The role of a person appointed as Guardian in a Will is to raise the children. Nothing else.
The exception would be when the guardian is also appointed as the executor and trustee.
Otherwise, the guardian does NOT get to manage the children’s inheritance. It’s the trustee that is solely responsible for management of the funds.
The guardian has to raise the child, house, feed and care for the child and ensure the child gets an education. He/she does this using funds provided from the child’s inheritance and which is obtained from the trustee.
The trustee holds the infant’s inheritance.
The trustee then pays it out to the guardian for use for the infant beneficiary as and when needed. A trustee may also make payment to a third party eg directly to a school for school fees.
When can the trustee release an infant’s inheritance in full to the beneficiary?
When a trustee pays out a beneficiary’s inheritance he/she should get the recipient to sign a Release for the trustee.
However, only an adult is able to provide a valid release to a trustee.
An executor and trustee cannot decide to pay out a beneficiary who is say 15 years old just because he/she is tired of the responsibility.
A trustee cannot get an infant beneficiary to sign a release either. That release is no good.
A trustee must wait until an infant beneficiary is 21 years old before paying out in full his/her share of the estate. Only then can the trustee obtain a proper release.
If the Will says that gifts to infants are to be at a later age (say 25) then the trustee must wait until that age is reached.
When a trustee may release an infant’s inheritance in full to a parent/guardian
If a Will expressly authorises a trustee to pay an infant beneficiary’s share to a parent or guardian of that infant than the trustee can do so.
The trustee can then get the parent or guardian to sign the release.
A trustee also cannot choose to “transfer” his/her responsibility by simply paying out the inheritance to a parent or guardian of the child.
How things work when there are infant beneficiaries
Most Wills grant a power of advancement to the trustee.
If so, the guardian has to ask the trustee for funds as and when it is needed by the infant beneficiary (eg for education). The trustee can then exercise a discretion to ‘advance’ funds.
At no time does a guardian ever get to get hold of the infant’s inheritance in full. The trustee holds that.
Experienced lawyers who act as executors and trustees sometimes find parents of infant beneficiaries asking to have their child’s inheritance paid to them in full. ‘It’s simpler’ they may say.
However, if the will maker chooses to appoint someone other than the parent or guardian as trustee than there is no reason for the parent or guardian to ask for the funds to be released to them. It is unlikely a court will allow such a release.
Sometimes a will maker may have fears that the parents of infant beneficiaries may divorce. Putting their inheritance into the hands of their parents may be like bringing oil into a burning house. Not good.
So when you make your Will choose as guardian someone who is good with children and best able to raise them.
Then choose someone who is a good money manager as executor and trustee. Some people can do both but not everyone can. Choose wisely.
8 April 2019