Guardianship happens when an individual is not able to take care of their own financial assets. A guardian is assigned to help them manage their assets for their own benefit. As someone ages, for instance, they may not be mentally capable of managing their home or their estate. A guardian would keep the bills paid and the estate maintained, to ensure that the person isn’t losing the value of their property.
Guardianship can be a delicate process, as it’s important that a trustworthy individual be assigned. The guardian doesn’t take the individual’s assets, they merely control them; the assets remain under the individual’s social security number or EIN. Guardianship can also occasionally be temporary. If someone has a temporary illness that they need to recover from, a guardian may be elected until they have fully recovered.
Understandably, guardianship is mostly a legal issue. The IRS does not need to know about guardianships, but guardians need to function within legal bounds and have the appropriate legal paperwork filed. When done properly, this allows the individual to be enriched and benefit from their assets without having to manage it.