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.
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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.
photo credit: The Labour Party
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?
Hi Dan – It sounds like you made the account so airtight that you can’t access it. Usually, you can access the funds if they’re used to pay for the kid’s expenses. But you should check with the account trustee to see what your options are. Failing that, you may have to speak with an attorney to see if the laws in your state provide any options.
MY DAUGHTER WAS KILLED A YEAR AGO IN CAR CRASH SHE DID,NT HAVE ANY DEBTS SHE DID NOT OWN ANYTHING BUT SHE DID HAVE A QUIT CLAIM DEED FROM HER DECEASED HUSBANDS MOTHER FOR THE HOME SHE LIVED IN @ THE TIME OF HER DEATH BUT SHE NEVER FILED IT SHE JUST KEPT IN SAFE PLACE FOR OVER A YEAR THEN SHE GOT KILLED BUT SHE ALWAYS TOLD ME WHERE IT WAS BUT MY ? IS CAN I HAVE THE MOTHER N LAW QUIT CLAIM TO ME AND THEN SALE AND PUT MONIES IN A TRUST FUND FOR THE 4 REMAINING CHILDREN , I CALLED THE COURT HOUSE AND THEY STILL SHOWED THE MOTHER N LAW OWNED BUT HAS NOT HAD TAXES PAID IN ALMOST 3 YEARS AND I DO NOT WANT THE STATE TO SALE FOR TAXES WHICH THEY CAN IF NOT PAID BUT MY LAWYER FRIEND OF 27 YEARS IS TELLING ME THAT I AM NOT ALLOWED TO BE OVER HER PERSONAL THINGS AND I WANT TO KNOW WHY NOT ……………………THX !!!!
Hi Tamathy – That’s a legal question that I can’t help you with. It also depends on the laws in the state where you live. It is true though that if the quit claim deed was never filed with the court house. As far as the court is concerned, the mother-in-law is still the owner.
Now since you want to sell the house and use the proceeds to provide for the children, perhaps her mother-in-law will cooperate in transferring the deed for the benefit of the kids. As well, if you offer to pay the back taxes, you may be getting her out of a jam. Since mom-in-law is still the owner, the tax lien is against her.
If you’re not satisfied with the advice that you’re lawyer friend gave, get another opinion from a different lawyer. But my guess is that you’ll have to work this out with the mother-in-law.
My 15yr daughter’s dad was killed.She has about 18,000.00 in life insurance.My question is other than a restricted bank account or surety bond,are there other options in order for her to access her money for things she needs now or up until she’s18..What would be legitimate reasons for requesting funds since they are saying you cant use it for things such as food and clothes,which is so crazy being that if her father was alive,he was obligated to help provide for her.
Hi Tera – I’d check with an attorney in your state. Laws are specific to each state so the answer might be a little bit different in each state.
I was legally appointed guardianship to raise my husband son whose mom was in a fatal car accident…at the time he was in the 3rd grade…my husband hid the fact that his mom had a large insurance policy for them that my husband was the beneficiary of..the childs biological grandmother got a family member in the courts to give her papers to oversee the money in the account that was for raising the child.because my husband faced life imprisonment…..they teamed up together and kept this a srcret from me for years..i suffered financially for13 years raising my son..he is 21 now..do i have any rights to the guardship money that was already spent for me to raise my son..p.s when he turned 18 he left my home and went to live with his biological family but he ended up in trouble over there and is now incarcerated…i feel so hurt and betrayed..what are my rights at this point
Hi Erica – You did a truly selfless thing raising your husband’s son, so please at least feel good about that. As to any rights to the money that was hidden from you, you need to contact an attorney in your state to see what the laws are and what recourse you have. Unfortunately, if they’ve already spent the money, and they have no money otherwise, there may be no money left to get.
Which institutions will allow a guardianship CD to be opened; I called Capital One today as well as Goldman Sachs and they both stated they do not offer guardianship accounts.
Hi Andrea – I’m surprise to hear that Capital One won’t. Try local banks in your area, they commonly do offer guardianship accounts. You might also try some investment brokerage accounts.
It has just come to my attention of a situation that I need some guidance on. A mother of a completely disabled person (now age 52) has opened credit cards in the disabled persons name, listing herself as guardian (which she is). The disable person is completely incapable of paying this debt of roughly $40,000 , and she (the guardian) is unable to pay this debt as well. What happens to the debt? There are two adults that will assume guardianship once she (the mother) is unable to continue the role. Will these two people become responsible for this large debt?
Hi Nancy – That’s an EXCELLENT question for an attorney – which I most definitely am not. Just an opinion here, but I don’t see how the two succeeding guardians can be held responsible for debts they didn’t create, but it is possible the debts will transfer with the disabled person. But I think a complication here is that the debts might have been taken in the name of a person who lacks the legal capacity to enter them, and that’s why an attorney is necessary.
My dad and I just received our official commission as co-guardians for his incapacitated sister. She is in an assisted living facility that she direct pays for. We need to take care of her outstanding bill asap.
We are in New York and are having a difficult time finding any bank that will open a bank account for her with us as co-guardians. She has significant funds that we need to put into this type of account. Any ideas of which banks offer guardianship accounts in New York?
