Occasionally, some lucky children are left valuable gifts after a loved one's passing. In the event these inheritances are of a value in excess of approximately $5,000, parents must establish what is called a guardianship of the estate. Depending on if the inheritance is left in the form of money or property, individual state laws dictates if and when a guardianship of the estate must be established by the minor's parents.
A guardianship of the estate is a role that serves two purposes: 1) it eliminates the potential for misuse or mismanagement of funds by a minor's parents by allowing a judge to scrutinize the spending of inherited funds; and 2) it removes the liability from other people and other institutions and places it with the parents.
Leaving a valuable gift to a loved one is a beautiful gesture. However, when left to a minor, certain other aspects must be considered. The potential for misuse of money or property is higher with minors, as they are unprepared to take on the responsibility of ownership. Unfortunately, transferring money or property to the minor's parents does not completely remedy the issue of misuse.
Establishing a guardianship of the estate is not always necessary. It does, however, protect a minor's asset through a court-monitored order. Today, many states do not require this type of guardianship for parents wishing to manage their minor child's inheritance. In most cases, the deceased simply names an individual to handle the gift until the minor child is an adult.
For parents interested in establishing a guardianship of the estate, speaking to an attorney may help. Whether a gift left to a minor child is in the form of money or property, proper management's of the valuable assets may help protect it for years to come.