What is the difference between a guardianship and a trust?

A guardianship and a trust both involve taking care of someone’s finances and welfare. However, there are some key differences between them. In Virginia, guardianship is a legal arrangement established through a court proceeding known as an “adjudication of incapacity” in which a person is declared legally incapable of managing their own finances or taking care of their own needs due to age or disability. The guardian is then responsible for making decisions about the person’s finances and welfare that are in the best interests of the individual. Trusts are transfers of property, usually money, to a third party or trust company. Under a trust, the person creating the trust (the grantor) transfers money or assets to a trust, and the trust company is then responsible for managing and distributing the trust funds for the benefit of the grantor or other individuals, as outlined in the trust document. In summary, while both guardianships and trusts can be used to manage someone’s finances and welfare, there are distinct differences between the two. A guardianship is established through a court proceeding and gives a guardian decision-making authority over the individual’s needs and finances. A trust, however, transfers money or assets to a trust company or other third party and the trust document outlines how the trust funds will be distributed.

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What is the difference between a guardianship and a trust?

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