The guardian will act for your child (the "ward") with the range of parental responsibilities and authority you'd have, if you were living.
How is the Guardian Selected?
When appointing a guardian, the District Court appoints the person or entity who would be in the best interest of the minor, taking into consideration the person or entity nominated by the last surviving parent, or by the minor
In his or her Will, the last surviving parent of a minor may nominate a guardian for a minor, to have care, custody, and control of the minor.
A minor age 14 or older may appear in District Court or before a judge to nominate his or her own guardian.
The minor's opportunity to nominate his or her own guardian takes precedence over a previous appointment by will or otherwise before the minor was age 14.
If you think your child between age 14 and 18 will nominate someone as guardian you don't think is optimal (or even suitable), your Will should state your preference for the guardian you want, and explain why you think that person is better than other alternatives.
While there is no guarantee the court will prioritize your preference for a guardian over your child's, as the Kentucky Lottery once famously said: "you can't win if you don't play."
Guardianship proceedings occur in the county where the Will of the minor's last surviving parent was probated, if the Will nominates a guardian.
When no guardian has been nominated by Will, the proceedings occur in the county where the minor resides.
What Does the Guardian Do?
A ward's guardian has the powers and responsibilities of a parent regarding the ward's support, care, and education. Nonetheless, a guardian is not personally liable for the ward's expenses, and is not liable to third parties for acts of the ward simply because he or she is the ward's guardian.
A guardian may receive money payable for the support of the ward from any statutory benefit (such as Social Security) or any insurance contract, bequest, or trust.
Unless the District Court restricts the guardian's power to do so, the guardian may distribute income or principal of the ward's estate without District Court authorization.
When performing his or her duties, the guardian is to consider several factors, including:
the size of the estate under the guardian's control
the ward's age, capacities, limitations, needs, opportunities, and physical and mental health
the likelihood that the ward will be able to work and earn money as an adult
the accustomed standard of living of the ward
other funds or sources used for the support of the ward which have not been placed under the guardian's control.
District Court approval is required for a guardian's sale of a ward's real property, or a settlement by the guardian of a lawsuit or claim brought on behalf of the ward. A guardian's lease of a ward's real property may not extend past the lesser of 7 years, or the ward's reaching age 18.
A guardian is required to invest a ward's funds in a way that "would be regarded by prudent businessmen as a safe investment."
When the ward becomes age 18, all remaining guardianship funds are to be distributed to the ward, outright.
How Are Guardians Compensated?
Guardians may receive reasonable compensation from the ward's estate for services and reimbursement for reasonable and necessary expenses.
Generally, this compensation and reimbursement may not exceed more than 6% of the income collected by the guardian, plus an annual commission of either 0.3% of the ward's property or 6% of the principal distributed by the guardian.
If the guardian submits proof showing that the guardian has performed additional and necessary services, which have been "unusual or extraordinary," the court may allow additional fair and reasonable compensation for the guardian.
Oversight of Guardians
A guardian may resign, or may be removed by the District Court if the guardian becomes insane, moves out of Kentucky, becomes incapable of performing or does not perform his or her duties, or the court deems the removal of the guardian to be in the ward's best interest.
Guardians are required to file annual reports with the court providing information in several areas, including the ward's current mental, physical, and social condition, and a summary of the medical, social, educational, vocational, and other professional services received by the ward since the prior report.
Estate Planning Issues Relating to Guardians
Guardianship funds are all too frequently targets for fraud. In my experience, to protect against fraud, courts often place guardianship funds in a "blocked account," from which withdrawals may only be made with prior authorization of the court.
Guardians are often surprised by the burdens and obstacles presented by blocked accounts.
To avoid a court's imposing a blocked account on your guardian that you wouldn't want, consider creating a trust to hold assets intended to benefit your child. If the same person nominated as guardian in your Will is also nominated as trustee of that trust, they will have more freedom to manage and use trust assets without prior court approval.
Another critical feature of a trust to hold assets for your minor children (rather than a guardianship) is that the trust can prevent your child obtaining outright control of his or her assets at age 18.
(After all, even if you were ready to make completely prudent decisions about large sums of money at age 18, didn't your decisions get even better by the time you were in your late 20s?)
Unless assets held by a guardian for a ward are very large, compensation to the guardian will be rather low. Accordingly, you might want to consider providing for an annual stipend or one-time specific bequest to the person serving as guardian, as a way of saying "thank you" for the care they provide to your minor child.
Another question to consider, if you will leave substantial assets and/or life insurance proceeds to help provide for the care of minor children, is whether you might want to provide for payment (in whole or in part) of the guardian's children for independent school or college.
Without planning for this, there might be awkward issues if your children can afford to have an education that your guardian's children cannot.
The decision about whom to nominate as guardian can be a very emotional one for parents, sometimes so much so that a married couple will delay preparing an estate plan because they can't agree on whom the guardian should be.
This kind of delay is regrettable, and at worst, might even lead to a court battle between competing grandparents, aunts, or uncles on each side of the family about control of minor children.
Giving a reasonable degree of thought to nominating a guardian for your minor children and having an estate plan written to carry out your preferences is time well spent, and part of being a responsible parent.
Photo above: "Jones children cover their father with sand, Panama City Beach, Florida, 1954" by Charles Barron, credit to State Archives of Florida, Florida Memory, http://floridamemory.com/items/show/72163.