What do you do when a Minor inherits property?

A parent is the natural guardian of his or her child's person. That means the parent has physical custody of the child, can consent to medical treatment for the child, can determine the child's residence, etc. Thus, it comes as a shock when a financial institution holding inherited assets for the minor tells the parent that the parent cannot control the assets unless the institution receives Letters of Guardianship. That is because the parent is not the natural guardian of the child's estate.

Texas law does not allow a parent to automatically assume control over his or her child's estate. The phrase, "in this life we pay for the sins of others", is no truer than when applied to guardianship.  Due to instances where a parent has squandered the child's estate, the law has evolved to be overly protective of the child's estate.  This ensures that the parent continues to support the child instead of having the child support the parent.

So what are your options when a minor inherits assets?  Here are some options:

• Do nothing
• Deposit funds in Registry of the Court
• Ask the Court to create Management Trust for the Ward
• Guardianship of the Estate
• Special Proceedure for the Sale of Real Estate

Do nothing

Believe it or not, this is often a viable option. Many financial institutions will hold the assets for the minor until the minor turns 18 years old. They will also pay a modest amount of interest on the account. Depending upon the interest paid and the rate of inflation, this may be the best option. There are no attorney's fees, no court costs, no bond premiums. Just le the money stay where it is, and have long talks with your child about how to be responsible with money.

Deposit funds in Registry of the Court

The Court maintains a bank. A parent can ask the Court to order the financial institution to deliver the assets to the Court Registry or Trust Department. The Trust Department will invest the money in certificates of deposit until the minor turns 18 years old. Again, teaching your child to be financially responsible is critical.

Ask the Court to create Management Trust for the Ward

For larger amounts, the Court will often appoint a corporate fiduciary such as a bank trust company. The trust company will then be charged with investing the money for the benefit of the minor until the minor reaches a specified age. Under Texas law, the trust can go up to age 25. In exchange for taking care of the assets, the trust company will charge a fee that is typically a percentage of the estate, subject to court approval. This is often done when the minor needs access to the assets for his or her support.

Guardianship of the Estate

Finally, if none of the above are an acceptable option, the Court can appoint a guardian of the minor's estate. This option is to be avoided at all costs, because of the costs. First, the guardian must post a bond in an amount equal to the value of the personal property of the estate (everything other than real estate). A guardian of a minor's estate is also heavily supervised by the probate courts. A guardian of an estate can only do a few things without prior court approval (pay the guardian's bond premium; pay court costs; pay to insure estate property; pay taxes). For every other action, the guardian must seek and obtain prior court approval. That means the guardian must pay his or her lawyer to prepare the application and order to get the necessary court approval. Furthermore, often a hearing is required, resulting in more expense. The guardian of the estate must also prepare accountings on an annual basis to describe what happened to the estate over the previous year. Tis continues until the minor turns 18 years of age. It is the gift that keeps giving... to the attorneys! It is to be avoided if at all possible.

Sale of Real Estate

There are procedures to sell real estate belonging to a minor and to deposit the proceeds of sale into the registry of the court. The application to sell the minor's interest in real estate can be completed by a natural guardian or the guardian of the person. If approved, the court will authorize the parent or guardian of the person to sign the closing documents. The court will direct the title company to send the proceeds of the sale to the registry of the court. Please call us to get information on this little-known process.

How to Obtain a Guardianship of the Estate

If the matter is uncontested, obtaining a Letters of Guardianship over a minor's property can be a straight-forward. By following the steps below, you can enable The Duran Firm to get a quick start on the process.

Step 1. Complete the Guardianship Prospective Client Information Worksheet

The proceeding seeking the appointment of a Guardian begins with the filing of a written Application for Guardianship in the county court where the proposed ward lives. Texas probate courts charge approximately $400 to file an Application for Guardianship. Any person, other than a person with an interest adverse to the proposed ward, has the right to commence a Guardianship proceeding.

The Application must meet certain requirements as set out in the Texas Estates Code. For example, the Application must state relevant facts about the minor and his or her property. Because Guardianship is such an important matter, the Texas Estates Code requires that the minor and his or her immediate family all receive notice of the Application. Therefore, the minors’ familial relationships must also be set out in the Application.

