Testamentary guardian

A Will is not only for dividing property. The workbook says Wills are made for disposing of property, for appointing executors, for creating trusts, and for appointing a guardian of the children.

A guardian appointed under the provisions of a Will is a testamentary guardian. That arrangement is called testamentary guardianship.

It is seen mostly in the case of minor children.

And it is limited. The appointed guardian manages the child's affairs within the limits set in the Will. The testator decides how much room the guardian has.

That is what makes it different from the other two kinds of guardianship. A natural guardian needs no legal provision at all. A court-appointed guardian is chosen by a court. A testamentary guardian is chosen by the parent, in advance, in writing.

What guardianship is for. Section 15.7 describes guardianship as the legal process of establishing who will step in should a person become unable to care for another person they were caring for. Once a legal guardian steps in, he or she assumes all the responsibilities of care: food, housing, education, medical and other basic needs. Guardians have fiduciary duties to act on behalf of those they are put in charge of, making decisions on healthcare, legal matters and financial issues, and must agree to always act in their best interest.

Two kinds of guardian, by function.

Three kinds of legal guardianship, by how the guardian is appointed. The workbook gives three major kinds:

1. Natural Guardian - no legal provision is required, as it falls by birth. Parents are the natural guardians of their child until the child reaches the age of legal maturity, 18 years.
2. Guardian appointed by Court - for individuals with no parents alive, or who are incapacitated by birth, accident or any other eventuality and unable to take responsible decisions. The courts have the power to appoint a guardian to take decisions on the individual's behalf.
3. Testamentary Guardian - where a guardian is appointed under the provisions of a Will. Mostly seen in the case of minor children. The appointed guardian manages the child's affairs within the limits set in the Will.

Who may be a guardian. The person applying for legal guardianship has to be a citizen of India of more than 18 years of age. In the absence of parents or legal heirs, anyone concerned with the welfare of the person with special needs can apply for legal guardianship. The workbook states these as the section's general requirements for guardianship rather than as a separate rule for a testamentary appointment.

Why it matters financially. A legal guardianship is primarily required to make financial and personal decisions on behalf of another individual. Where a person is over 18 and incapacitated from taking their own decisions, only a legal guardian may make financial decisions on their behalf. The workbook names three:

1. managing bank accounts - opening an account, managing transactions in an existing account;
2. making and managing investments - in financial securities such as mutual funds, shares, bonds and debentures;
3. availing loans or concessions from governments for the disabled person.

Two instruments, two moments. A testamentary guardian is appointed by a Will and so takes effect on the testator's death. A Power of Attorney operates during the donor's lifetime, where the donor becomes incapacitated or cannot act. Both parties to a Power of Attorney must have attained majority, be of sound mind and be competent to contract.

Illustrative figures; the workbook states the rules without figures.

Mr and Mrs Fernandes have one child, aged 9. Their estate is a flat worth Rs 95,00,000, mutual funds of Rs 40,00,000 and a life insurance payout of Rs 1,50,00,000 that will fall due on death - Rs 2,85,00,000 in all.

While both parents are alive, neither needs to appoint anyone. Parents are the natural guardians of their child until the child turns 18, and that falls by birth with no legal provision required.

In their Wills each of them appoints Mrs Fernandes's sister as testamentary guardian of the child, with the limits written in:

Both parents die in an accident. The aunt, an Indian citizen over 18, becomes the guardian under the Will, and manages the child's affairs within exactly those limits. She can operate the bank accounts, manage the mutual funds of Rs 40,00,000, and draw the monthly maintenance.

What happens if no Will had named her. With no parents alive, the appointment falls to a court, under the second of the three kinds. The court decides who the guardian is, and the limits, rather than the parents. The child's Rs 2,85,00,000 is administered on terms the parents never got to set.

And after 18. Natural and testamentary guardianship of a minor ends at majority. If the child were instead over 18 and incapacitated from taking decisions, only a legal guardian could open or operate bank accounts, make and manage investments, or claim loans and concessions for the disabled on his behalf.

Chapter 15 (Tools for Estate Planning), section 15.7, Guardianship, defines guardianship and the fiduciary duty, splits a guardian's responsibilities into Guardian of the Person and Guardian of the Estate, and then lists the three major kinds of legal guardianship, of which the testamentary guardian is the third. It follows with the citizenship and age requirement and the three financial decisions that need a legal guardian. Chapter 15, section 15.2, adds that a Will is used to appoint a guardian of the children. Expect a matching question across the three kinds of guardianship, and a recall question that 18 years is the age of legal maturity at which natural guardianship ends.

• Three kinds of guardianship, and the appointing authority differs in each. Natural, by birth. Court-appointed, by a court. Testamentary, by a Will.
• A testamentary guardian is bound by the limits set in the Will. This is the defining feature, and it is what a question about the extent of a guardian's powers is testing.
• Guardian of the Person and Guardian of the Estate are a separate split. They describe what a guardian is responsible for, not how the guardian was appointed, and either kind of appointment can carry either role.
• 18 years is the age of legal maturity at which parents cease to be natural guardians, and it is also the minimum age of a person applying for legal guardianship.
• The applicant must be a citizen of India over 18. The workbook gives this as the section's general requirement for guardianship.
• A guardian is not an executor. An executor administers the estate under the Will; a testamentary guardian looks after the child.
• A guardian is not a nominee either. A nominee receives or holds an asset after death; a guardian makes decisions for a living person who cannot make them.
• Testamentary guardianship takes effect on death. For incapacity during life, the instrument is a Power of Attorney, and that needs both parties to be of majority, sound mind and competent to contract.