5th DCA: Can a guardian for a minor ward create an annuity that restricts the ward's access to her assets even after turning 18?
Hancock v. Share, --- So.3d ----, 2011 WL 2650887 (Fla. 5th DCA July 8, 2011)
A guardian appointed by the court to take care of a minor child may act on behalf of the ward’s person or property, within certain statutorily defined limits. An important limitation is found in F.S. § 744.361(6)(c), which requires that the guardian, “[a]t the termination of the guardianship, deliver the property of the ward to the person lawfully entitled to it.” In other words, the guardian must hand over the property when the ward turns 18.
However, it's not always so simple. As estate planners know, management of assets may involve long term effects, and actions that a guardian takes during the period of minority may affect the ward’s ability to access the assets after turning 18. For instance, does putting cash into an annuity, which can't be accessed immediately upon the ward turning 18, violate F.S. § 744.361(6)(c)?
In this case, after a settlement of a personal injury lawsuit, the ward’s mother, acting as guardian for her daughter, petitioned the trial court to put the proceeds of the settlement into an annuity that was payable over the next 27 years. The trial court denied the petition because the ward would not be able to access her money immediately upon turning 18:
After hearing a summary of the terms of the proposed settlement agreement, the trial court asked counsel whether the minor would be able to “get her cash out of the annuity when she turns 18”. Counsel replied, “no”.
The trial court entered an order approving the settlement of the minor's personal injury lawsuit, but refusing to authorize the purchase of a structured settlement annuity. The order reads:
The Court denies the guardian's request for authority to purchase an annuity contract for the benefit of the minor child payable beyond the age of majority. The Guardian of the property has no authority to bind the assets of the ward beyond the age of majority pursuant to Florida Statute 744.441(19); Guardianship of Bernstein v. Miller, 777 So.2d 1125 (Fla. 4th DCA 2001).
Because the trial court's order turned on F.S. § 744.441(19), it's worth stopping to read what the statute actually says. (Hint: focus on the statute's limited application to trusts.)
After obtaining approval of the court pursuant to a petition for authorization to act, a plenary guardian of the property... may... create or amend revocable trusts or create irrevocable trusts of property of the ward’s estate which may extend beyond the disability or life of the ward in connection with estate, gift, income, or other tax planning or in connection with estate planning. The court shall retain oversight of the assets transferred to a trust, unless otherwise ordered by the court.
The 5th DCA held that the annuity should have been approved because F.S. § 744.441(21) allows guardians to “[e]nter into contracts that are appropriate for, and in the best interest of, the ward.” The trial court’s reliance on F.S. § 744.441(19) was in error, because that statue applies only to trusts, not annuities. Thus, there is no requirement that the annuity be created in connection with tax planning:
Here, there were no trust documents at issue and, thus, the limitation set forth in section 744.441(19) was not at issue. Instead, the parties in this case submitted a proposed annuity contract which, pursuant to section 744.441(21) of the Florida Statutes, a trial court is authorized to approve, provided that the contract is ‘appropriate for, and in the best interest of, the ward.’ All parties and the trial court agreed that the annuity contract proposed by the parties in this case was in the minor's best interest. In addition, section 744.361(c) does not prohibit the entering into an annuity contract as long as the annuity contract is delivered to the ward at the termination of the guardianship. See § 774.102, Fla. Stat. (2009) (defining property as meaning ‘both real and personal property or any interest in it and anything that may be the subject of ownership.’). Accordingly, the trial court erred in refusing to approve the structured portion of the proposed settlement agreement.