{"id":7612,"date":"2023-08-25T12:26:46","date_gmt":"2023-08-25T10:26:46","guid":{"rendered":"https:\/\/dotnewsconnect.co.za\/law\/?p=7612"},"modified":"2026-09-25T14:25:41","modified_gmt":"2026-09-25T12:25:41","slug":"how-to-protect-your-childrens-inheritances-from-ending-up-in-the-guardians-fund","status":"publish","type":"post","link":"https:\/\/dotnewsconnect.co.za\/law\/2023\/how-to-protect-your-childrens-inheritances-from-ending-up-in-the-guardians-fund\/","title":{"rendered":"How to Protect Your Children\u2019s Inheritances from Ending Up in the Guardian\u2019s Fund"},"content":{"rendered":"<blockquote><p>\u201cLive each day as if it were your last\u2026 because one day, you\u2019ll be right.\u201d (Benny Hill)<\/p><\/blockquote>\n<p>It\u2019s always tempting to procrastinate about decisions that force us to address the inevitability of our own mortality. But we have no choice when it comes to protecting our loved ones after we are gone, because to protect them a will (\u201cLast Will and Testament\u201d) is not a nice-to-have, it\u2019s a necessity. And it\u2019s urgent. No one \u2013 young or old, healthy or ill, wealthy or of limited means \u2013 can guarantee that they\u2019ll be alive tomorrow.<\/p>\n<p>How to structure your will? One potential risk area when it comes to your children\u2019s inheritances is the Guardian\u2019s Fund. The Fund serves a vital purpose, but it has featured regularly in the media over the past few years for all the wrong reasons \u2013 ongoing losses to cybercriminals and fraudsters (the last reported loss was R17m), SIU (Special Investigating Unit) probes into allegations of misconduct and corruption, and the like.<\/p>\n<p>How is that relevant to you? Well, if you have minor children,&nbsp;<strong>it confirms once again that your will should be professionally drawn to avoid any chance of your children\u2019s money ending up in the Guardian\u2019s Fund<\/strong>.<\/p>\n<h6>Dying \u201cintestate\u201d means trusting a State-run entity with your children\u2019s money<\/h6>\n<p>Without a will, you die \u201cintestate\u201d, which means that the law makes your decisions for you. You have lost the right to choose a trusted executor, you have lost the right to specify how your estate is distributed to your loved ones, you have lost the right to nominate a guardian for your children. Perhaps most importantly of all, you have lost the right to protect your minor children\u2019s inheritances as you see fit.<\/p>\n<p>That\u2019s a problem because, unless you leave a will structured to provide a mechanism for looking after your children\u2019s inheritances until they reach majority (i.e. turn 18), those moneys might well end up in the Guardian\u2019s Fund.<\/p>\n<h6>What is the Guardian\u2019s Fund?<\/h6>\n<ul>\n<li>The thought behind the Guardian\u2019s Fund is a laudable one \u2013 it was created to hold and protect money (including inheritances) for minors and other people who are legally incapable of managing their own affairs. For those vulnerable people whose money it safeguards, it performs a most valuable service.<\/li>\n<li>All money is invested with the PIC (Public Investment Commission) and earns interest at a rate set from time to time by the Minister of Finance.<\/li>\n<li>The Fund is audited annually and is managed by the Master of the High Court (actually by one of several Masters around the country, each of whom runs a separate Fund), without charge.<\/li>\n<li>A child\u2019s guardian can approach the local Master to pay over accrued interest (and in need up to R250,000 of the capital) for maintenance needs.<\/li>\n<\/ul>\n<h6>So, what\u2019s the problem?<\/h6>\n<p>Knowing that your children\u2019s money is to be held in an audited, managed-for-free fund administered by independent and senior government officials is certainly a lot less alarming than many of the possible alternatives, but it is by no means ideal &#8211;<\/p>\n<ul>\n<li>The media reports of hacking, theft, fraud, police probes into allegations of misconduct and corruption etc that we mentioned above hardly inspire confidence in the Fund\u2019s ability to manage and protect your children\u2019s inheritances, even if only one or two \u201cbad egg\u201d employees are involved.<\/li>\n<li>Your children\u2019s guardian must jump through all sorts of administrative hoops to draw money for maintenance, education, clothing, medical costs and so on. The delays and dysfunction which reportedly still plague many Master\u2019s Offices won\u2019t help.<\/li>\n<li>As mentioned above, Fund monies are paid a government-fixed rate of interest, currently 4.25% p.a. That\u2019s both below inflation and an unattractive alternative to the earnings potentially available to discretionary funds.<\/li>\n<li>When your children turn eighteen, they are again faced with red tape and bureaucracy before they can access whatever is left of their money.<\/li>\n<\/ul>\n<h6>The best protection?<\/h6>\n<p>The good news is that you can easily protect your vulnerable minor children from all those risks and negatives. These are the two essentials \u2013<\/p>\n<ol>\n<li><strong>Leave a valid will<\/strong>, professionally drawn to protect all your loved ones and in particular those most vulnerable such as your minor children,&nbsp;<strong>and<br \/>\n<\/strong><\/li>\n<li>Make sure that your will nominates a guardian for your children and includes&nbsp;<strong>a mechanism to protect their inheritances<\/strong>&nbsp;so as to avoid any risk of their money having to be paid into the Guardian\u2019s Fund.\n<p style=\"margin-left: 0px!important;padding-top: 10px\">The most commonly advised protection mechanism to avoid that unhappy scenario is a trust \u2013 either an existing trust (if fit for purpose), or a new \u201ctestamentary trust\u201d which will come into existence when you die. The alternative is to provide for the children\u2019s guardians to administer their inheritances for them, but a trust is almost always the better, safer, and more practical option. Either way, make sure that your will\u2019s provisions correctly and clearly set out your wishes in that regard.<\/p>\n<p style=\"margin-left: 0px!important;padding-top: 5px\">Bear in mind that anything to do with trusts of any kind calls for specific professional advice \u2013 there are complex legal, financial and tax considerations involved.<\/p>\n<\/li>\n<\/ol>\n<p><strong>Bottom line \u2013 have your attorney draw your will (or update your existing will) to ensure that your children\u2019s inheritances are properly protected and don\u2019t end up in the Guardian\u2019s Fund!<\/strong><\/p>\n<p><strong>Disclaimer:<\/strong>&nbsp;The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.<\/p>\n<p style=\"text-align: right\">\u00a9 LawDotNews<\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u201cLive each day as if it were your last\u2026 because one day, you\u2019ll be right.\u201d (Benny Hill) It\u2019s always tempting to procrastinate about decisions that force us to address the inevitability of our own mortality. But we have no choice when it comes to protecting our loved ones after we are gone, because to protect [&hellip;]<\/p>\n","protected":false},"author":101014,"featured_media":7613,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[59],"tags":[],"class_list":["post-7612","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wills-and-estate-planning"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>How to Protect Your Children\u2019s Inheritances from Ending Up in the Guardian\u2019s Fund &#8226; LawDotNews<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/dotnewsconnect.co.za\/law\/2023\/how-to-protect-your-childrens-inheritances-from-ending-up-in-the-guardians-fund\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How to Protect Your Children\u2019s Inheritances from Ending Up in the Guardian\u2019s Fund &#8226; LawDotNews\" \/>\n<meta property=\"og:description\" content=\"\u201cLive each day as if it were your last\u2026 because one day, you\u2019ll be right.\u201d (Benny Hill) It\u2019s always tempting to procrastinate about decisions that force us to address the inevitability of our own mortality. 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