Guardianship of an Estate
If the court appoints you as guardian of the child's estate, you will have additional duties and obligations. The money and other assets of the child are called the child's "estate." Appointment as guardian of a child's estate is a solemn matter. It is taken very seriously by the court. The guardian of the estate is required to manage the child's funds, collect and make an inventory of the assets, keep accurate financial records, and regularly file financial accountings with the court. The use of an attorney for legal advice in managing the estate is recommended.
Prudent investments: As guardian of the estate, you must manage the child's assets with the care of a prudent person dealing with someone else's property. This means that you must be cautious and may not make speculative or risky investments.
Keeping estate assets separate: As guardian of the estate, you must keep the money and property of the child's estate separate from everyone else's, including your own. When you open a bank account for the estate, the account name must indicate that it is a guardianship account and not your personal account.
You should use the child's social security number when opening estate accounts. You should never deposit estate funds in your personal account or otherwise mix them with your own funds or anyone else's funds, even for brief periods. Securities in the estate must be held in a name that shows that they are estate property and not your personal property.
Roles and Responsibilities
Interest-bearing accounts and other investments
Except for checking accounts intended for ordinary expenses, you should place estate funds in interest-bearing accounts. You may deposit estate funds in insured accounts in federally insured financial institutions, but you should not put more than $100,000 in any single institution. You should consult with an attorney before making other kinds of investments.
Blocked accounts
A blocked account is an account with a financial institution in which money or securities are placed. No person may withdraw funds from a blocked account without the court's permission.
Depending on the amount and character of the child's property, the guardian may elect - or the court may require - that estate assets be placed in a blocked account. As guardian of the estate, you must follow the direction of the court and the procedures required to deposit funds in this type of account. The use of a blocked account is a safeguard and may save the estate the cost of a bond.
As guardian of the estate, you will have other restrictions on your authority to deal with estate assets. Without prior court order of the court, you may not pay fees to yourself or your attorney. You may not make a gift of estate assets to anyone. You may not borrow money from the estate. You may not use estate funds to purchase real property without prior court order.
If you do not obtain the court's permission to spend estate funds, you may be compelled to reimburse the estate from your own personal funds and may be removed as guardian. You should consult with an attorney concerning the legal requirements relating to sales, leases, mortgages, and investment of estate property.
If the child of whose estate you are the guardian has a living parent or if that child receives assets or is entitled to support from another source, you must obtain court approval before using guardianship assets for the child's support, maintenance, or education. You must file a petition or include a request for approval in the original petition, and set forth which exceptional circumstances justify any use of guardianship assets for the child's support. The court ordinarily will grant such a petition for only a limited period of time, usually not more than one year, and only for specific and limited purposes.
Locate the estate's property: As guardian of the estate, you must locate, take possession of, and protect the child's income and assets that will be administered in the estate. You must change the ownership of all assets into the guardianship estate's name. For real estate, you should record a copy of your Letters of Guardianship with the county recorder in each county where the child owns real property.
Determine the value of the property
As guardian of the estate, you must arrange to have a court-appointed referee determine the value of the estate property unless the appointment is waived by the court. You, rather than the referee, must determine the value of certain "cash items." An attorney can advise you about how to do this.
File an inventory and appraisal
As guardian of the estate, you must file an inventory and appraisal within 90 days after your appointment. You may be required to return to court 90 days after your appointment as guardian of the estate, to ensure that you have properly filed the inventory and appraisal.
Insurance coverage: As guardian of the estate, you should make sure that there is appropriate and sufficient insurance covering the assets and risks of the estate. You should maintain the insurance in force throughout the entire period of the guardianship, or until the insured asset is sold.
Records
As guardian of the estate, you must keep complete, accurate records of each financial transaction affecting the estate. The checkbook for the guardianship checking account is your indispensable tool for keeping records of income and expenditures. You should also keep receipts for all purchases.
Record keeping is critical because you will have to prepare an accounting of all money and property you have received, what you have spent, and the date of each transaction and its purpose. You will also have to be able to describe in detail what is left after you have paid the estate's expenses.
Accountings
As guardian of the estate, you must file a petition requesting that the court review and approve your accounting one year after your appointment and at least every two years after that. The court may ask that you justify some or all expenditures. You should have receipts and other documents available for the court's review, if requested.
If you do not file your accounting as required, the court will order you to do so. You may be removed as guardian for failure to file an accounting.
Format
As guardian of the estate, you must comply with all state and local rules when filing your accounting. A particular format is specified in the Probate Code, which you must follow when you present your account to the court. You should check local rules for any special local requirements.
Legal advice: An attorney can advise you and help you prepare your inventories, accountings, and petitions to the court. If you have any questions, you should consult with an attorney.