We frequently hear of minor children achieving significant financial wealth through inheritance or personal success. Managing your child’s financial wealth will probably become your responsibility. By law these children cannot enter into legally binding contracts and in other legal situations must have an adult representative. A guardianship of a minor’s estate is necessary if a child becomes an insurance beneficiary, or inherits money, investment accounts, or real estate.
In such situations 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.
An practical example would be a couple and their daughter who live next door to an elderly widow, who was extremely fond of their small daughter. The widow passes away and leaves her house to the daughter making the young child a home owner. The lawyer handling the widow’s estate suggests that girl’s parents go to court to establish a guardianship of their child’s estate. The house is then transferred into the name of girl’s guardianship estate which protects the child’s assets, and enables her parents to manage her assets until she reaches adulthood.
While this system is effective in protecting substantial assets from unscrupulous parents, setting up a formal guardianship of the estate for smaller amounts of money may not be warranted. For this reason, all states have passed laws to make it easier to give smaller amounts of 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.
If you have a question regarding Family Law in Los Angeles County please contact us at (818) 926-4420 or visit the Family Law section on our website at Law Offices of Anat Resnik. Call today and we will connect you with Anat Resnik, an experienced, aggressive, affordable Divorce and Family Law Attorney in Los Angeles County. After you have spoken with our Los Angeles County Family Law attorney, we can schedule you a free face to face appointment to discuss your circumstances. If you have questions or are considering any aspect of filing for Divorce, a Paternity issues, Child Custody and Visitation, Spousal Support & Alimony, etc. we can help! Call us now at(818) 926-4420. We look forward to hearing from you and assisting you with any and all family law needs.