usually over 18 years of age (check your State law).  This person will be raising your children, making decisions about what they eat, where they go to school, what chores they do, whether they take piano lessons or play rugby, whether they get braces or get antibiotics or immunizations and so forth.  

 

They will be raising your children as their own!  Put yourself in their shoes for a few minutes.

Consider these questions:

  1. Is this someone your child has a good and close relationship with?
  2. Is this person a responsible adult with integrity?
  3. Can this person raise my children (in addition to their own)?
  4. Can this person fulfill the child’s needs?
  5. Is this person up to the task of raising my children?
  6. Does this person’s moral and ethical philosophies match up with my own?
  7. Does this person have enough space at home for one or more children?
  8. Do they live close by or will my children have to move to a different city, town, or school district?
  9. Will they be far away from other family members?
  10. In case you didn’t leave enough financial resources, can they afford to raise your child?

You may think of other questions to ask.  Regardless, it’s important to discuss with the guardian and the alternate guardian and get their input.  May be they don’t like children?  May be they have too many children of their own.  May be, they are done with child rearing and are looking forward to being empty nesters.  Make sure they are willing and able to take on this huge responsibility.

Let’s look at it the other way.  

What if your very best friend asked you to be a guardian for his kids?

  1. Do I want another child who my partner didn’t give birth to?
  2. Do I care for this child enough to provide the love, safety and well-being to raise this child into a responsible adult?  After all, you would have to do this until the child turns 18.
  3. Am I willing to accept responsibility for the child’s actions?
  4. Do I have enough financial capability to manage the child’s trust or estate on an ongoing basis?
  5. Am I willing to provide records to the court or show up there if needed?
  6. What is my relationship with the child’s extended family?
  7. Will some relative show up at my door looking to challenge my guardianship?
  8. Do I have the time and energy?
  9. How will this affect my children? My family?
  10. Can I honor the agreements and understandings that I had with his parents when they asked me to be their children’s guardian?

Discussions to be had

Before you select a guardian and put it in your Will (LWT), please make sure you have discussed this with your spouse, the primary and alternate guardians, your family and the children.  In some states, children 14 or over have the right to decline your choice of a guardian and select one on their own.

Who do you choose?

Ideally, you’d choose a married couple in a stable relationship and make sure to name them both in your Will (LWT).  Although you can select a different guardian for each child, it’s probably in your children’s best interest to keep them together.

Be sure to name an alternate guardian just in case the primary guardian is unable to fulfill the duties of guardianship.

How do you specify a guardian?

  • You name the primary and alternate guardians in your Will (LWT)
  • If the child will inherit a substantial amount of money, you may want to appoint a guardian of property and also name that person and an alternate in your Will (LWT)
  • Leave  a letter explaining your choice and explain to your family members the choice you are making and why
  • If for some reason, the guardian you named cannot fulfill the duties of guardianship you can amend your Will (LWT) at any time.

What about the money I left my children?

A guardian is financially responsible for managing money or property on behalf of your children.  It is a fiduciary responsibility.  Fiduciary is someone who manages someone else’s money.  As such, the guardian is legally responsible to act with honesty, integrity and in the best interest of your children.  It also means that the guardian cannot use your children’s money for his/her own benefit.    It also means that if the guardian is unscrupulous, he can be removed from this role and may be sued or investigated.

Should you set up a trust for your minor children?

Minors cannot own property (real or financial).  Therefore, it is best to set up a living trust and have the minors as beneficiaries of the trust.  While you may be able to set up a living trust on your own, it’s best to consult an attorney in your state.

Other considerations in setting up a trust may be to continue financial oversight of your children.  A guardianship ends when the child turns 18, but the trust may be structured in many different ways.  A trustee would manage the trust and distribute your funds according to the terms of the trust.  Trusts also have the benefit of avoiding court proceedings and oversight.

What about life insurance?

There are ways to set up life insurance policies with a living trust as beneficiary.   Children’s trusts will need to be set up under your living trust to provide for an adult to oversee the assets, since minors cannot own any substantial assets.  If the assets are substantial, it’s best to consult an attorney in your state.

There may be tax implications based on whether you (the deceased) owned the insurance policy or if the children are named as beneficiaries the court will need to appoint a guardian of property.

What is the difference between Guardianship and Adoption?

Guardianship is not the same as an adoption.  When a child is adopted, the birth parents lose their rights as parents.  The adopted child inherits through the adopted parents as if he/she was a birth child.  However, in some cases, the adopted child can inherit from the birth parents and lineage.  See https://www.childwelfare.gov/pubPDFs/inheritance.pdf for more information.

A child in a guardianship inherits through his family line not the guardian’s.  If the guardian wishes to provide for the child, he needs to explicitly state that in a Will (LWT).  

Finally, speak with a lawyer if substantial monies are involved.  

Resources:

https://www.childwelfare.gov/pubPDFs/inheritance.pdf

http://files.consumerfinance.gov/f/201310_cfpb_lay_fiduciary_guides_guardians.pdf

http://www.herjustice.org/assets/pdfs/TheBasicsSeries_English/Becoming-a-Legal-Guardian_ENGLISH.pdf

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