We continue our discussion of probate court today on the topic of probate court and minor children. The costs of probate will go up considerably if the succession involves orphaned minor children. But in that case, of course, more than money is at stake.
When children are under eighteen, and no parent survives, the state or other “interested person” will seek a guardianship for the child’s “person” and a guardian for the child’s money, or “estate.” Sometimes, these will be the same person, and sometimes they will not. In the Introduction of this book, we discussed a common situation in which these two roles should be separated. Let’s look at these issues more deeply.
In most states, if someone under the age of eighteen inherits any money of significance, the question of guardianship for this money will arise in court. If the child does not have a living parent, and a parent has not nominated anyone, the court will start looking for suitable guardians for both the person and the estate. If the child inherits a couple of hundred thousand dollars, the cost of creating these guardianships alone will cost $10,000 to $15,000. It’s not uncommon for the full cost of a probate process that includes a guardianship court proceeding for minor orphans to run $100,000 in legal fees.
Why so much? For starters, the court generally appoints an investigator to look into the backgrounds of nominated guardians. There’s typically an additional attorney appointed to represent the minor child. The costs of hiring these people is not paid for by the state if the estate has the ability to pay.
But minor children present an even greater risk to your financial legacy. The moment the child turns seventeen and 366 days, he or she can take complete control of their money and blow it, which they usually do. Do you remember being eighteen? Boys generally buy cars. Girls buy clothes or cars for their boyfriends. In any case, they have been thinking about this money for a long time—and now they’ve got it.
Guardianship creates a heavy responsibility whether it’s guardianship of the person, of the finances, or of both. The guardian will have to file an accounting with the court every two years, or as the court may otherwise order, and give a final accounting when the child turns eighteen. If you don’t find a suitable guardian to agree to take on this role before something happens to you, the court may not be able to find a good, willing guardian at all. And your children will end up in foster homes with strangers as their guardians.
Guardians sometimes drop out before the child comes of age, or they do something irresponsible, which makes it vital to move them out of the role. In that case, the court will appoint a new guardian.
Many other situations will trigger a guardianship or a conservatorship (i.e., guardianship for an adult) proceeding.
These include mentally incompetent, adult dependents and mentally incompetent, surviving spouses. Again, if you don’t plan for these possibilities in advance, a court appointed social worker will.
How do guardians get put into place? If you die suddenly, and your children under eighteen have no surviving parent (divorced or otherwise), social services may claim responsibility for them. The relevant agency will then start interacting with family members. “Did they find a will? Did the parent make some other nomination for a guardian? Did the deceased parent write anything down that says, ‘I want this person to care for my minor child?’”
If no one petitions to become the guardian, social services will petition the court to name a guardian. If social services identify a nominated guardian, and the nominee agrees, then he or she must go on to file a petition with the court to become the guardian. No petition, no guardian. The process is not automatic.
The guardianship process and hearing are very much like the probate process I described for Bob Jr. A potential guardian has to file a stack of papers and appear in court. But in this case, he or she will also have to go through a pretty serious background check, including perhaps fingerprints, etc. As mentioned, this investigative process will indeed cost money, paid by the estate.
No nominee designated by the deceased parents? Social services will start sorting through the rest of your family. Any grandparents out there? What if four grandparents are alive, and both sets want to be the guardians? Now that can be a nasty fight.
Such situations cannot always be avoided. But their cost, their burden on the family, and the chance of a bad outcome can all be greatly reduced by proper estate planning. And all parents should do it.
I believe it is every parent’s responsibility to create proper documents nominating guardians for minor children— every parent with any child under eighteen. In fact, just as important, I believe parents should create a living trust and designate a trustee to watch over their children’s financial estate until they are well older than eighteen—perhaps until they complete an undergraduate education or later.
For more information on creating your living trust and guardianship for minors, contact one of our licensed attorneys today!
