What Is Financial Guardianship? 

Financial guardianship is a legal arrangement designed to protect the financial well-being of individuals who are unable to manage their own financial affairs due to age, disability, illness, or incapacity. A financial guardian, also known as a conservator in some jurisdictions, is appointed by the court to oversee and manage the finances and assets of the person in need, ensuring that their resources are used appropriately and responsibly.

In this blog, we’ll explain what financial guardianship is, who may need a financial guardian, the responsibilities of a financial guardian, and how the guardianship process works.

What Is Financial Guardianship?

Financial guardianship is a court-appointed role in which a person (the guardian) is responsible for managing the finances of someone who is unable to do so on their own. The person under guardianship, often referred to as the “ward,” might be a minor, an elderly person with dementia, or an adult with physical or mental disabilities that affect their ability to make sound financial decisions.

The primary goal of financial guardianship is to protect the ward’s assets, ensure that their bills are paid, and manage their financial obligations in a way that benefits them. The guardian is held to a high standard of care and must act in the best interest of the ward at all times.

Who Needs a Financial Guardian?

There are several situations in which someone might need a financial guardian. The most common include:

• Minors: Children under the age of 18 may need a financial guardian if they inherit money or property, win a legal settlement, or receive financial benefits. In these cases, the guardian manages the assets until the child reaches adulthood.

• Elderly Individuals: Seniors who are suffering from dementia, Alzheimer’s, or other cognitive impairments may require a financial guardian to ensure their finances are managed responsibly.

• Adults with Disabilities: Individuals with physical or mental disabilities that prevent them from managing their own finances may need a guardian to handle financial matters on their behalf.

• Incapacitated Individuals: Adults who become incapacitated due to illness, injury, or mental health issues may also require a financial guardian to ensure that their financial affairs are properly managed.

Responsibilities of a Financial Guardian

The duties of a financial guardian vary depending on the needs of the ward, but typically include the following responsibilities:

1. Managing the Ward’s Income
   The financial guardian is responsible for collecting and managing the ward’s income, including wages, retirement benefits, Social Security, pensions, and other sources of income. This ensures that the ward’s bills are paid, and their financial needs are met.

2. Paying Bills and Expenses
   One of the primary duties of a financial guardian is to ensure that all of the ward’s financial obligations are met. This includes paying rent or mortgage, utilities, medical bills, insurance premiums, and other necessary expenses.

3. Protecting and Managing Assets
   A financial guardian is responsible for managing the ward’s assets, such as bank accounts, investments, real estate, and personal property. This may include making decisions about selling or maintaining assets, investing funds, or managing savings for the future.

4. Filing Taxes
   The financial guardian is also responsible for filing the ward’s tax returns and ensuring that all taxes are paid on time. This includes managing any tax liabilities and keeping detailed records of income and expenses.

5. Keeping Accurate Financial Records
   Financial guardians must maintain detailed records of all financial transactions made on behalf of the ward. These records are important for transparency and accountability, and the guardian may need to provide these records to the court for review.

6. Acting in the Ward’s Best Interest
   Above all, the financial guardian is required to act in the best interest of the ward. This means making financial decisions that benefit the ward and avoid any conflicts of interest or misuse of funds.

The Process of Establishing Financial Guardianship

Financial guardianship is a legal process that must be approved by a court. Here are the general steps involved:

1. Filing a Petition
   A family member, friend, or concerned party must file a petition with the court to request the appointment of a financial guardian. The petition will include information about the ward’s condition and the need for guardianship.

2. Court Evaluation
   The court will evaluate the case, often appointing a guardian ad litem or an investigator to assess the ward’s condition and the suitability of the proposed guardian. The court may also require medical or psychological evaluations of the ward.

3. Hearing
   A hearing will be scheduled to determine whether financial guardianship is necessary and who will be appointed as the guardian. The ward has the right to attend the hearing and present their own views.

4. Appointment of Guardian
   If the court finds that the ward is unable to manage their finances and that guardianship is in their best interest, a financial guardian will be appointed. The court will issue an order outlining the guardian’s duties and the extent of their authority.

5. Ongoing Oversight
   Once appointed, the financial guardian must report regularly to the court, providing updates on the ward’s finances and how the assets are being managed. The court may require periodic reviews to ensure that the guardian is fulfilling their duties.

Alternatives to Financial Guardianship

In some cases, financial guardianship may not be the only option. There are alternative ways to manage someone’s finances without the need for a court-appointed guardian. These options include:

• Power of Attorney: A durable power of attorney allows a person to designate someone to manage their finances in case they become incapacitated. This is a less restrictive option than guardianship and can be established in advance.

• Living Trust: A living trust can be set up to manage a person’s assets in the event of incapacity. A trustee is named to manage the assets on behalf of the person, similar to a guardian but without court involvement.

• Representative Payee: For individuals who receive government benefits, such as Social Security, a representative payee can be appointed to manage the benefits and ensure they are used for the individual’s needs.

Financial guardianship is an important legal tool designed to protect individuals who are unable to manage their own financial affairs. Whether for a minor, an elderly person, or an adult with disabilities, financial guardianship ensures that the ward’s assets are managed responsibly and in their best interest.

If you believe a loved one may need a financial guardian or you’ve been asked to serve as one, it’s important to understand the responsibilities and legal requirements involved. Consulting with an attorney who specializes in guardianship law can help guide you through the process and ensure the best outcome for the person in need.

If you’re in need of legal advice regarding financial guardianship, contact us today for a consultation. We’re here to help you navigate the guardianship process and protect your loved one’s financial future.