A complete guide to guardianship and inheritance in Australia

If you're a parent, you are likely always thinking about your kids' future. It's a constant juggle of school lunches, saving for their first car, and generally trying to set them up for a good life. But there's one piece of the puzzle that often gets postponed, and it's arguably the most important one: who would look after them if you couldn't?

This is where guardianship and inheritance in Australia comes in. It’s not just about who gets the money. It's about making sure your kids are raised by someone you trust, in a home that feels right. If you don't have a plan written down in a proper Will, a court has to make that significant decision. That can be a slow, stressful process for your family and might lead to a choice you wouldn't have made yourself.

This guide will walk you through the process, covering what a guardian does, how to pick one, and how to make sure their inheritance is managed properly so they're always looked after.

Understanding testamentary guardianship and inheritance in Australia

Let's clarify the terminology. A "testamentary guardian" is the official name for the person you choose in your Will to take care of your children if you pass away before they're 18.

According to the federal Family Law Act 1975, this person is responsible for all the major life decisions you'd normally make. This includes their health, schooling, religious upbringing, and general wellbeing. They are essentially stepping into your shoes to guide your child.

It is important to note, however, that naming someone in your Will is a very strong statement of your wishes, but it's not a 100% guarantee. The Family Court can overrule your choice if someone challenges it. The court's primary role is to do what's in the "best interests of the child", so their welfare will always be the top priority. A solid Will gives the court clear direction, but the child's needs come first.

It's also good to remember that a guardian isn't the same as an executor. The guardian is focused on the child's personal care. The executor, sometimes called a trustee, is the one who handles the money and the inheritance you've left behind. These are two distinct and crucial roles.

How to appoint a legal guardian

Appointing a guardian involves two key steps: choosing the right person and then making the appointment legally official.

Choosing the right person

This is a significant decision that requires careful consideration. It’s not just about picking your best friend or closest sibling. You need to find someone who can give your children a stable and loving home.

Here are a few things to think about:

• Values and parenting style: Do they see eye-to-eye with you on important topics like education, religion, and discipline? You want someone who will raise your kids in a way you'd be happy with.
• Age and health: Are they young and healthy enough to keep up with the demands of raising children, which could be for many years?
• Financial stability: Your child’s inheritance is there to support them, but you don't want to put your chosen guardian under significant financial pressure. Can they handle the extra responsibility without it causing them problems?
• Relationship with your children: It’s a huge help if you can choose someone your kids already know and trust. That existing bond can make a massive difference during a difficult time.
• Location: If your guardian lives in another city, your kids would have to move, change schools, and leave their friends. It's worth considering how much of an upheaval that would be.

The most important step is to have an open discussion with the person you're considering. Estate planning experts always say you have to confirm they are willing and able to accept this significant responsibility before you put them in your Will. This avoids a situation where they are caught off guard or feel they cannot take on the role when the time comes.

Making the appointment legally sound

Once you’ve found your person and they’ve agreed, you need to make it official. The only way to do that is by clearly naming them in a legally valid Will. A verbal promise or an informal note is not legally sufficient.

It's also a good idea to have a backup plan. Appoint your main guardian and then at least one substitute. That way you're covered if your first choice can't take on the role for any reason.

If you want to give your guardian more personal direction, you could write a non-binding "letter of wishes" to go with your Will. It's not a legal document, but it's a place for you to share your thoughts on parenting, your values, and your dreams for your kids. It can be a helpful guide for the person raising them.

Online platforms like Willfully can guide you through the specific clauses you need so nothing gets missed. A benefit of using Willfully is that every Will is checked by an Australian lawyer. One customer, Priya M., mentioned that the lawyer review "flagged a specific detail about my guardianship wishes I hadn't considered," which provided peace of mind that her choice was properly set up.

How guardianship and inheritance work together

Appointing a guardian handles your child's personal care. But what about their financial future? That's where inheritance comes in, and it's looked after by someone in a different role: the trustee.

The trustee’s role in managing your child’s inheritance

Here's a key legal point: in Australia, anyone under 18 can't inherit assets directly. You can't just leave a house or a sum of cash to a 10-year-old.

Instead, any inheritance you leave for your child is held in a trust, which might be called a Minor's Trust or a Testamentary Trust. This trust is managed by someone you name in your Will, called the trustee. Often, the executor of your Will is also the trustee.

The trustee's job is to look after the inheritance until your child is old enough to receive it. In the meantime, they release money to the guardian for the child's "maintenance, education, and advancement." This can cover various child-related expenses such as school fees, medical bills, and clothing. It's meant to directly support the child, not pay for the guardian's general household bills or a family holiday.

In your Will, you get to decide when your child receives the rest of their inheritance. They're legally an adult at 18, but many parents feel that's a bit young to handle a large amount of money. You can set the age at 21, 25, or older.

Should the guardian and trustee be the same person?

This is a question that comes up a lot, and there's no single correct answer. You can appoint the same person for both roles, but it's worth weighing the pros and cons.

