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Generally issues of guardianship arise as the result of trauma or tragedy. For children, guardians are sought after parents die or when they are unable to provide care. For the elderly or infirmed, guardians are appointed by courts when individuals are unable to take care of themselves. This pertains to personal or financial needs. Sometimes guardians are appointed for individuals with special needs to assist them with making personal or monetary decisions. Recently, however, news outlets have reported another, less conventional impetus for guardianship: Tuition.
It has been reported that certain parents, particularly in the State of Illinois, have petitioned courts to transfer legal guardianship to third parties in order to better situate their children for financial aid scholarships at colleges and universities. In these jurisdictions, the laws for the transfer of guardianship are broad, if not vague. In certain jurisdictions, a petition for guardianship may be granted with little evidence of rationale or reason as to why a guardianship of a minor, with living and able parents, is needed. The guardianship may even be on the brink of adulthood — that is, junior and senior years of high school — when college applications are filed.
Certain universities, like the University of Illinois at Urbana-Champaign, discovered a trend in students applying with legal guardianships and in response have intensified their review of applications, as has the Department of Education. This particular action of transferring guardianship means that in reviewing a financial aid application, only the student child’s earnings are considered. The family’s wealth or asset level are not part of the analysis as to a financial aid reward. Apparently families have been known to consult with certain college preparation firms to learn these kinds of strategies for savings.
Those in defense of such a guardianship, in order to receive financial aid, argue that it is in the “best interest” of the child. The rationale is that financial aid packages will allow students to afford the best universities. The Department of Education counters that because a child under a legal guardianship continues to receive medical and financial support from her parents, it is not a true guardianship under the spirit of the law and she is still considered a dependent student.
The use of guardianship for financial aid is not the first time the law has been used to change relationships for economic gain. Historically, for inheritance purposes, many have used adoption in order to give legal standing to individuals so that they may having standing as “heirs.” Standing means the ability to contest a will and to have notice of any wills filed. It also means that if there is no will, the next-of-kin receives the estate pursuant to the intestate statutes.
In Minary v. Citizens Fidelity Bank & Trust Co. (1967), a woman was adopted by her husband in order to receive a share as an “heir” from her husband’s mother’s estate. The Kentucky appellate court did not recognize her as an heir, reasoning that her impetus for the adoption was to take under the estate. Allowing the adoption, the court held, would “thwart the intent of the ancestor whose property is being distributed and cheat the rightful heirs.
At one time, the practice of adult adoption was common amongst same-sex couples, prior to the legalization of same-sex marriage. Adopting a partner made individuals into next-of-kin and situated survivors in the courts, able to defend decedents’ wills against more distant family or contest estate plans that excluded them. In many cases, it also saved on inheritance taxes, creating a family relationship between decedent and beneficiary. The created familial relationship also gave standing to the new relative to be included in health care decisions.
Arguably, the impetus in Minary was different than the same-sex couple adoption cases. In the latter, individuals were denied the right to marry and so they used the law to be treated with the same rights as any surviving spouse. In Minary, it seems that the law was being used to frustrate a third party’s plans for the disposition of her estate. In cases of adult adoption or in the instant matter, transfer of guardianship, it is important to look not only at the purpose, but at the effect. When guardianships are transferred, those who might not qualify for financial aid with their natural guardians suddenly do. Perhaps their awards take away from other students who naturally qualify for financial aid and whose parents cannot afford a consultant.
It is well-known that the law allows individuals to use planning strategies in order to save money or qualify for governmental programs. In the practice of trusts and estates and elder law, this occurs frequently with tax and Medicaid planning. While technically legal, it is imperative to look at who is impacted directly from the guardianship proceeding. No one doubts that parents’ efforts to gain financial aid are for the ultimate best interest of getting children college educations, however, it should not be at the expense of others, or at the expense of the guardianship law itself, whose intent is to protect those who are most vulnerable.
Cori A. Robinson is a solo practitioner having founded Cori A. Robinson PLLC, a New York and New Jersey law firm, in 2017. For more than a decade Cori has focused her law practice on trusts and estates and elder law including estate and Medicaid planning, probate and administration, estate litigation, and guardianships. She can be reached at cori@robinsonestatelaw.com.