Can a Trustee Be a Guardian?

By Jennifer Kiesewetter, J.D.

Can a Trustee Be a Guardian?

By Jennifer Kiesewetter, J.D.

In most cases, one person can serve as both a trustee and guardian. However, just because one person can serve in both roles, it does not mean that this is ideal. Both trustees and guardians can take care of your loved ones if you die prematurely. However, by having one person control similar but distinct situations, that person may not serve the beneficiary's best interest.

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Trustee and Guardian Basics

A trustee is a person or entity that manages a trust according to its terms. The legal document provides authority for that person to distribute assets to the beneficiaries. Distribution will be handled according to the terms outlined in the documentation.

Trustees can make individual decisions regarding the assets. For example, they may decide to invest the assets to preserve the trust. Additionally, they can make specific decisions within the guidelines for the beneficiary, such as how to distribute college expenses. Finally, they must pay any taxes on the assets, along with other duties.

In case of the death of a child's parents, the parents can choose a guardian who will care for their children. Parents can appoint someone too oversee the child's possession and assets, or someone who will actually care for the child. As a guardian over the property, such person manages what the child owns, including assets left to them by the parent's will, which are held outside of a trust. This person will gain custody of the children, thus making day-to-day decisions such as school, church, and medical choices in the best interest of each child. After parents choose someone, they should speak with them to confirm that they want to take on the designated responsibility.

Conflict of Interest

In most states, one person can serve as both trustee and guardian. For example, in a minor's trust, one person may care for the child as well as serve as trustee until the child is 18 years of age. Additionally, for disabled children or adults, the parents can serve as both the guardian of the disabled individual as well as hold authority over the special needs trust.

However, with one person in charge of all decisions over a child or a disabled person, a potential conflict of interest may arise in decision-making. If you have one person serve as guardian and another serve as trustee, you have two people making decisions on behalf of the child or disabled individual, serving as a check and balance on one another. With two people in the mix, you're likely to get better decision-making, giving more protection to the beneficiary.

Estate planning can be confusing, especially for those who are unfamiliar with the various legal documents. If you want to set up a trust for a loved one and select a guardian in the event of your premature death, you'll want to review your local state laws so you understand any requirements. Ensure that you sit down and speak with any other individuals involved, particularly those who you'll want as your guardian and trustee.

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