Expenditures on Behalf of the Minor
The guardian, after taking into account the minor’s other sources of income, support rights and other reasonably available resources of which the guardian is aware, may provide for the minor’s health, education , maintenance and support from the income of the assets of the minor and if income is insufficient from the principal of the assets of the minor, except as hereinafter provided. Section 64.2-1800, Code of Virginia (1950).
Costs of administration of the guardianship, which includes qualification costs, surety premiums, filing costs for the Commissioner of Accounts, “reasonable compensation” to the guardian and other administrative costs are proper disbursements from the assets of the minor.
If the minor has no living parent, income may be used for the minor’s health, education, maintenance and support after taking into consideration all other resources available to the guardian for the minor. The guardian should consult Section 64.2-1800, Code of Virginia (1950).
Use of the Minor’s Assets Where a Parent is Living
The living parent(s) of a minor owe a duty to support the minor. A guardian of a minor’s estate shall not make distribution of income or principal to or for the benefit of a minor who has a living parent, except in the following special circumstances:
a. Approval by Order of the Henrico County Circuit Court on petition by the guardian filed with the Clerk of Court:
If a distribution of income or principal is desired to be made by the guardian and the minor has a living parent, that parent has a legal obligation to provide for the support for the minor, and the minor’s funds shall not be used without Order of the Court. Generally the petition to the Henrico Circuit Court is made with the assistance of an attorney experienced in the handling of guardianship matters.
The application for Court approval is made under Section 64.2-1801, Code of Virginia (1950). In order for the Court to approve the distribution of income or principal held for the benefit of the minor who has a living parent the Court must find that:
- The deed, will or other instrument under which the property was received allows for such distribution; or
- The Court finds that:
- The parent(s) is unable to completely fulfill the duty as a parent of supporting the child; or
- The parent cannot for some reason be required to provide such support; or
- A proposed distribution is beyond the scope of the parental duty of support in the circumstances of the specific case.
If the living parent is able to support the child financially, in almost all circumstances the Court will not approve the distribution of the income or principal held for the benefit of a minor. Requests should be sought in advance from the Court for the distribution. Approval for a distribution already made from the minor’s income or principal is approved retroactively only in “extenuating circumstances”.
b. Approval by the Commissioner of Accounts under Section 64.2-1802, Code of Virginia (1950):
The Commissioner of Accounts has authority to approve distributions not to exceed $5,000.00 in one year for the benefit of a minor even if there is a living parent. However, the Commissioner of Accounts must make the same findings as the Court under Section 64.2-1801.
The Commissioner of Accounts is required to conduct a hearing on the appropriateness of the requested distribution and shall give five (5) days notice of the scheduled hearing to any minor who is fourteen (14) years or older. This notice by the Commissioner of Accounts shall be in writing. No notice is required if the minor is under age 14.
The Commissioner of Accounts must find that the same circumstances required for the Court’s approval are present, specifically:
- That the parent is unable to completely fulfill the parental duty of supporting the child; or
- That the parent cannot be required to provide the support; or
- That the proposed distribution is beyond the scope of the parental duty of support.
Therefore, if the minor has a living parent, the distribution of any income or principal requires either (i) the approval of the Court or (ii) if the proposed distribution of income or principal does not exceed $5,000.00, the prior approval of the Commissioner of Accounts. Without one or the other of these approvals, any distribution to or for the benefit of the minor who has a living parent (except for administration costs) is improper and will be disapproved by the Commissioner.
The guardian of the property of a minor has the obligation to pay taxes for which the minor may be liable on income from asset investment or sale, from year to year to the Federal government and to the Commonwealth of Virginia. These returns should be made under the social security number of the minor and should be timely paid. It may be required that the minor’s income and/or capital gains be reported on the parent’s personal tax returns. Consult with a CPA or Enrolled Agent for a proper determination. The failure to timely make the returns may result in penalties and interest. The Henrico Commissioner of Accounts charges the penalties and interest to the guardian personally. Be sure to consider any earnings of the minor and whether or not the parent is claiming the minor on a tax return or the minor is filing a return.