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| Milestone Consulting, LLC

When an individual suffers a catastrophic injury, there are three main vehicles for protecting that individual's resources: trusts, structured settlements, and guardianship arrangements. If a child or teen has a recovery in the range of $25,000-$50,000 or a person deemed incompetent by the courts wants to allocate no more than 5% of a substantial recovery, it may be beneficial to appoint a legal guardian for a person and/or an estate.

A legally appointed guardian is responsible for making informed decisions that are in the best interest of the incapacitated party. Oftentimes, a trusted family member is the best choice to act as the legal guardian. However, making decisions on behalf of a loved one can be emotionally and mentally demanding, especially for those cases in which a catastrophic injury has completely altered the way of life for the incapacitated individual (and in effect, for the family).

Initial and Ongoing Assessment

At the onset of the arrangement, the guardian needs to file an inventory of the incapacitated person's assets and will also need to file an annual report through the Surrogate's office with whom the original qualification documents for guardianship were filed. The purpose of this annual assessment is to determine the necessity for the continuation of the guardianship; however, in the case of individuals who have suffered catastrophic injuries, it is likely that the guardianship, if handled appropriately, will continue until the death of the incapacitated individual. The court will usually require the guardian to provide a guardianship bond, which acts as insurance against any potential mismanagement of the incapacitated individual's assets. These bonds can be very costly.

What are the Guardian's Responsibilities?*

According to the National Guardianship Association (NGA), the guardian is assigned the following responsibilities:

  • Marshal and protect assets
  • Obtain appraisals of property
  • Protect property and assets from loss
  • Receive income for the estate
  • Make appropriate disbursements
  • Obtain court approval prior to selling any asset
  • Report to the court or estate status

*The NGA's list does not reference the additional responsibility of investing assets. State law can significantly restrict the types of investments a guardian can make, leaving them with only very conservative options.

Guardianship of a Person

If appointed the guardian of a person, the guardian must ensure that health care decisions are made in accordance with the regulations mandated by any government programs for which the incapacitated individual is or may become eligible (e.g. Medicaid, SSI, SNAP, etc.). The incapacitated individual must be allowed to live in the least restrictive environment possible, which in some cases might require movement to an assisted living facility.

Guardianship of an Estate

If appointed the guardian of an estate, the guardian is responsible for managing both real (e.g. real estate, acreage, etc.) and personal (e.g. bank accounts, insurance policies, stocks, bonds, investments, vehicles, etc.) property. The guardian typically has to open a guardianship account (which must remain separate from any property belonging to the guardian) for the deposit of these funds and must maintain a detailed record of any expenditures.

It is important to remember that guardianship is just one option; cases should be evaluated on an individual basis as there are other options that may be a better fit. An experienced settlement planner can help you develop a plan for your loved one's settlement recovery that will protect their assets and government benefits, which maintaining the highest possible quality of life.


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A 'Family Office' for the Plaintiff: The Value of a Settlement Planner

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