When someone can’t manage their own finances, a court may appoint a guardian to oversee that person’s assets. This usually happens when the person is mentally incapacitated or otherwise unable to handle money. Once a financial firm receives the proper court appointment documents, it opens a guardianship account. The person’s assets are placed into that account, and only the court-appointed guardian is allowed to manage them.
Guardianship accounts are also a type of fiduciary account, meaning the guardian must act in the best interest of the account owner. Like custodial accounts, guardianship accounts must avoid risky investment strategies, including short sales, margin, and some option strategies.
Sign up for free to take 5 quiz questions on this topic