The following issues are often addressed by the Commissioner’s office:

1. I am the guardian of the property of two minors.  May I maintain a joint bank account for both minors?
2. How should I open accounts for the guardianship?
3. May I take my commission at the beginning of an accounting period?
4. What do I do with real estate of a minor?
5. I need money for the minor’s support, may I use the minor’s assets?
6. What investments are appropriate for a minor’s estate?
7. I would like to retain the minor’s money until age 21, may I do so?

Questions and Answers

1. I am the guardian of the property of two minors.  May I maintain a joint bank account for both minors?

   Accounts for each minor shall be maintained separately.  There may be circumstances under which assets of one minor are used where the other minor is not in need of such resources.  Therefore, each minor’s account shall be maintained separately under each minor’s social security number.  Interest should be independently reported on separate accountings.  You may have qualified under one bond and one qualification for both minors, however, separate inventories and accounts shall be filed with the Commissioner of Accounts since the minors’ dates of birth will result in different periods of distribution upon reaching age 18.  Do not comingle the funds of one minor with the funds of another minor.

2. How should I open accounts for the guardianship?

   Guardianship accounts will be opened once you have qualified as guardian with the Clerk of the Court and properly posted surety bond.  With the qualification certificate you receive you will be able to deposit to a guardianship account at a federally insured bank the cash assets which you have for the minor.  The account should be established in the minor’s name by you as guardian, and should be established under the social security number of the minor.  Only the guardian should have signature authority on the account.  Irrespective of the age of the minor, if he or she is under age 18, they should not have signature authority on the account.  Other accounts should be similarly established including certificates of deposit, stock accounts and any other account that you are holding for the benefit of the minor. Do not open a Uniform Transfers to Minors account; it must be a guardianship account.

3. May I take my commission at the beginning of an accounting period?

   No, commissions may not be payable in advance without Order of the Court.  Commissions may be taken on a monthly pro rata basis based on the principal and income assets.

   It is good practice to take your commission at the end of each accounting period.  If you have questions about the appropriate commission to be taken, you should prepare an account, forward it to the Commissioner of Accounts for approval of a commission or forward the accounting requesting that the Commissioner approve a commission to be paid upon approval of the pending account.

   The amount of the Guardian’s commission will likely be governed by the Guidelines For Fiduciary Compensation, however the final fees are subject to the Commissioner’s approval.

4. What do I do with real estate of a minor?

   This presents a difficult question depending upon whether or not the minor is still living  in the property, in which case the property is probably not going to be sold but will be maintained as the residence of the minor.  So long as the asset can be maintained in a proper manner with the available resources of the minor, the real estate is appropriately retained.   If the minor, however, is no longer going to live in the property and the property has become vacant, sale of the property is appropriate as the maintenance of the property, along with the payment of mortgage payments, taxes and insurance represent a drain on assets of the minor’s estate with no return to the estate.  In such cases, you should seek approval of the Commissioner of Accounts for the sale of the property.  You will need to present to the Commissioner of Accounts a current appraisal or real estate market analysis showing comparable sales of similar situated properties so the Commissioner may make a determination as to whether a particular sale is in the best interest of the minor.

   The retention of rental property for a minor’s estate presents unusual problems, and unless you are experienced in managing rental property it may be in the best interest of the minor that that property be sold and the equity invested in an asset which can provide a fixed return to the minor’s estate.

5. I need money for the minor’s support, may I use the minor’s assets?

   If there is no living parent, you may use income and principal as needed, after taking into consideration all other assets of the minor, in order to provide for the proper support, maintenance and education of the minor.

   If the minor has a living parent, however, you must seek approval of the Henrico County Circuit Court for the disbursement of income and/or principal (other than administration expenses) or you may seek approval of the Commissioner of Accounts if the anticipated disbursement of income and/or principal does not exceed $5,000.00 per year.

   This application either to the Circuit Court or to the Commissioner of Accounts should be before the disbursement of the funds requested.

6. What investments are appropriate for a minor’s estate?

   Recent financial turmoil has suggested that investment in federally insured money market accounts, certificates of deposit or like accounts is appropriate even though the return on such accounts is minimal.  The preservation of the principal is a primary concern for the minor.

   If the minor is very young, investment in very conservative mutual funds may be appropriate.  Investment in risky investments on the promise of high yields would be inappropriate for a minor’s account.

   If the minor, at the time of your appointment, has only a short period of time before obtaining the age of 18, the use of bank deposits and short term certificates of deposit would be appropriate as opposed to stock market investment.

7. I would like to retain the minor’s money until age 21, may I do so?

   Unless the document creating the need for the guardianship for the minor child establishes an age different from the age 18, you must distribute the assets to the child upon obtaining the age of majority which in Virginia is age 18.  It makes no difference that you may not feel that the child is capable of handling the funds.  The child is entitled to the distribution of all assets held by the guardian upon reaching age 18.  Therefore, you should not invest in long-term investments which will extend beyond the minor’s 18th birthday as the withdrawal of those assets by the minor may result in penalties for which you may be responsible.  If there is a short period of time before the minor reaches majority, you should consider the use of short-term certificates of deposit or money market accounts to avoid the imposition of penalties upon the minor at age 18 when the minor is entitled to distribution.