Can a Trustee Be a Guardian?

By John Stevens J.D.

Although a trustee and a guardian serve very different roles, both are important and involve considerable responsibility. A trustee manages property held in trust for the benefit of another. A guardian is responsible for the care of a person who is legally unable to care for himself and this role may include safeguarding the ward's property not held in trust. It is common for one person to serve as both trustee and guardian, but a potential conflict of interest may require two different individuals be appointed to fulfill these duties.

Guardian of the Estate

To own and manage real property or personal property, a person must be legally competent to do so. Every state specifies an age at which a person reaches the age of majority; in most states, that age is 18. Before a minor reaches the age of majority, states generally hold that the person is not legally competent to own property. Some states provide that a minor can only manage a small amount of property. When property must be managed on behalf of a minor, a “guardian of the estate” is appointed, either by the person who is currently responsible for the child or by a court. When a trust is created for a minor, a trustee is typically appointed to manage the trust property. That person, called the “successor trustee,” is often named by the person creating the trust as the guardian of the estate who, in turn, is responsible for any property the minor owns until reaching the age of majority. The guardian of the estate may be a successor trustee, a guardian or both.

Guardian of the Person

A “guardian of the person” is responsible for the care of the child as opposed to managing the child’s assets. The role of a guardian of the person and a successor trustee are very different. A successor trustee manages the property held by the trust whereas a guardian of the person is responsible for the minor but may not have any responsibility with respect to trust property. As with the guardian of the estate, a guardian of the person may be a successor trustee, guardian or both.

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Minor’s Trusts

Trust property is often left to persons under the age of majority. Because a minor cannot manage property, the child’s share of the trust typically remains in the trust until she reaches the age of majority or until some later date stipulated in the will. For example, if a grandmother leaves $50,000 in a trust to her granddaughter, who is age 12 when the grandmother passes away, the trust likely specifies that the successor trustee must hold that property in trust for the granddaughter until she reaches the age of majority. The trustee’s role is to safeguard the property in the trust. A guardian’s role is to safeguard property outside of the trust that belongs to the minor. The trustee can serve as both trustee and guardian or someone else can take on the position as the child’s guardian.

Potential Conflicts of Interest

As the name suggests, a great deal of trust is placed into the hands of a trustee. The same is true for a guardian, particularly a guardian of the person. The potential for conflict of interest can arise if the trustee and guardian are the same person. Other problems may arise if an adult is well-suited to serve as the minor's guardian but lacks the financial acumen to manage a substantial estate. If you suspect you may be facing such a situation, consider naming one person to act as trustee and another person to act as guardian.

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How to Transfer a Trust Deed to a Guardian Conservator

References

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