To gain a better understanding about the types of fiduciary duties that a guardian may be responsible for, it is helpful to know what a guardian is first. A legal guardian is an individual who is entrusted with the legal care and oversight of another person. The person whom the legal guardian cares for is called the ward.
Legal guardians are normally appointed by the state, but in some cases, they can also be appointed by the ward’s parents. The ward is typically a minor who needs legal guidance, or an adult who cannot make legal decisions on their own.
In general, there are two types of guardians. The first is known as “guardians of the person.” These guardians are entrusted with the care of the actual ward, which is similar to the way that an adoptive parent cares for an adopted child.
The second is referred to as, “guardians of the estate.” This second type of guardian is entrusted with overseeing a person’s estate, which includes the entirety of the person’s property, money, and assets that they own.
In both roles of guardianships, the guardian owes a fiduciary duty to the ward—meaning they must act in the best interests of the ward.
All guardians owe a basic “fiduciary duty” to the ward. As mentioned, this essentially means that a guardian must act in the ward’s best interest. The law also mandates that a guardian perform in a manner that is honest and responsible when managing the ward’s financial affairs.
Additionally, when a guardian of the ward makes financial decisions on the ward’s behalf, the guardian must act in good faith and exercise sound judgment. This is especially true when a guardian is making decisions, such as whether to invest in a certain asset on behalf of the ward.
One basic rule is that the guardian should use the same level of care and judgment with the ward’s estate as they would with their own funds. This rule is found in most jurisdictions. This also implies that a guardian must keep the ward’s funds separate from their own personal accounts.
Thus, due to some of the regulation standards, if the ward suffers a loss that was a direct result of the guardian’s breach of their duties, then the guardian may be held legally responsible for the ward’s own losses. Therefore, it is preferable that the guardian consult with an accounting or legal professional before making any major decisions on behalf of the ward or the ward’s estate.
Generally speaking, a guardian is usually not responsible or personally liable for any debts or legal obligations that were incurred solely by the ward.
While a guardian should manage the ward’s finances so that their debts are addressed in a timely manner, the guardian usually does not need to pay for these debts out of their own pocket. Instead, the ward’s own funds normally will be used to pay off such debts. There are other occasions, however, where a guardian may be held liable for the debts associated with the ward.
For example, if the debts arise according to a contract’s provisions or some other type of arrangement (e.g., terms found in a guardianship agreement), then the guardian will be held responsible for the ward’s debts. This is due to the fact that the debt was a result of the guardian’s mismanagement of funds and for not properly following the requirements of the contract, or other similar documentation.
For example, in some situations, the ward’s parents might not have completely forfeited all of their parental rights. In such a case, the guardian is typically only acting on the ward’s behalf for a particular purpose and in an extremely limited capacity. When this scenario occurs, the child support order may list the biological parent as the payment recipient, as opposed to the ward’s guardian.
The guardian will then need to collect child support payments from the non-custodial biological parent, if necessary. Regardless of the situation, if a guardian is receiving child support payments to care for the ward, the funds must be dedicated to the ward and not for the guardian’s own personal use.
Being a guardian is a major responsibility that involves many duties on the guardian’s behalf. You should strongly consider hiring a guardianship lawyer to guide you through the complexities found in guardianship laws.
This is especially true if you need to make any life altering decisions on behalf of the ward. An attorney can provide you with sound legal advice and counsel you on the matter.
Also, if for some reason the court has requested your appearance, having a qualified attorney to represent you in court will make the process easier to manage, and will help to protect your own rights and interests.