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 individual’s accounts.
While you want to think that everyone 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 than 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 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 person’s 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 cannot appoint a beneficiary of the account. In other words, the guardian cannot change who the account is for and who receives the disbursements.
- In order to open a guardianship account, the guardian must show a certified copy of a court order appointing them the 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 seized.