There comes a time when minors, senior citizens, or disabled persons might need someone to manage their money. In these cases, a guardian will be appointed by the court to control guardianship of the persons accounts. While you want to think that every one who is appointed a guardian of an account is trustworthy and will manage the accounts ethically and wisely, that is not always the case. That is why there are rules governing the control of guardian accounts. From who has access to the account, to who owns it, and how money is spent, courts monitor these accounts.
Children and Guardianship Accounts
Children are not legally allowed to open a bank account or manage their own money in an account. Sometimes a parent or guardian might jointly open an account for a child to save money for college or to just help to teach the child about saving. In this case the parent is the actual owner of the account and has control over the money, and may do what they wish with the funds.
This is different then a guardianship account. With a guardianship account the money does belong to the child. The guardian of the account manages the money for a child but doesn’t not have any ownership over that money. The most common reason for a child to have an account with guardianship is that the parents are deceased and have left money or property for the child and someone, the guardian, needs to control that account until the child is of legal age.
Elderly or Disabled Individuals and Guardianship Accounts
Sometimes adults do not have the physical or mental capacity to manage their finances and a guardian needs to be appointed. As with children, the guardian does not gain any ownership of the persons finances, they just manage the account. The court chooses an appropriate guardian for someone who has been deemed unable to manage their finances.
The Rules and How it all Works
As mentioned, the guardian of an account controls the funds and must report all receipts and disbursements to the court on a periodic basis. The guardian handles the account but had no ownership of the account, meaning the money or property in the account.
- All guardianship accounts have a beneficiary or a “ward”, usually a child, elderly, or disabled individual.
- The guardian of the account can not appoint a beneficiary of the account. It other words can not change who the account is for and who receives the disbursements.
- In order to open an guardianship account, the guardian must show a certified copy of a court order appointing them guardian of an individuals account.
- If an individual can no longer serve as guardian of an account, because of death or some other reason, the court will appoint a new guardian for the account.
- Because the guardian does not own the funds in the account, the money can not be used to settle the debt of the guardian – meaning it can’t be garnished or siezed.
Amanda Armstrong says
Hi my name is Amanda and I am my so s Guardia of his account he is 3 but needs major surgery and I don’t have the money for . Is there any way i could pay the bill out of his money ?
Jeff Rose says
Hi Linda – Guardianship accounts typically let you use the money in the account for the benefit of the child. Check with the bank and see how you can go about it. You may have to provide documents proving the need for the surgery, but that’s just a guess.
Chrystal says
My minor daughter’s father passed away years ago and a guardianship account was set up at my bank for her, listing me as a guardian. I know to withdraw money I need permission from the judge. I am purchasing a home and one of the requirements states I must show an account in my name with “excess funds”. Am I able to list this guardian account on paperwork when purchasing a home? Money will not be transferred or removed from this account. It will just be to show the amount of money sitting in the account. I will pay all home purchasing fees from my personal checking account. We are in Illinois.
Jeff Rose says
Hi Chrystal – I think you’re referring to cash reserves for a mortgage – money you have to show, but not use in the purchase. You’ll have to find out if that’s acceptable to your mortgage lender. It’s not really a legal question.
Jody davis says
I am my mother‘s are limited guardian my sons went to guardian is 24 years old I am responsible for all his money is as representative payee and Social Security account and also the trustee under the special needs trust. My ex-husband has had nothing to do with my son for 20 years he abandoned him he has no custody never had any custody is not a guardian is not in the trust whatsoever except etc. and I have just learned that he has been taking checks that are his mother has been sending my son for his birthday and cashing them or doing whatever he’s doing and if fiduciary matter and I believe that’s Firstly against the law… By the way I reminded him before he did it that he was not allowed to do that I didn’t want him to do it I didn’t know how is going to handle the money is yet except etc. he is not in a legal position to handle any financial documents of my sons or cash checks etc. etc. he’s not on any of the accounts what agencies can I contact you can’t have him arrested or whatever needs to happen please advise
Jeff Rose says
Hi Jody – You can try filing a police report, but I’m not sure how they’ll handle that. You may have to speak with an attorney and find out how to proceed. The laws are different in each state.
Carol J Johnson says
Hello. I live in Florida. I am a healthy widow, 76 years of age, and the legal guardian of a Great Grandson, now age 13. My only child cannot handle money, and I have nobody at this time to list as a Power of Attorney on a Will. What would be my best option of having a Will set up and somebody, personally unknown to me, that could act as a Power of Attorney if needed? Any suggestions would be helpful.
Carol Johnson
Jeff Rose says
Hi Carol – You really have to sit down with an attorney and make this decision. Since it will be a non-family member, it may need to be an institution. You’ll need help in making that decision. The bright side is that your great grandson is just 5 years away from adulthood, so it’s really a temporary problem. But you want to make sure you get it right, without causing long-term problems for him. That’s why you need professional advice. You may need to set up a trust rather than a guardianship account, but that’s for you and your attorney to decide.
Gladys Piggee says
I have legal guardianship over my nephew whom is grown but have a permentaly disability. My sister which is my nephew mother died April 19,2016 in a car accident and in her will I a was appointed gurdian over my nephew and following me was his sister. After the settlement of the lawsuit against trucking companies that hit the vechile my sister was in the lawyers us still holding my nephew 9 hundred thousand dollars claiming the father which gave up his rights to my nephew when he was born is now over his money and I nor his sister other my nephew hisself can get his money. The lawsuit case was closed in December of 2017. What can I do?
Jeff Rose says
Hi Gladys – Wow, that’s entirely a legal matter that I’m not qualified to answer (nor do I have one). For that kind of money, you might want to talk to another lawyer and get a second opinion. Or even a judge if you can.
Gladys Piggee says
Ok thanks
Rosemary Beltre says
Greetings, my name is Rosemary,
The process of opening a guardianship related bank account seems uncommon for a situation involving the elderly.
Is it a common service offered by most financial institutions?
My mom is still alive and with us, she simply is unable to conduct any business because of her dementia.
The courts are requesting that I obviously open a guardianship related bank account, and I am certainly willing to comply.
Any recommendations regarding what should be my proceeding steps?
Many thanks in advance,
Kindly,
Rosemary B
Jeff Rose says
Hi Rosemary – It sounds like you’re already at the point of needing to do this, if the courts are making the request. You need to sit down with a bank if it’s just one account, or a lawyer if it’s several. There are other considerations where a lawyer can help such as creating a living will.
londa says
HI my son will be19 in may he wanting enrolling in air force he has ADHD disability bad has problem with handling money , saving money paying bills ,responsibility wanted to get guardian ship over his military check until he learn how manage his own money and take care of his self is that possible
Jeff Rose says
Hi Ionda – I don’t think that’s possible. But you might have it direct deposited into an account that you control. You can then give him money as he needs it without turning the whole amount over to him.
Meechie says
Dear friend. My grandma had a guardianship account set up for my son .. she passed away , so I went and tried to have the account switched to my name because my son is 13. The bank told me I need a guardianship paper in order
To get access to the account. It’s not set up through court that she has a guardianship account for him , so how can I get access to this account and will I be able to use the funds.
Jeff Rose says
Hi Meechie – That’s really a legal issue, not a financial one. Please consult with an attorney in your state to determine the best course of action.
Dan says
We had a settlement with and put money away for our children. They way it was structured was so we cannot even borrow against it. We are trying to pay our children’s back school bill so they can register and are trying to figure a way to get the money. Any ideas?