The Basics of guardianships and trusts
Understanding guardianships is critical to anyone who is planning for the life of their child or dependents after they are gone. And while no one likes to think about what will happen then, planning now can help you to avoid any potential risks your loved ones may have to deal with later on.
A guardianship is a court supervised proceeding in which those who are minors or those who are adults unable to make their own decisions are considered for placement with friends or family if their current guardian or parent dies. The guardian is court appointed, which means that the guardian is appointed without any input from parents, usually because the parents left behind no specific instructions for what should happen in their absence.
In a guardianship, the guardian will manage the assets and well-being of the minor or dependent children. This process is far more complex than other methods available, though. For example:
A guardianship requires annual accountings of the assets of the dependents
Limitations on decision making to some level occur
Bond requirements are often in place
Restrictions on how money can be spent or invested for the benefit of the dependent are in place
More lawyer and court involvement in the lives of the minor or dependents is common.
There are ways to avoid this from occurring though, and that is something many parents are striving to do. If there is no trustworthy person that is available to take care of your children then a guardianship may be the best option for your child, but with activities and assets monitored and under court control, this is not the right option for many.
How Trusts Offer Protection
One of the best ways to avoid the effects of a guardianship is to develop a trust before you die, so that you have the last say in what happens with your children should you be unable to care for them. There are several factors to consider:
In a typical trust for adult children, it allows for the assets you have to move to your children without any risk of the court limiting access. A living trust, the child manages his or her assets without any guardian control.
For minors or dependent children, a testamentary trust can be helpful. This allows you to leave assets to a minor child with a trustee to oversee the trust.
For those who wish to control what happens to their children and dependents after their death, using a trust is often the best route to go. You can leave assets and overall guardianship guidelines behind as part of your will and estate plan. These, when created properly, can protect your loved ones and ensure that they are able to benefit from your estate without the risk of the court becoming involved in their lives. For many parents, knowing their child is protected, long term, is the best route to take to avoid problems down the road should something happen.