Many people separate the roles to create a natural system of checks and balances. The guardian handles the day-to-day care, and the trustee keeps an eye on the finances. This can help avoid any potential conflicts of interest and means there are two people looking out for your child.

Here’s a simple table showing their different jobs:

Having the same person do both can make communication easier, since the caregiver is also managing the money. But appointing different people helps ensure financial decisions are made with more objectivity. The main thing is to pick responsible people who can work together, always putting the best interests of your child first.

The role of public bodies like the Public Trustee can also come into play, especially in complex situations or when a Will is unclear. The system can be difficult to navigate, and understanding its potential pitfalls is crucial for ensuring your wishes are followed. This video from ABC News provides an in-depth look at how the guardianship system operates in Australia and why having a clear, private plan is so important.

Common legal questions

Estate planning can bring up a lot of "what if" questions. Here are some answers to the common ones about guardianship and inheritance in Australia.

What if the other parent is still alive?

The process is generally straightforward in this case. If your child’s other parent is still alive and has parental responsibility, they will almost always be the one to care for the child. A guardian you name in your Will usually only steps in if both parents have passed away, overriding a guardian appointment made by the first parent to die.

You can appoint a guardian to act jointly with the surviving parent, but that can become complicated. If they disagree on things, the Family Court would have to intervene. Your Will just acts as a record of what you would have preferred.

What happens if no guardian is appointed?

If you die without a Will (this is called dying intestate) or you have a Will but forgot to name a guardian, the decision about who raises your kids is left up to the court.

The court will have to decide what's best for your children based on who applies for guardianship. This process can be long, expensive, and difficult on a family that's already grieving. It can cause disputes between family members, leaving your children in a state of uncertainty when they need stability more than ever. A Will is the only way to make your wishes known and guide the court.

Can a guardianship appointment be challenged?

Yes, it can. Any family member can challenge your choice of guardian in the Family Court, and the court will review everything.

It's important to know that the court's decision is not about who is right or wrong. It is based on what is in the "best interests of the child". This is why having a clear, well-thought-out, and legally valid Will is so important. It shows you've carefully considered your choice, and that carries a lot of weight in court.

Using a service like Willfully, where a professional lawyer reviews your document, helps make sure your Will is clear and robust. This strengthens your wishes and makes it more likely your chosen guardian will be appointed if a challenge ever comes up.

Secure your children’s future with a clear plan

Planning for what happens when you're not around is one of the most loving things you can do for your kids. Naming a guardian to care for them and a trustee to manage their inheritance is a huge part of any parent's estate plan.

To recap: the guardian is the caregiver, and the trustee is the money manager. By clearly setting out both roles in your Will, you're replacing guesswork with a stable plan. Leaving it up to the courts can create conflict and instability for your children at the worst possible time.

By taking a little time now to create a Will, you're giving your family the gift of certainty and giving yourself some much-needed peace of mind.

Take the next step with Willfully

Creating a legally valid Will is one of the most important things you can do for your family. With Willfully, you can appoint guardians and trustees for your children in about 20 minutes, right from your own home.

Our online platform makes it simple and affordable at just $159.99. And importantly, every single Will is reviewed by a qualified Australian lawyer to make sure it's legally binding and meets all the requirements in your state.

Your plan also comes with 12 months of free edits, so you can easily update it if your life changes. Plus, all your information is protected with bank-level AES-256 encryption.

Don't leave your children's future up in the air. Get started today and get the peace of mind that comes from knowing they'll be looked after, no matter what.

Frequently Asked Questions

What is the first step in planning for guardianship and inheritance?

The first and most important step is to create a legally valid Will. This is the only document where you can officially name a guardian for your children and outline how their inheritance should be managed.

Can I name two people as joint guardians?

Yes, you can appoint a couple or two individuals to act as joint guardians. However, it's wise to consider how they would make decisions together and what would happen if they separated. It's also a good idea to name a backup guardian.

How does superannuation fit into inheritance for my children?

Your superannuation doesn't automatically form part of your estate. To ensure it's included in your children's inheritance, you need to make a binding death benefit nomination with your super fund, directing the funds to your estate. The trustee you appoint in your Will can then manage these funds for your children.

What is the biggest mistake people make with guardianship and inheritance?

The biggest mistake is not making a Will at all. Without one, the courts decide who will raise your children and manage their finances. This can lead to family disputes and an outcome you never would have wanted.

Do I need a lawyer, or can I use an online service?

While you can consult a lawyer, modern online platforms like Willfully offer a reliable and affordable alternative. Willfully guides you through appointing a guardian and trustee, and every Will is reviewed by a qualified Australian lawyer to ensure it's legally sound.

How often should I review my guardianship arrangements?

It's a good idea to review your Will every few years or after any major life event, such as the birth of another child, a divorce, or if your chosen guardian's circumstances change. This ensures your wishes remain up-to-date.