{Read in 6 Minutes} As a Trust and Estates attorney, I routinely represent people with interests in Estates. Whether it is an Executor, Administrator, beneficiary, or creditor, each of them has individual interests. I’ve seen and done it all.
One of the interesting things that I have written about before is what happens when children are interested parties to the Estate. I’ve also addressed what happens when parents choose to include children in their estate plan by way of setting up a testamentary trust. However, absent prior advance planning, issues generally arise when a minor is entitled to receive an interest in the Estate that they are too young to presently handle.
This can happen in a variety of ways. First, it is possible that the person died intestate and did not address what would happen to any inheritances that a minor would receive. Another possibility is that the person died with a Will but it was somewhat shoddily done and does not address what happens to the interests of minors. Another possibility is that the individual filled out a beneficiary designation form on a life insurance policy or a retirement account naming a child as a direct beneficiary. In any of these situations, what routinely happens is that the Surrogate’s Court will appoint a Guardian to handle that minor’s property until they reach the age of 18. Normally, this is an uncontested proceeding that many parents will handle without an attorney, and which the Surrogate’s Court handles very quickly and efficiently.
So, we know when the Surrogate’s Court may appoint a legal Guardian of the Property for a minor, but what happens when that minor turns eighteen? This is important to address because you can set up a guardianship but eventually it’s also going to need to end. Here are the steps:
1. When a minor turns 18, New York State Law recognizes them as an adult. The person acting as the Guardian for that minor should begin preparing for this day a couple of months in advance, to gather the information necessary to terminate the guardianship.
2. The minor must know what’s going to happen when they turn 18. Some parents and Guardians choose to keep the children in the dark concerning this money, worried that teenagers will make rash and imprudent decisions against their own financial interests. However, once the minor turns 18, they are an active participant in the process of winding down the guardianship, so they’re going to find out one way or another.
3. A Guardian should begin to fill out the Court forms in advance. The Court forms to close a guardianship for a minor are available online, but it needs a lot of information such as present contact information, present bank balances, and the property which the Guardian is holding that they will turn over to the minor on their eighteenth birthday.
4. When the minor turns eighteen (not before) the minor can sign the form. The Guardian and the minor should then submit the form to the Surrogate’s Court. Some Courts will allow you to submit this remotely (electronic filing or mailing it to the Court). Some Courts will require that the Guardian and the minor show up together in the Guardianship Department of the Courthouse with their photo ID to submit the papers. Contacting the Court in advance to determine their local procedures is best.
5. The Court will process the papers and give the Guardian and the minor a Court Order to bring to the banks where the Guardianship accounts are held. The banks will require a certified copy of this order so the Guardian and minor should be prepared to pay some court fees (presently $6-8 per page) to obtain this certified copy.
6. The Guardian and the former minor should contact the bank before showing up. Why? The bank is going to need to send the Order to their legal department, the review process for which might take several business days. The larger the bank, the longer the wait. They can either drop off the certified copy at the branch knowing that they’re going to need to return it, or they can e-mail an uncertified copy for prior approval.
7. The Guardian and the minor should show up at the bank branch together both bearing photo identification and bringing a certified copy of the Order (if not already done in one of the previous steps). The bank will then either open a new bank account in the minor individual’s name or issue that former minor a cashier’s check and close the guardianship account.
8. The former Guardian is going to need to file some papers with the Court to demonstrate compliance with the Order and the return of the funds to the former minor. These forms are available online.
So, as one can see, this is a fairly straightforward process. Being organized and planning in advance will help things go smoothly and efficiently both for the Guardian and the former minor. Just like setting up the Guardianship, a lot of people can handle this proceeding without necessarily hiring an attorney, although legal assistance is available for those who would like it.
For more information on this topic, please contact me.