If the Will names a guardian for the minor beneficiary, a court can authorize distributions to be made to the guardian to be held and safeguarded for the minor's benefit until the minor attains the age of majority established by law or by the instrument itself. Courts tend to prefer a formal guardianship with annual reporting requirements to ensure funds are properly managed, not misused, and are available for the beneficiary's needs, as appropriate.
A Better Alternative
If we work with the parent during the planning stage, we stress the benefit of creating either a Will with a Testamentary Trust or a Revocable Living Trust as they avoid the cost of a formal guardianship. This requires the parent have someone they can trust to perform this function. If you are a fiduciary acting on behalf of a beneficiary, whether as the attorney, financial planner, accountant or otherwise, it is incumbent on you to examine all the circumstances and ensure the interests of the beneficiary are safeguarded. While you can never protect against outright fraud or dishonesty, if you put appropriate safeguards in place, you at least have taken the first step in protecting the interests of the minor. Recently, I've had two different cases involving minors which point out the importance of planning ahead.
In case #1, the mother was in the hospital and on her deathbed when she executed her Will. It named her sister, not her husband, as the guardian of the child and provided that everything would pass to the child, to the exclusion of her husband. This did not sit well with the husband, who had been unemployed since their marriage. The child was less than three years old. We persuaded the judge to appoint the sister as the guardian and convinced the husband to relinquish his claim to certain estate assets (to be retained for the child's benefit) in exchange for giving him other assets. The problem was that we had to pursue a formal guardianship and the husband can always return to court and attempt to undo what has been done. He is a spendthrift and the daughter's assets will clearly be at risk if he ever reaches them.
The second case involves the death of a relatively young single mother of a twelve-year old son. She was killed in an automobile accident and her life insurance policy was payable to her son. We initiated formal guardianship proceedings to have the grandparents appointed as his guardians and the court released the funds to them. They were concerned that when their grandson turned eighteen, he could take control of this (significant) investment account. Last year, six months before his eighteenth birthday, we scheduled a guardianship hearing with him and his grandparents present and argued to the court that it would be beneficial to place these funds into a Trust to be managed by his grandparents as his trustees until he attained the age of 30. The boy had been pulled over by the police for excessive speed and reckless driving two weeks before and we argued that this demonstrated his lack of responsibility. After much discussion, the court approved the transfer to the trust.
A Better Solution
Both of the cases above could have been dealt with much more easily and less expensively had the parents created a Testamentary Trust or living trust with appropriate safeguards. Instead, the assets still remain (at least potentially) at risk because the parties can return to court at any time. And until the guardianships are terminated, the families continue to incur the ongoing costs of having to return to court each year to file a care and financial accounting report.
If you have minor children or face the possibility of being appointed as guardian or responsible agent for a minor child, it is incumbent upon you to plan ahead and make sure whatever actions might need to be taken are authorized and addressed in the least expensive and complicated manner possible.
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