Guardianships

Texas Guardianship Information

What is a Guardianship?

•    A guardian is an individual assigned by the court.  When an incapacitated person or minor needs representatives to oversee their personal affairs or finances, the court, if not designated by another writing (such as a will or codicil), will select an individual to oversee such issues.  A guardian may either serve in a full or limited capacity, depending on the circumstances. Contact our Texas Guardianship attorney if you need representation in Houston, Dallas, Fort Worth or Austin

Who is an incapacitated person?

•    Texas defines an incapacitated person as “an adult individual who, because of a physical or mental condition, is substantially unable to provide food, clothing, or shelter for himself or herself, to care for the individual's own physical health, or to manage the individual's own financial affairs; or a person who must have a guardian appointed to receive funds due the person from any governmental source”
•    A proper estate plan is imperative, because once someone is deemed incapacitated, if they have not executed a financial or medical power of attorney or executed a Declaration of Guardian, a court will appoint a guardian to make medical decisions and a guardian of the estate to make the financial decisions

Guardianship and Custodianship for minors

•    Because minors cannot sign a contract, if there is property in their name, they cannot manage or sell it, or buy securities.  In such instances, a guardian will be appointed to manage the property.  Additionally, it is important to have a guardian named as a beneficiary of a life insurance policy, because many insurance companies will not disburse funds until there is a guardian appointed
•    Unlike a guardianship, in a custodianship, the planner can either choose the custodian herself or have the trustee choose the custodian, without worrying about the court appointing someone.  Under the Texas Uniform Transfers to Minors Acts (TUTMA), the custodian has the authority to manage the property on behalf of a minor beyond the age of 18.  A custodian arrangement can be very convenient for handling small amounts of property or for parents who want to use the annual gift tax exclusion until the child turns 21

Guardianship vs. custodianship or trust

•    However, a guardianship or custodianship is usually a last resort.  Because a guardian must be supervised by the court and cannot be waived by anyone, such arrangements can be time-consuming, and a conservator or a trust may be more appropriate.  It is important to realize that a guardianship ends once the child turns 18, and she will be able to have complete access and control of the funds.  A guardianship can usually be avoided by proper financial planning, and many people favor a custodianship or a trust.   A custodianship or trust may be more appealing because it allows you to extend the age at which the child gains full control of the money or property

Guardianship of the Estate

There is no such thing as an “independent guardian” in Texas, which is a significant difference between an executor and a guardian.  The purpose of having a guardian of the estate is to possess and manage the assets of the ward.
The guardian serves under rules similar to those of an executor; such duties include:

(1) posting a mandatory bond, (2) have issued letter from the court to evidence his or her authority, and (3) mandatory inventory filing, appraisement, and list of claims with the court within 30 days after qualifying as a guardian of the estate.

 While the guardian of the estate is entitled to compensation, because all guardianships are court supervised proceedings, they involve significant hassle and expense; therefore, most attorney-prepared wills are drafted as to avoid any need for a guardianship of the estate.

How a Texas Guardianship Attorney can assist in proper planning:

•    An attorney would be able to assist a client to properly leave all property in trust for the benefit of their minor children, instead of leaving it directly to the children. An attorney could do this by creating a trust and making a general gift to it, assisting the client to in making a change of beneficiary from the children to the trust or trustee for all life insurance, retirement plans, etc.
•    Additionally, an attorney would verify that the client has not named the children as payable-on-death beneficiaries of any taxable bank or brokerage accounts. Ironically, many clients have filled out payable-on-death forms in an effort to avoid probate, not realizing that the probate horror stories they have heard may in fact be guardianship horror stories. Therefore, if it is not set up properly, the payable-on-death accounts might trigger probate proceedings in their own estate, instead of avoiding probate as intended.

Do you have questions or do you want to make an appointment in this area?

Call us at (972) 712-1515 or use our contact form.