Choosing a Trust vs. Guardianship for Minors
Consult a Jacksonville Estate Planning Attorney to Discuss Your Case
At Owenby Law, P.A., we understand how confusing it can be to choose between
a guardianship or
trust for your minor children. You want to be sure that you are selecting the
estate planning option that better suits your needs and will provide for your minor children
in the event you are unable to in the future. It is an important decision,
one of our Jacksonville estate planning lawyers at Owenby Law, P.A. can
help you make.
What is the Difference Between a Trust and a Guardianship?
A trust is a legal agreement that outlines the rules you want followed
for property held in trust for your beneficiaries. Trusts are an important
way to protect property in your estate, reduce estate tax liability, and
help your family avoid the
probate process, which can be long and complex.
The benefits of a trust include the following:
- A trust can continue past the age of majority (18 years old)
- You can choose who the trustee will be even if not qualified
- There are broader powers
- There can be alternative dispositions upon the beneficiary's death
- The trust is private and the cost is usually less
- There is some control over the preservation of wealth
Guardianships, on the other hand, give the ward property at 18 years of
age if the ward has capacity. 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. Guardianships possess fewer powers than trusts. Upon the ward's
passing, the remaining assets will go to the ward's estate.
Guardianships also differ from trusts in the following ways:
- The court file is public record
- The cost is usually more, including annual accountings to be filed with the court
- A guardian is appointed to exercise the legal rights of an incapacitated person
Manners of Distribution
When there is an adult beneficiary, distribution is mandatory. It can be
discretionary when the beneficiary has an inability to handle income or
there is excess income. Distribution can also be done in a hybrid manner.
Distribution for guardianships is as follows:
- Guardians given authority over a ward’s property must be required
to inventory the property and invest it reasonably. They are also required
to use property to support the ward, and file reports with the court.
For some financial transactions, guardians must obtain court approval.
- Guardians given authority of a ward’s person have the ability to
make decisions regarding medical, mental, and personal care services,
as well as living circumstances. Guardians must also submit plans for
a ward’s care to the court.
The court must appoint a guardian in circumstances where the parents become
incapacitated or die or if a child receives 1) an inheritance, 2) proceeds
of a lawsuit, OR 3) an insurance policy of $15,000 or more.
Contact Owenby Law, P.A. Today
Your family, your wishes, and your estate are important, which is why you
need a legal advocate you can trust to ensure that all three are protected.
If you have questions about trusts, guardianships, and which option may
be right for you, we invite you to contact our firm to discuss your needs
during an initial case evaluation with a Jacksonville estate planning lawyer.