The Guardian's Fund: What Happens When a Child Inherits Money
A parent dies. There is a policy, or a share of a house, or a bank account, and the children are eight and eleven. The surviving parent assumes the money will come to them to raise the children with.
Usually it will not. It goes to the Master of the High Court, into something called the Guardian's Fund, and it stays there until each child turns eighteen.
That is not a penalty and it is not anybody's error. It is section 43 of the Administration of Estates Act 66 of 1965 doing what it was designed to do — protecting a child's inheritance from being spent by the adults around them. But it has consequences that families are rarely warned about, and two of them have hard deadlines attached.
Why the money goes to the Master
Section 43 sets up a default and an exception.
The natural guardian of a minor is
"entitled to receive from the executor for and on behalf of the minor, any movable property to which the minor is … entitled"
so the surviving parent is not excluded on principle. But section 43(2) attaches a condition to money:
no money shall be paid to the guardian unless payment of that sum "or payment, in default of delivery, of the value of such movable property … to the minor … has been secured to the satisfaction of the Master"
In other words, a parent can receive the child's money only against security acceptable to the Master. In practice that means a bond of security, which costs money and which most surviving spouses cannot readily provide.
And section 43(6) supplies the default where security is not furnished. An executor
"shall pay into the hands of the Master any money to which any minor … is entitled according to any liquidation or distribution account"
with the Court retaining a discretion to exempt the executor where the terms of the will justify it.
So the sequence is: the estate is wound up, the liquidation and distribution account shows what the minor takes, and unless the natural guardian has given security or the will provides otherwise, the money goes to the Master.
What the Fund does with it
The Guardian's Fund holds the money until the child is entitled to claim it, and it pays interest. Section 88 sets the rate:
"the rate per annum determined from time to time by the Minister for Justice and Constitutional Development, in consultation with the Minister of Finance"
Interest runs from the first day of the month following the month in which the Master received the money.
We are deliberately not publishing a rate here. It is set administratively and changes, and a figure quoted as though it were fixed would mislead someone making a decision about a child's inheritance. Ask the Master's office holding the money what the current rate is — and ask in writing.
What matters more than the rate is the limit attached to it.
The two deadlines nobody mentions
Interest stops after five years. Section 88 provides that no interest accrues beyond five years after the money becomes legally claimable, unless it is legally claimed before that expiry.
Read that against the ordinary sequence. A child turns eighteen. The money becomes claimable. Nobody tells them, or they are told and do not get round to it, or the family has moved and the Master's letter goes nowhere. Five years later — at twenty-three — the money stops growing. It is still theirs. It simply stops earning.
After thirty years it is gone. Section 92:
"Any money in the guardian's fund … which has remained unclaimed by the person entitled thereto for a period of thirty years … shall be forfeited to the State."
Thirty years sounds like a comfortable margin until you consider who these beneficiaries are. A child orphaned at six, raised by relatives, possibly unaware that an inheritance exists, is thirty-six when the money is forfeited. There is no requirement that anyone successfully find them.
The Master publishes lists of unclaimed money, and the Department of Justice maintains a searchable facility. If there is any possibility that a deceased relative left something to you or to a sibling as a child, it costs nothing to search.
Getting the money out
Two routes exist while the child is still a minor.
Maintenance payments. The Fund can make payments for a minor's maintenance, education and related needs, on application by the guardian, tutor or curator. This is the provision that matters most to a surviving parent who is suddenly raising children on one income while the children's own inheritance sits at the Master. It is an application with supporting proof of the expense — school fees, medical costs — not an allowance that arrives automatically.
On majority. When the child turns eighteen, the capital becomes claimable by them directly.
The paperwork each Master's office requires differs and is administrative practice rather than statute, so ask the office holding the money what it wants rather than assembling documents on the strength of a checklist from the internet.
The alternative: a testamentary trust
Everything above is the default that applies when a will is silent. A will can displace it.
A testamentary trust — a trust created by the will itself — takes the child's inheritance out of the Guardian's Fund route entirely. The trustees you name hold and invest the money, on the terms you set, for the beneficiaries you name, until the age you choose. That last point is worth pausing on: the Guardian's Fund pays out at eighteen, and eighteen is young to receive a lump sum.
The trade-offs are real. A trust costs money to administer and needs trustees who will actually do the work. The Guardian's Fund costs nothing to run and is about as safe as money gets. For a modest inheritance the Fund may genuinely be the better answer.
But the decision should be made deliberately, in the will, rather than arrived at by silence — and it is one of several reasons the document has to be valid in the first place. Our guide to intestate succession sets out what happens when there is no will at all, and winding up a deceased estate and executor fees cover the process the money passes through on its way to the Master.
What to do
If you have minor children and no will, understand that the default is the Guardian's Fund and a payout at eighteen. Decide whether that is what you want.
If you are a surviving parent whose children's inheritance has gone to the Master, ask about maintenance payments rather than assuming the money is untouchable until they turn eighteen. Keep the proof of what you spend on them.
If you are turning eighteen, or you know someone who is, claim promptly. Interest stops five years after the money becomes claimable.
If a relative died when you were a child and you have never accounted for an inheritance, search the unclaimed money lists. Thirty years is the outer limit, and it is not as far away as it sounds.
Frequently asked
My spouse died and left everything to our children. Why can't I have the money? Because section 43(2) requires payment to a natural guardian to be secured to the Master's satisfaction. Without that security, section 43(6) sends the money to the Master.
Does the Guardian's Fund pay interest? Yes, at a rate the Minister for Justice determines in consultation with the Minister of Finance, running from the first day of the month after the Master received the money. Ask the Master's office for the current rate.
Can I get money out for school fees? The Fund can make payments for a minor's maintenance and education on application. It is an application with proof, not an automatic allowance.
When does my child get the capital? When they reach majority, at eighteen — unless a will created a trust with different terms.
Is there a deadline to claim? Two. Interest stops accruing five years after the money becomes legally claimable unless claimed before then, and money unclaimed for thirty years is forfeited to the State under section 92.
How do I find out whether there is money waiting for me? The Master publishes lists of unclaimed moneys and the Department of Justice maintains a search facility. Searching costs nothing.
How do I avoid the Guardian's Fund entirely? By creating a testamentary trust in a valid will, naming trustees and setting the age at which your children inherit. Weigh the administration cost against the benefit before assuming a trust is always better.
