Frequently Asked Questions About Alternatives to Texas Guardianship

Frequently Asked Questions About Alternatives to Texas Guardianship

This part of a 3 part series answering frequently asked questions about does Texas have alternatives to guardianship.

My child was injured in an automobile accident and I expect that he will receive a big insurance settlement. Does this money have to go into a guardianship?

Yes. There are several non-guardianship alternatives if the property is being received pursuant to a judgment, including annuities and a special type of trust usually called a 142 trust because it is set up under Chapter 142 of the Texas Property Code. A 142 trust is similar to an 867 trust. The trustee generally must be a bank or trust company, and the trust can last until the minor reaches age 25. A big advantage of 142 trusts over 867 trusts is that there is no annual accounting requirement and trustee compensation is less restrictive. For these reasons, banks and trust companies often are willing to take smaller 142 trusts.

A relative left my child less than $100,000 without creating a trust. Do I have to set up a guardianship?

No. One possibility is an 867 trust, discussed above. If the property is cash and is under $100,000, Texas law has a procedure where the money may be placed in an interest-bearing account by the county clerk and held until the minor reaches age 18. Your lawyer can tell you if this procedure is a good idea in your case. The interest earned on the money may not be as great as a trust would earn, and it will be difficult or impossible to spend the money prior to the child reaching age 18, but there is no annual accounting requirement so the costs are reduced.

My child inherited an undivided interest in real property. Do I have to set up a guardianship to sell it?

Maybe not. If the child’s interest in the real property is worth less than $100,000 and if the other co-owners agree, Texas law has a procedure for getting court approval of the sale of the property and for placing the child’s share of the proceeds in an interest-bearing account by the county clerk, where the money is held until the child turns 18. Your lawyer can tell you if this procedure is available in your case.