Deceased Estate With Minor Children: The Guardian's Fund and the Alternatives

A minor cannot simply be handed the money

A person under 18 cannot receive and manage an inheritance in their own right. If a child inherits cash and the will makes no other arrangement, the executor pays that money to the Guardian's Fund, which is administered by the Master of the High Court, and it is held there for the child.

This is the statutory default, not a punishment and not a sign that anyone distrusts the surviving parent. It applies even where the surviving parent is the child's sole guardian.

How the Guardian's Fund works

• The money is held by the Master and earns interest at a rate set for the Fund. It is not invested in growth assets, so over a long period it may not keep pace with what a properly invested trust could achieve.
• The guardian can apply to the Master for payments out of the Fund for the child's maintenance, education, medical costs and similar needs. These are applications with supporting proof, decided by the Master, not a facility the guardian can draw on freely.
• The capital is paid out to the child when they turn 18.
• Money left unclaimed in the Fund for 30 years is forfeited to the state, which is why unclaimed Guardian's Fund money is a recurring news story. If you think a family member may have money there, it is worth asking the Master.

The better answer is a testamentary trust

A will can create a trust that takes the child's inheritance instead of the Guardian's Fund. The trustees named in the will manage and invest the money and apply it for the child's benefit according to the terms the testator set.

• The testator chooses the trustees, rather than the money defaulting to a state fund.
• The trust can invest for growth rather than sitting in a single interest-bearing pool.
• The testator can set the age at which capital is handed over, commonly 21 or 25 rather than 18.
• The trust can be given discretion to pay for education, health and maintenance without a separate application each time.
• The trade-off is cost and administration. A trust has trustees to pay, annual accounts, and its own tax treatment, so for a small inheritance the Guardian's Fund may genuinely be the more sensible route.

This is a will-drafting decision. It has to be made before death, which is the point worth passing on to anyone with young children who has not made a will.

Immovable property inherited by a minor

Property is different from cash. A minor can own immovable property, and it is registered in the child's name with the guardian assisting. What the guardian cannot do is sell or mortgage it freely. Dealing with a minor's immovable property generally requires the Master's consent, or a High Court order above the value limit at which the Master's consent suffices.

Practically, this means an inherited house cannot be quietly sold to fund the family's living costs. The consent process exists precisely to prevent that.

The guardianship question itself

A will can nominate a guardian for minor children. The nomination is influential but not binding on a court, which decides on the best interests of the child. Where there is a surviving parent with guardianship rights, those rights ordinarily continue and the nomination in the will takes effect only if there is no surviving guardian.

If nobody is nominated and there is no surviving parent, the High Court, as upper guardian of all minors, appoints a guardian.

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