Types of Trusts for Establishing Guardianship of Minor Children in a Will
A trust and a guardianship are two separate and distinct legal entities. Both entities can be set up to care for the property of a minor child, but they have different types of administration and reporting requirements.
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Guardian of the Property
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Guardianship of the property is established through order of the court, not by a last will and testament. If the parents of a minor child die and their will leaves property to a minor with no further instruction, then the personal representative of the estate will obtain a court order to have a guardian of the property appointed. Property guardians are required to report and account to the court on an annual basis regarding the assets of the guardianship, and any contributions or distributions made on behalf of the child. A guardianship terminates when the minor reaches the age of majority as defined under the statutes of the state.
Irrevocable Trust Under Will
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An irrevocable trust created under a last will and testament will automatically fund at death. In this case, the court does not have to become involved in establishing a formal, court monitored guardianship. The trustee will administer the trust under the terms established in the will which gives parents more latitude in determining when the child may receive funds. For example, an irrevocable trust for a minor child may state that the child receives income after the age of 18, principal trust funds can disburse for college education, and that the trust terminates to the child at age 30.
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Guardian of the Person
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Establishing a trust or guardianship to manage the funds of a minor child is separate from appointing a guardian of the person. The guardian of the property or the trustee will not be able to make medical decisions or provide basic care for the child, as their duties are limited to property management. Parents need to specifically state in their last will and testament what person is to have physical custody of the child upon their death, or this decision is made by the court. The guardian of the person and the guardian of the property can be the same person, but can be different if circumstances warrant.
Seek Advice
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Setting up a trust for future care of a child in the event of death is complex legal work. It is wise for parents to seek the advice of a trust lawyer that specializes in this area of law. This will help to ensure that the child is properly cared for physically and also that property management is in the child's best interests.
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