Alternatives to Conservatorship of a Child
A conservatorship is appointed to manage the assets of a child. A conservatorship is not necessary to provide financial support for the child. Rather, a conservatorship is appointed when the child actually owns, or has a right to, assets. Common situations that might require a conservatorship include when the child receives an inheritance. A child might also receive proceeds from a lawsuit.
A conservatorship can be costly in both time and expenses. A conservatorship also has reporting requirements when the money is used. Whenever possible, we seek alternatives to using conservatorship.
Avoiding Conservatorship with estate planning
One of the best ways to avoid a conservatorship is to establish an estate plan for the child’s parents. If the parents establish a trust, for example, the child’s inheritance can be managed by a trustee if something happens to the parents. Unfortunately, many people do not have an adequate estate plan in place.
Missouri's Transfers to Minors Act
Another alternative to a conservatorship is Missouri’s Transfers to Minors Act. The Transfers to Minors Act allows for a “custodian” to manage the assets of a child. Use of the Transfers to Minors Act can avoid some of the hurdles of a conservatorship.
The Transfers to Minors Act is often used when a child inherits something. For example, assume a child’s grandparent dies. The grandparent’s will leaves money to the grandchild. The grandparent left the money to the grandchild directly, without placing the money in a trust until the child reached a certain age. Under this scenario, the money belongs to the child, even though the child is not yet of legal age. The parents are not able to use the money without some form of court approval. Rather than obtain a conservatorship to manage the money of their own child, the parents may be able to use the Transfers to Minors Act.
A transfer to a child can be completed by assuming control of the child’s assets as the “custodian” for the child. For example, if a transfer to minors act account is created, the funds would be deposited by the parent “as custodian for (the child) under the Missouri transfers to minors law.”
A “custodian” of the child’s assets has the power to “collect, hold, maintain, manage, invest, and reinvest custodial property.” The custodian can also use the assets for the benefit of the minor, or deliver the money to the child for the child’s own use.
Questions about a guardianship or conservatorship?
Schedule a FREE Consultation.
The “custodian” is holding the assets for the benefit of the child. The custodian cannot use the assets for the custodian’s own benefit. The custodian must keep the assets of the child separate from other assets. These requirements apply even if the custodian is the parent of the child. The assets of the child cannot be used to replace the support a parent would normally provide his or her own child. For example, a parent cannot “borrow” money from the child’s account, even if the parent pays the money back with interest.
A “custodian” can be either an individual or a financial institution. Most banks will have their own forms for creating a Transfers to Minors Act account.
Is Court approval needed?
Court approval may be necessary to create a custodial account for a child. Any amount can be transferred to a financial institution to serve as the custodian for a child’s assets. Transfers of $10,000 or more to an individual require court approval. This applies even if the individual is the parent of the child. The court has discretion on whether to approve the transfer, and whether a bond will be required.
When can the child access the money?
Once completed, the assets can be held for the child until the child reaches 21 years old. Once the child turns 21, the child has the right to demand receipt of any assets held by the custodian.
Questions about a guardianship or conservatorship?
Schedule a FREE Consultation.
Guardianship lawyer Tim McCurdy
Guardianship requires a lawyer who will listen to you. You need a partner to help guide you through the complex guardianship process. Tim McCurdy will take the time to learn about your unique situation to help look for a solution.
