Choosing A Trust Vs. Guardianship For Minors

A trust can continue past the age of majority (18 years old).

It the ward has capacity, at 18 years of age, the ward gets the property.

You can choose who the trustee will be even if not qualified.

The court determines who will be the guardian for the ward. A guardian is an individual or institution (such as a nonprofit corporation or bank trust department) appointed by the court to care for an incapacitated person -- called a "ward" or for the ward's assets.

There are broader powers.

There are less powers.

There can be alternative dispositions upon the beneficiary's death.

Upon the ward's passing, the remaining assets will go to the ward's estate.

The trust is private.

The court file is public record.

The cost is usually less.

The cost is usually more, including annual accountings to be filed with the court.

There is some control over the preservation of wealth.

A guardian is appointed to exercise the legal rights of an incapacitated person.

There are different manners of distribution:

• Mandatory where there is an adult beneficiary.
• Discretionary where the beneficiary has an inability to handle income or there is excess income.
• Accumulation of wealth is unusual.
• Hybrid.

A guardian who is given authority over property of the ward is required to inventory the property, invest it prudently, use it for the ward's support, and account for it by filing detailed annual reports with the court. In addition, the guardian must obtain court approval for certain financial transactions.

The guardian of the ward's person may exercise those rights that have been removed from the ward and delegated to the guardian, such as providing medical, mental and personal care services and determining the place and kind of residential setting best suited for the ward. The guardian of the person must also present to the court every year a detailed plan for the ward's care along with a physician's report.

The standard of invasion can be for emergency needs (medical), support, standard of living and education.

In circumstances where the parents die or become incapacitated or if a child receives an inheritance or proceeds of a lawsuit or insurance policy exceeding $15,000, the court must appoint a guardian.