In Texas, guardianships are designed to protect vulnerable individuals who are unable to make important decisions due to disability, age, or incapacity. A guardian—whether appointed by the court as a guardian of the person, estate, or both—assumes responsibility for managing a ward’s affairs. As freelance and gig economy jobs grow increasingly common, many wards may have income from independent work. However, guardians must carefully navigate complex rules and ethical considerations in managing these incomes, especially when they arise from non-traditional sources like the gig economy. This article examines the legal, financial, and ethical landscape surrounding guardianship and freelance income management for wards in Texas, along with strategies and considerations for guardians.

The Gig Economy: Context and Challenges

What Is the Gig Economy?

The gig economy includes freelance, contract, and temporary work that operates outside traditional employment structures. This economy spans sectors such as ride-hailing (e.g., Uber, Lyft), food delivery (e.g., DoorDash, Grubhub), freelance digital services (e.g., Upwork, Fiverr), and creative freelancing. Gig economy work offers flexibility, allowing individuals to work on their own schedules and often from their preferred location.

Why Wards Participate in the Gig Economy

For some wards, gig work provides opportunities to exercise skills, earn income, and engage in society in a way that builds independence and confidence. However, these flexible jobs also lack the security and protections associated with traditional employment, creating challenges for guardians who must balance the ward’s autonomy and financial protection.

Guardianship in Texas: Types and Duties

In Texas, guardianship is governed by the Texas Estates Code and offers several guardianship types, including:

• Guardian of the Person: Manages personal care, medical, and residential decisions for the ward.
• Guardian of the Estate: Handles the ward’s financial assets, property, income, and other fiscal matters.
• Guardian of the Person and Estate: A combined role where the guardian has both personal and financial responsibilities.

Guardians are held to a fiduciary standard, meaning they must act solely in the ward’s best interests, prioritizing their needs, rights, and autonomy wherever possible. This can create unique complexities when dealing with gig economy income.

Legal Responsibilities in Managing Freelance Income

1. Understanding Court Authority and Approval

Managing a ward’s freelance income involves abiding by both Texas state law and court orders. Guardians must often seek court approval for any substantial financial decisions, which can include handling income earned through freelance and gig work. The court’s role is to prevent financial abuse and ensure funds are used appropriately to benefit the ward.

• Income Reporting: Guardians must report all income to the court, including freelance and gig earnings.
• Expense Management: Courts may require that any expenses related to the ward’s gig work be carefully documented and justified.

The guardian must ensure that income from freelance work does not jeopardize public assistance, such as Medicaid or Supplemental Security Income (SSI), which may have strict income limitations. When income reporting and expense management do not align with guardianship standards, guardians could face legal consequences.

2. Addressing Tax Implications

Gig economy income generally falls under self-employment, making the ward liable for specific tax obligations. A guardian should work with a tax professional to ensure:

• Self-Employment Taxes: These must be accounted for, as freelancers are responsible for Social Security and Medicare taxes.
• Quarterly Estimated Payments: To avoid penalties, wards may need to make estimated tax payments throughout the year.
• Deductions: If the ward incurs expenses related to freelance work (e.g., equipment, travel), these can sometimes be deductible, which may lessen their tax burden.

Texas does not have a state income tax, but federal tax implications must be carefully managed by the guardian.

3. Protecting Benefits Eligibility

Many wards rely on public benefits with strict income and asset limitations. Earnings from freelance work can disrupt benefits eligibility, requiring guardians to carefully track income to avoid unintentionally disqualifying the ward. This often involves:

• Income Threshold Management: Guardians must work with financial professionals to monitor the ward’s income levels and ensure compliance with benefit thresholds.
• Trust Accounts and ABLE Accounts:Special accounts, like Supplemental Needs Trusts or ABLE accounts, may allow guardians to hold earnings without disqualifying the ward from benefits. Income can be directed here to shield assets from affecting means-tested benefits eligibility.

Ethical Considerations in Managing Gig Economy Income

1. Supporting the Ward’s Autonomy

While the guardian has authority over the ward’s income, preserving the ward’s independence and agency is essential. If the ward expresses a desire to engage in freelance work, the guardian should support this goal when feasible, provided it does not jeopardize the ward’s well-being.

2. Transparent Communication

Transparency is crucial in ensuring the ward understands their income and financial standing. Guardians should aim to:

• Provide clear explanations of any restrictions or financial decisions related to gig income.
• Include the ward in discussions about managing income to the extent possible, fostering trust and participation.

3. Avoiding Exploitation Risks

Guardians should avoid exploitation by ensuring that the ward’s earnings are directed towards legitimate and beneficial expenses. Guardians must also avoid pressuring the ward into gig work solely to generate income for expenses that should otherwise be covered by the guardian.

Practical Strategies for Guardians Managing Gig Economy Income

1. Developing a Budget

Creating a comprehensive budget that includes freelance income, tax obligations, and allowable expenses can guide the guardian in managing funds responsibly. Key components should include:

• Income Tracking and Reporting
• Expense Monitoring: Including legitimate deductions and necessary expenses.
• Allocation for Taxes and Savings: Managing taxes and setting aside funds for future needs is critical.

2. Working with Financial and Legal Advisors

Given the complexities of guardianship and gig income, guardians should consult legal and financial advisors to ensure they adhere to best practices, including:

• Estate Planning Professionals: To explore options such as special needs trusts and ABLE accounts.
• Certified Public Accountants (CPAs): For tax planning, particularly regarding self-employment tax.
• Legal Counsel: Especially if the ward’s income significantly impacts their benefits eligibility or court approvals.

3. Leveraging Financial Tools and Software

Financial tools can simplify record-keeping and compliance with court and tax requirements:

• Freelance Accounting Software: Programs like QuickBooks and Wave can help guardians manage freelance income and expenses.
• Bank Accounts: Maintaining separate accounts for personal and freelance income can streamline budgeting and reduce risk of mismanagement.

Conclusion

Managing freelance income for wards in Texas within the gig economy requires a careful balance of legal compliance, ethical considerations, and financial acumen. Guardians play a pivotal role in enabling their wards to participate in meaningful work opportunities while safeguarding their financial interests and public benefits. By understanding guardianship responsibilities, consulting professionals, and using financial management strategies, guardians can help their wards navigate the complexities of gig economy earnings effectively and responsibly.