How Guardianships Work FAQ

Is it true that parents may need a guardianship of their own child?

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Answer:

Is it true that parents may need a guardianship of their own child?

It's strange but true: sometimes parents need to establish a particular type of guardianship called a "guardianship of the estate" to handle their own child's finances -- even if the child lives with them. This situation usually arises when significant amounts of property (at least $5,000 in most states) are given directly to a child.

Understandably, institutions and lawyers are reluctant to turn assets over to parents when they were intended for a child. A guardianship of the estate relieves the institution from liability, and the parents are directly accountable to a court to show how funds are spent and invested.

Example: The Thompsons lived next door to an elderly widow, who was extremely fond of their small daughter. When the widow died, she left her house to little Suzy Thompson. The lawyer handling the widow's estate suggests that Suzy's parents go to court to establish a guardianship of their child's estate. The house is then transferred into the name of Suzy's guardianship estate, which her parents manage until she reaches adulthood.


While this system is effective in protecting children's assets from unscrupulous parents, setting up a formal guardianship of the estate involves time and money that well-meaning parents sometimes find burdensome. For this reason, all states have passed laws to make it easier to give money or property to children. These laws provide simple, inexpensive procedures by which gifts to minors (typically up to $10,000) can be managed by their parents without setting up formal guardianships of the estate. A gift-giver must simply name, in his or her will or in a trust document, someone to manage the gift until the child reaches adulthood. No court involvement is required.

For More Information

To learn more about guardianships, see Nolo's Encyclopedia of Everyday Law: Answers to Your Most Frequently Asked Legal Questions, by Shae Irving and the editors of Nolo (Nolo).

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