In order to start work on the Application, I need some basic information about you and the minor with property. Please download the Guardianship Prospective Client Information Worksheet by clicking on the link below:

Guardianship Prospective Client Information Worksheet

BE SURE TO SAVE AND PRINT YOUR WORKSHEET BEFORE ATTEMPTING TO SEND IT TO THE DURAN FIRM.

Step 2. Complete the Application for Bond

If the minor has significant assets, a Guardianship of the Estate will often be required. Usually the probate court will require a Guardianship of the Estate if the minor has more than $2,000 in assets or annual income (not counting Social Security). The Duran Firm will send you the bond company's current application.

Step 3. Return the Documents to the Duran Firm

Send a copy of the Guardianship Prospective Client Information Worksheet, and the Bond Application (if necessary) to The Duran Firm. An attorney with the Firm will review the documents, determine whether a guardianship is appropriate in your case, and call you to discuss the case.

Court Actions upon receiving an Application for Guardianship

Once the Application for Guardianship is filed, the Court will take the following steps:

Step 4. Serve a "Personal Citation" and a copy of the Application for Guardianship upon the minor

Once the Application is filed, the appropriate notice requirements must be satisfied. For example, the minor must be personally served with a copy of the Application. This is usually done by a sheriff or process server. The Applicant must also send a copy of the Application to the members of the proposed ward's immediate family (spouse, children, parents, and siblings), unless they waive service. Finally, if the minor lives in an facility, the administrator must also receive a copy of the Application by certified mail.

Step 5. Assign a Court Investigator to visit the proposed ward and file a Court Investigator Report

Whenever an Application for Guardianship is filed, a Court Investigator must investigate the circumstances alleged in the Application to determine whether an alternative that is less restrictive than Guardianship might be appropriate. The Court Investigator will visit the minor at his or her home and interview the Applicant. Upon completing the investigation, the Court Investigator will file a report of his or her findings with the court.

Step 6. Appoint an attorney ad litem to represent the interests of the minor

Once the probate court receives the court investigator's report, the court will appoint an attorney ad litem to represent the interests of the minor. The attorney ad litem will meet with the minor and attempt to inform the minor about the Application for Guardianship and advise the minor of his or her legal options. After meeting with the minor, the attorney ad litem will usually file an Answer that generally denies the allegations in the Application for Guardianship and asks that the Applicant prove his or her case to the court.

Step 7. Hold a hearing before the Judge

Once the attorney ad litem has filed his or her Answer, a hearing will take place before a judge. If the Application is uncontested, the hearing is usually very informal and takes less than 20 minutes to complete. In response to my questions, the Applicant will give testimony in support of the allegations stated in the Application for Guardianship. The attorney ad litem will then ask the Applicant a series of questions to confirm that Guardianship is in the best interests of the minor.

If the judge agrees that a Guardianship is required and that the Applicant should be named Guardian, then the judge will issue an order to this effect and will direct the probate court clerk to issue "Letters of Guardianship" to the Applicant. These Letters and the Order are the authority you need to act on behalf of the minor, with prior court approval. The judge will also set a bond amount to ensure that the Applicant fulfills his or her duties as Guardian.

In order to qualify the Applicant as Guardian, the Applicant must satisfy the bond requirement and take an oath to faithfully discharge the duties of Guardian. Guardians of the Estate must a corporate surety bond which is a written contract (insurance policy) to pay the Court if the Guardian fails to properly perform his or her duties.

Estimated Costs

At the Duran Firm, we always provide our clients with an Attorney-Client Fee Agreement that lists the projected fees and costs of the case. We promise that you will know the terms of our relationship prior to your being obligated to pay any money to the Firm.

Attorney's Fees The attorney's fees for a guardianship depend on the type of guardianship required and whether the matter is contested or disputed. In a guardianship of the Estate, there is no way to know in advance how long or how difficult the case will be because each estate is different. There is also no way to estimate costs. In cases where we cannot estimate the time or costs, the only fair way to bill for these types of cases is to bill fees on an hourly basis and bill costs as they are incurred. Effective June 9, 2023, The Duran Firm's hourly rate for attorney's fees is $400 per hour. The Duran Firm's hourly rate for paralegal work is $100.00 per hour.

Payment Terms — The Firm accepts cash, checks, money orders, MasterCard and Visa for the payment of attorney’s fees and expenses. In this life we pay for the sins of others, Therefore payment of a retainer and all expected expenses is due prior to the Firm accepting you as a Client.