Hi Christine – I don’t, but you should locate an attorney who handles guardianship cases and might be able to recommend on. You might also check with some large banks, like Chase and Citi to see what they recommend. But if your aunt has substantial assets, you might want to get an attorney involved in the process anyway. You may need to protect your own rights in the arrangements, as well as to be fully aware of your legal rights and obligations.
My mother in law left our two children some money. My husband was the executor of her will. It was to be put into a bank account. I saw yesterday the guardian on the account is only in my husbands name. Why would he not have both of us as guardians on our childrens account? Am I wrong feeling this way?
Hi Jean – I certainly understand your concern, but have you asked your husband why he did it that way. Maybe the will stipulated he be the guardian. Whatever the reason, only one person can be a guardian on an account (I’ve never seen two names on a guardian account), so maybe the better question is why your husband made himself guardian on both accounts, rather than setting up each of you as guardian for one child?
I need to know why when I am legal guardian of my own son do I have to get guardianship papers to close a savings account for him his grandmother opened with his name. Unfortunately she passed in an auto accident and my husband became executor of her estate. So why isn’t different than us just being able to go and transfer his funds to another savings account.
Hi Darlene – I’m the wrong guy to ask that question! It sounds like a complication of guardianship laws in your state, and you should consult an attorney on how to proceed. That said, I fully agree that it seems like a convoluted arrangement. You’re the guardian of your son, and your husband is the estate executor, so there has to be a way to do that that won’t violate some legal provision.
my husband and I have co-guardianship over our son who is 38. my question is he was able to change his checking account without our signature and I was wondering could I close his checking account even though my name is not on account. he has been diagonised with bipolar in 2007
Hi Velma – That’s really going to depend on the laws in your state. If the guardianship is total, you may be able to close out the account. But since it’s in his name alone – this is where it gets really complicated. You can contact the bank (be prepared to present legal documents establishing the guardianship), but you may have to meet with an attorney.
Do you know if the Guardian needs to have an attorney for the life of the guardianship for tax purposes?
Hi my daughters father got into a helicopter accident and the settlement was really low of 32k. Right now I received guardianship of her money. I think is such a low sum besides that he left with a life insurance 125k that I fooze I want to know how can I get these funds liquid to help me with her up bringing after I lost everything when I lost her father?
Me and my Ex got guardianship of my niece. My Ex is a financial adviser and has always used that for an excuse to not share accounts and she could hide money. Well now she does the same thing on nieces accounts. I can only deposit money. She says because she is a financial adviser my name cant be on the account. Is this true?
Hi Sherry – That’s an outstanding question for an attorney. And given the other party’s history of hiding money and not sharing accounts, I think you need to retain one. It’s your niece, and the person in question is your Ex, so this is a legal matter. The laws in your state will have a major impact on how this plays out. Seeking opinions – including mine – won’t offer much help in this case.
One more question that I think is really important – Did your Ex become your Ex before or after guardianship was awarded to her??? (This is another reason why you need legal counsel.)
Hello, I am a 2o year old from Indiana and when I was six years old I was hit by a car and broke my femur. The person that hit me payed for my medical expenses and such, but there was money left over from it all, for grievences, I suppose, and the extra was set up in a gaurdianship account as me as the beneficiary. Due to my parents lack of credit no bank would open an account for them so our lawyer was kind enough to help my parents get through all the loop holes. I was always told when I turned 21 I would have access to these funds myself. Now that day is almost upon me and I have no clue how I am susposed to go about gaining access to it. I tried calling the lawyer but I get brushed aside and told to wait for him to call since “it’s such an old case file.” What can I do?
Well, my daughter’s father was killed and she received a large insurance settlement which was set up in an annuity. There was a lump sum placed in a guardianship account with limited access. Also, an annuity interest check was sent to me as guardian of the estate of my daughter monthly. I was told by the lawyer, before receiving any funds that I could do with the annuity interest as I please and it was not placed in the guardian account. I have not filed accounting for these funds for over 9 years and have used the money to maintain standard of living. Now I am finding out that I could be prosecuted for this and may have to pay the funds back, which would bankrupt our family. I in know way would have kept the money had I known that it was supposed to sit in an account. To say that now sounds naive but I was 25 when this all took place and this is the first time any accounting has ever been requested (and I have been filing accounting for the other account every 2 years). I am scared and feel like I was misled or the checks were not worded the way that was originally agreed. My lawyer also tells me that he now may be a potential adverse witness so I need to seek other council. Please advise.
Hello.. We are from Indiana. About 7 years ago our son was involved in an auto accident with his grandmother. We were not sure of how to handle things so we got an attorney. The case was settled out of court and dismissed. So the courts no longer have it on record. I have the entire case from attorney, whom at that time told us we had to put in account for our son. we thought we doing the right thing. Little did we know that we would not access to it to be able to buy him things. We wrote a letter to judge as we were instructed to do. The judge told us that there was nothing we could do but try to get another lawyer to help us. By no means are we talking about lots of money… only a little over a thousand! The attorney back at that time told us that we did not have a say in matter!! Told us to sign the papers, what bank it was to be placed in, and that if we did not do what he said that our son would not get his settlement. We are at aloss as what to do now… tried talking to this law firm but they are of absolutley NO help. Do you have any advice for us? at this time anything would be greatly appreciated!!!! thank you for your time and look forward to your response.
@Susannah I wish I could be of help, but your situation is out of my expertise. I would suggest keep calling different attorneys and hopefully you’ll find someone that is willing to help.