Guardianship Trust:

What is a Guardianship Trust?

A Guardianship Trust nominates the future Legal Guardian of your children, and places key assets into a Trust to be held for their benefit. When parents of young children die, it is extraordinarily traumatic and disruptive.

A Guardianship Trust protects your childrens’ future by ensuring that your children are taken care of by the specific Guardian that you choose, and that the assets you leave for your children are managed for the childrens’ benefit by the responsible adult of your choice.

In addition to its legal effect, a Guardianship Trust communicates your wishes to your family, thereby avoiding potential disputes amongst remaining family members about who should take care of your children.

Who Should Use a Guardianship Trust?

Parents of young children are often the best candidates for a Guardianship Trust. Younger people can’t reasonbly be expected to “need” to put their affairs in order as their life expectancy is ample. Young parents often haven’t finished accruing major assets to leave for their children either. Thus, younger couples and single parents usually don’t have a pressing desire for a “full blown” Estate Plan.

But, the key issues that parents of young children usually are troubled by are: Who is going to care for my children if I am gone? And, what is going to happen to the money I leave for my children? A Guardianship Trust definitively answers each of those questions and resolves any potential uncertainties.

I’m a Single Parent, Can I Use a Guardianship Trust?

Absolutely. A Guardianship Trust ensures that your Ex will not have any control over assets or money you leave behind for your childrens’ benefit. If you don’t use a Guardianship Trust, when you die your assets will most likely be taken control of by your Ex - because minor children cannot control their own assets, their surviving parent is the most likely person to be put in control of the minor child’s assets and money.

But, if you use a Guardianship Trust, upon your death any assets that you have left for your children will be transferred directly to the Trustee of your choice, to be held for the minors’ benefit. Your Ex will never have the chance to touch a nickel of it.

How Does a Guardianship Trust Work?

A Guardianship Trust nominates the person who shall be the Guardian. The appointment of the person as the Guardian is formalized by an Order of the Court. The Court Order is obtained by filing a Petition for Guardianship in the Superior Court of California (Probate Code § 1510).

There are two types of Guardianship: “Guardianship of the Person”, i.e. being responsible for the minor child on a day-to-day basis; and, “Guardianship of the Estate”, i.e. being responsible for the money and assets that belong to the minor child.

The “Guardian of the Person” and the “Guardian of the Estate” usually are the same person, but they do not have to be. This distinction is critical in a single-parent situation, where the minor child’s surviving parent will effectively be the “Guardian of the Person”, but a different person nominated by the deceased parent may be the “Guardian of the Estate” (Probate Code § 1501).

Probate Code § 1500 gives parents the legal authority to nominate the Guardian of the Person and the Guardian of the Estate.

Probate Code § 1501 gives a parent the legal authority to nominate a Guardian of the Estate for specific property, assets, money, and benefits left for the minor child by that parent.

Probate Code § 1502 expressly authorizes the use of a Guardianship Trust, e.g. parental nomination of a Guardian in writing that only becomes effective upon death of the parent.

Distinction Between Guardianship Trust Assets and Guardianship Estate Assets

The Guardianship Trust is an actual Trust that places assets into the Trust to be held for the minor’s benefit by a Trustee. Any assets in this Trust at the time of the parent’s death will be managed privately by the Trustee outside of the supervision of the Court.

On the other hand, any assets that are not held in the Trust at the time of the parent’s death will become a part of the Minor’s Estate - and those assets will be managed by the Guardian of the Estate under the Court’s supervision.

How Does the Court Evaluate the Guardianship Nomination?

At the Hearing of the Guardianship Petition, if it appears necessary or convenient, the Court may appoint a Guardian of the Person or Estate, or both ((Probate Code § 1514(a)).

Court Analysis: Guardianship of the Person

Probate Code § 1514(b)(1) provides that, in appointing the Guardian of the Person, the Court is governed by Family Code § 3020 (setting forth that the health, safety, and welfare of the child shall be the Court’s primary concern in determing the child’s best interests) and Family Code § 3040 (setting forth that child custody shall be granted in the following order of preference…If to neither parent, to the persons in whose home the child has been living in a wholesome and stable environment, or, to any other person deemed suitable by the Court to be able to provide adequate and proper care and guidance for the child).

Family Code § 3043 goes on to say that in determining whom custody should be granted to, the Court “shall consider and give due weight to the nomination of a Guardian of the Person of the child by a parent” through the use of a Guardianship Trust.

Thus, when selecting the Guardian of the Person, the Court is obligated to consider the nomination set forth in the Guardianship Trust. If the Petition is uncontested - unless the nominee is simply incapable of caring for the child - the nomination in the Guardianship Trust is most likely going to be granted by the Court.

Court Analysis: Guardianship of the Estate

Probate Code § 1514(c) provides that, the Court shall appoint a Guardian of the Estate nominated in a Guardianship Trust unless the Court determines that the nomination is unsuitable.

In determining suitability, the Court is to be guided by what appears to be in the best interest of the child, taking into account the proposed Guardian’s ability to manage and preserve the Estate, as well as the proposed Guardian’s concern for and interest in the welfare of the child ((Probate Code § 1514(e)(1)).

Thus, when selecting the Guardian of the Estate, the Court is essentially obligated to appoint the person nominated, unless the Court determines that the person is unsuitable.