There are many reasons why someone would need to create an estate for a minor child. One reason may be that a parent has passed away and named the child as a direct beneficiary, or has been killed in a wrongful death action and has left this child with large sums of money as a result of this lawsuit. Another reason could be that the child has been injured and has received a lawsuit settlement, or has received large amounts of sum to his/her name that needs to be supervised by the court until the child turns 18.
Whatever the reason may be, creating a guardianship estate can be a time consuming and even expensive process. For one, someone needs to step forward as the proposed guardian for the minor child. More likely than not it would be the parents, one parent, or a close relative. There will also need to be notice to any other interested party to ensure that there is no objection as to the proposed guardian. The guardian must meet certain requirements, such as a clean criminal record and must not have filed for bankruptcy within the last 10 years.
Secondly, the guardian will have to pay a premium for a bond amount that is 1.5 times the amount of the benefit the child will receive. A certified bondsman will need to approve and sign off on the bond. The bond ensures that the proceeds will be handled correctly and will ultimately be placed in a restricted account. This account must be in the child’s name and must prohibit any withdrawals except by court order or until the child turns 18.
Once the funds are securely deposited into the restricted account, the guardian can ask the court to close the estate and cancel the bond, thereby relieving the guardian of having to continue to pay the annual premium on the bond. The good news is that the guardian can petition the court for a reimbursement of the costs he/she incurred to create the estate so long as the fees are reasonable. However, the guardian will need to front these costs until the court approves the reimbursement.
If the guardian would like to withdraw funds for the benefit of the child, he/she will need to file a petition with the court for an explanation as to the reason for the withdrawal and how the funds will be used. Otherwise, the funds will accrue interest and be held in the restricted account until the child turns 18. To ensure that the process is done correctly and efficiently, talk to an experienced attorney that can help you through this process.