What are guardianships?

Guardianships are court supervised proceedings for minors and for incapacitated adults. Subject to court authorization and review, a guardian manages the assets of the minor or incapacitated person. Generally, guardianships are to be avoided. They require greater lawyer and court involvement. There are annual accountings and there are bonds. There are also restrictions on how the money may be spent as well as how it can be invested.

Is a guardianship ever the right answer?

Yes, if there is no trustworthy person available to act as trustee or guardian (and the amount involved is not large enough to justify a corporate trustee), a guardianship may be the best solution. The guardian and the assets will be bonded. The activities are subject to court control. The guardian's activities will be monitored and reviewed annually.

Can a guardianship be avoided for adults?

Trust. If a person has all of their assets in a living trust, a revocable intervivos trust, the trustee (or more likely, the successor trustee) can manage the assets and no guardian of the estate is necessary.

Health Care Power of Attorney. A guardian of the person may still be necessary. However, that too can be avoided with a health care durable power of attorney.

Durable Power of Attorney. A guardian of the estate can also be avoided by an up-to-date, properly executed durable power of attorney. Then the attorney in fact, not to be confused with a lawyer, can step in and manage the assets. A durable power of attorney is sometimes referred to as a poor man's trust.

Can a guardianship be avoided for minors?

Yes. If the child has a living parent or a managing conservator appointed by a family law court, there is no need for a guardian of the person.

Testamentary Trusts. Any asset left to a minor in a will can be left to a trustee of a trust established in that will. Any non-probate asset left to a minor can likewise be left to the trustee of a trust created in a will.

Uniform Transfers to Minors (Section 141.001 et seq , Texas Property Code) (AKA Custodianships)

1. Any transfer to a minor can instead be made to: "...Grandpa as custodian for Wee Willy Minor under the Texas Uniform Transfers to Minors Act."
2. Such a provision can be:
   • In a life insurance beneficiary designation
   • As owner of a life insurance policy
   • On a bank account
   • On a stock certificate
   • On a deed to real estate
   • In a will providing that any bequest to a minor shall pass to a custodian under the uniform transfers to minors act.
3. Now custodianships last until age 21.

Section 142 trust. Section 142 of the Texas Property Code allows property of a minor collected by a court proceeding to be placed in a court created trust.

1. The trustee must be a corporate trust
2. The trust must end at age 25 (unless the person is incapacitated).

Guardianship Trust. Section 867 of the Guardianship Code allows a probate court in a guardianship proceeding to create a trust for the benefit of a minor.

1. The trustee must be a corporate trust.
2. The trust can continue until age 25.
3. The trustee must make annual reports to the probate court.
4. This does not completely avoid the guardianship process but in some circumstances it reduces court involvement and the costs.

Payment into the court registry. The probate code allows payment of liquidated claims into the registry of the court (the clerk's office). By this mechanism a creditor can have his discharge, and the funds can be held without the need for the costs of a guardianship. Someone can apply, on behalf of the minor, to have the funds invested. At age 18 the minor can present his birth certificate to the court and collect the funds.