What is Guardianship?

Guardianship is a legal arrangement whereby an individual is granted the legal authority to make decisions on behalf of another person who is deemed unable to make those decisions independently. Most commonly, this applies to minor children whose parents are deceased, but this also applies to incapacitated adults.

Guardianship law serves as a protective framework to ensure those who cannot care for themselves receive necessary support and supervision.  The legal guardianship framework varies across jurisdictions, which can create particular complexities in cases where a non-US resident is named as guardian for a minor child.

Although there is a separate legal designation for the person who cares for a minor’s property, known as “guardian of the estate” (addressed later in this Advisory), initially, we will address “guardian of the person,” who does not manage or control the minor’s assets.

Considerations When Appointing a Foreign Guardian

If you are a US citizen or a permanent US resident, US courts will use your resident state’s laws to settle your affairs and appoint who they feel is the best person to be your child’s guardian.  This may or may not be the same individual you selected in your Will.  Generally, however, if the court determines that the best interests of the child will be promoted by the individual named in your Will, the court will issue a decree appointing such individual as guardian.

Every state is different, but usually, if the named guardian is not a US citizen or a permanent US resident, there are several factors the court will consider before appointing the proposed individual as guardian. 

1. Immigration Concerns.  If the child is a dual-citizen of the country where the proposed individual resides, it makes it more likely that the child can live legally in that country with the proposed foreign guardian. If the child is not a dual-citizen, the court must consider whether immigration matters will be a hardship for the child, whether the proposed country will allow the proposed guardian to apply for guardianship on behalf of the minor child and how likely this is to occur.  Many countries do allow for individuals to apply for citizenship on behalf of minor children for whom they are guardians (e.g., Australia and Canada). If immigration matters will be a hardship for the child, a US court will take this into account when awarding custody.
2. Ties to the Proposed Guardian and Country. If the child has close ties to the proposed foreign guardian in the proposed foreign country, it makes it more likely that US courts will award custody to such guardian. US courts will consider if the child speaks the language of the proposed country, if the proposed guardian is a close family member of the child, and if the child has spent time with the proposed guardian in the proposed country. If the child speaks the language, is familiar with their family overseas and has spent time with them in the proposed country, it is more likely the court will approve the selection of the foreign guardian.
3. Availability of Foreign Guardian to Appear in US Court. If the proposed foreign guardian can travel to the US to appear in court in connection with the guardianship proceeding, US courts are more likely to consider awarding custody to such guardian.  US courts will consider if the proposed guardian is able to obtain a visa and how soon the proposed guardian is willing to travel to the US.

Jurisdictional and Legal Issues Recognizing Guardianship Orders

Different countries have their own laws regarding guardianship, and guardianship orders issued in one country may not automatically be recognized or enforced in another. The legal processes for obtaining recognition can vary widely.

Attempts have been made to provide an international legal framework for the enforcement of guardianship orders, including the 1996 Hague Child Protection Convention (the “Convention), which is a multilateral treaty that aims to improve the protection of children in international situations.  For countries that have ratified the Convention, it applies to children from birth to the age of eighteen, and it covers a broad range of civil measures related to parental responsibility and measures for the protection of children, including jurisdiction, applicable law and the recognition and enforcement of guardianship orders.

Multilateral treaties like the Convention, however, provide no protection for individuals living in countries that have not ratified them, and the United States has not ratified the Convention.

Commonly Asked Questions

1. What Happens to the Child’s Assets?
   In most states, a person may not exercise any power or authority as guardian of the property or the estate of a child by virtue of an appointment in the child’s parent’s Will, unless the Will has been duly admitted to probate and recorded in the proper court and letters of guardianship have been issued thereon. As mentioned above, different individuals can be named as guardian of a child’s property and as guardian of a child’s person.  The guardian of a child’s person does not have authority to manage or access that child’s assets, unless he or she is also appointed as guardian of the child’s property or estate.
   
   Once letters of guardianship have been issued, the guardian of the child’s estate is also charged with protecting, preserving and managing the child’s property until age 18.  Generally, guardians are bound by the prudent investor standard in managing the child’s property, and, under certain circumstances, the guardian must file an annual accounting with the court.  Many parents, however, prefer to leave their child’s inheritance in a trust until a later age when the child will hopefully make more mature investment and spending decisions.
   
   A testamentary trust created for your child under your US estate planning documents must be carefully considered when the desired trustee resides outside of the US to avoid the trust becoming “foreign” for US income tax purposes.  A trust is deemed to be domestic and not foreign so long as (i) a US court can exercise primary supervision over the administration of the trust and (ii) one or more US persons (broadly defined as a US citizen or US resident) have the power to control all substantial decisions of the trust. In order to keep all substantial decisions in the hands of US persons, the foreign guardian of your child should not be named as a trustee of the trust unless there are at least two US persons also acting as trustees, which can be cumbersome.  Further, if one US person ceases to act leaving one US trustee and on non-US trustee, the trust will become foreign and trigger problematic tax consequences, including potentially higher (even punitive) taxes and additional reporting requirements.
   
2. Should the same person be named as Guardian of the Person and Guardian of the Estate?
   As noted above, the individual in charge of raising your child is known as the guardian of the person, and the individual in charge of administering the finances you have passed to your child is known as the guardian of the estate for assets passing outside of a trust, or a trustee for assets passing into a trust created under your testamentary documents. 
   
   It sometimes makes sense for the same individual to serve in both roles, but it may also make sense to divide these roles.  Your chosen legal guardian may be a great caretaker but may be terrible with finances, in which case, different individuals should be appointed for the separate roles. 
   
3. What Changes should be made in US Estate Planning Documents?
   When naming a foreign guardian for your child in your US estate planning documents, you should include an explanation in your Will that you consider this appointment to be in the best interest of your child.  You should also appoint a backup guardian for your minor child who is a US person in case the court finds the appointment of a foreign guardian unenforceable. 
   
   You may instruct the US resident guardian to take whatever legal action is necessary, at the expense of your estate, to allow your minor child to be placed in the permanent custody of the foreign guardian.  If this is not feasible for any reason, you may instruct your US resident guardian to permit your child to spend substantial and extended periods of time with the foreign guardian or your family members in their country of residence, including to attend school in such country.
   

These are important and complex decisions and there is no guarantee that a court will allow the appointment of a foreign guardian, but there are steps you can take, as described above, to give the court comfort that your wishes for guardianship should be followed.

Please contact your Wiggin and Dana attorney if you have questions or for more information.

Resources

• Navigating Foreign Guardianship: Key Considerations and Legal Questions
• Estate Planning Considerations for Non-U.S. Citizen Spouses
• U.S. Income Taxation of Foreign Trusts – Beware!
• 2024 Non-Citizen U.S. Transfer Tax Overview
• Five Reasons Why You Should Do Your Estate Plan
• The Estate Plan Audit: Addressing Changes in Assets, Relationships and Taxes