Entrepreneurs often pride themselves on their independence. The ability to make decisions, take risks, and build something from the ground up is the essence of business ownership. But what happens if something unexpected occurs—an accident, an illness, or a legal ruling that places someone under guardianship? Can a court-appointed guardian take control of your business, bank accounts, or major financial decisions?

This is a crucial question, especially for business owners, freelancers, and entrepreneurs who rely on their decision-making abilities to keep their ventures running. In Texas, guardianship laws can have a significant impact on an individual’s financial and business affairs. If a court determines that someone is legally incapacitated—whether due to age, disability, or other circumstances—a guardian may be appointed to manage their personal and financial matters, including their business interests.

For business owners, the implications of guardianship can be far-reaching. Who controls the company’s finances? Can a guardian sell assets? What happens if you disagree with the guardian’s decisions? Understanding Texas guardianship laws is essential for protecting both your personal independence and the business you’ve worked so hard to build.

What Is Guardianship, and When Does It Apply?

Guardianship is a legal arrangement in which a court appoints an individual (the guardian) to manage the personal and/or financial affairs of another person (the ward) who is deemed legally incapacitated. The person under guardianship may no longer have the legal authority to make significant decisions about their own life, finances, or business.

Texas courts do not grant guardianships lightly. To appoint a guardian, a court must determine that the individual is unable to manage their own affairs due to mental or physical incapacity. This can happen in cases involving:

• Age-related incapacity, such as dementia or Alzheimer’s
• Serious injury, like a traumatic brain injury from an accident
• Mental health conditions that impair decision-making
• Developmental disabilities that prevent someone from managing finances
• Other legal incapacities, including being declared incompetent in a legal proceeding

When a guardian is appointed, the individual may lose some or all of their rights to make decisions about their property, finances, and business ownership. This means that if you own a business and become incapacitated, a guardian could step in and take control—sometimes with consequences that may not align with your original vision.

Can a Guardian Control Your Business?

The short answer is yes, a guardian can take control of your business ownership, but the extent of that control depends on the type of guardianship granted by the court. Texas law recognizes different types of guardianship, and the level of control varies based on the specifics of the case.

Guardianship of the Estate: Full Financial Control

If a guardian is appointed over your estate (meaning your financial assets, including your business), they will have broad authority over your company’s operations. This can include:

• Managing business bank accounts
• Paying business expenses and taxes
• Signing contracts or legal documents on your behalf
• Hiring or firing employees
• Making financial decisions, such as whether to expand, downsize, or even close the business

In extreme cases, a guardian may even sell the business if they believe it is in the ward’s best financial interest. However, the guardian must seek court approval before making major financial decisions, such as selling real estate or transferring significant business assets.

Guardianship of the Person: Limited Business Control

If a guardian is appointed only over personal affairs, their control over the business may be more limited. They may help with healthcare decisions, living arrangements, and daily needs, but they may not have direct authority over business ownership matters unless explicitly granted by the court.

However, if an entrepreneur is also the sole decision-maker in their company (such as a single-member LLC or sole proprietorship), their personal incapacity could still create a leadership vacuum, affecting the business’s ability to operate.

What If You Disagree with a Guardian’s Business Decisions?

A guardian is legally obligated to act in the best interest of the ward. But what happens if their definition of “best interest” clashes with what’s best for the business?

For example, what if a guardian decides to sell the business because they think it’s too stressful for the ward to manage? Or what if they refuse to invest in necessary upgrades, causing the company to struggle?

Texas law provides some checks and balances in these situations:

• Court Oversight – The guardian must file financial reports and seek court approval for major decisions, ensuring that actions taken are justified.
• Challenges and Appeals – Family members, business partners, or even the ward themselves (if capable) can petition the court to review or reverse a guardian’s decision.
• Business Protections – If the business is structured properly (such as with a trust or legal agreements in place), a guardian’s power can be limited in advance.

Protecting Your Business Before Guardianship Becomes an Issue

No entrepreneur expects to end up in a situation where they lose control over their business ownership, but unexpected events happen. The best way to safeguard your hustle is to put legal protections in place before you ever need them.

1. Set Up a Power of Attorney

A power of attorney (POA) allows you to name someone you trust to make financial decisions on your behalf if you become incapacitated. Unlike guardianship, which requires a court proceeding, a POA can be set up in advance to ensure that your business is managed by someone you choose—not a court-appointed guardian.

• A general POA can give broad authority over business and financial decisions.
• A limited POA can restrict powers to specific tasks, such as signing contracts or managing payroll.

2. Consider a Business Trust or Succession Plan

For business owners with valuable assets, placing the business in a trust can protect it from guardianship interference. A properly structured trust allows control to pass to a designated trustee (such as a family member or business partner) without court involvement.

A business succession plan is also critical, especially for entrepreneurs running sole proprietorships or family businesses. A written plan detailing who takes over the business in the event of incapacity can help ensure continuity and prevent unwanted guardianship involvement.

3. Keep Business and Personal Assets Separate

Many small business owners commingle their personal and business finances, which can make it easier for a court-appointed guardian to step in and assume control over everything. Keeping separate business bank accounts, forming an LLC, or incorporating can help protect business assets from personal guardianship rulings.

Final Thoughts: Guardianship and the Entrepreneur’s Freedom

Being your own boss comes with a sense of control and freedom that many wouldn’t trade for anything. However, life’s uncertainties mean that even business owners should plan for the possibility of incapacity. Texas guardianship laws allow for significant interference in a person’s financial and business affairs, which can be a major issue if no legal protections are in place.

For entrepreneurs, the best defense is a strong offense—estate planning tools like powers of attorney, trusts, and clear business succession plans can help ensure that a court-appointed guardian never has the final say over your business. By taking action now, you can safeguard your legacy and ensure that your hustle remains yours—no matter what happens.