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.
Call (904) 770-3141 or contact us online to get started.
