Let’s explore the facts about guardianship and ways to avoid this nightmare for ourselves and our loved ones.
Incapacity and Guardianship
The term incapacity, according to the laws of most states means, “an adult whose ability to receive and evaluate information and to communicate decisions in any way is impaired to such a significant extent that he is partially or totally unable to manage his financial resources or to meet essential requirements for his physical health and safety. Note: a person can make foolish or irresponsible decisions and not be deemed Incapacitated; they must be incapable of making sound decisions. When an adult is deemed to be an Incapacitated Person, (sometimes referred to as the Ward), and that person has not previously appointed an agent to manage their affairs by way of legal documents including Durable Financial Powers of Attorney and/or Health Care Durable Powers of Attorney (or Health Care Proxies as referred to in some states), a court must be enlisted to appoint a substitute decision maker called a Guardian, (in some states called a Conservator).
Such a Guardian is only appointed after the Petitioner (a person who wishes to have the Guardianship established) institutes a court proceeding wherein expert witnesses testify as to the alleged Incapacitated Adult’s capacity. Most states will ensure that the alleged incapacitated person also has an attorney representing their interests since the loss of independence is taken seriously by the courts. If they cannot afford to hire an attorney the court will have one appointed.
Who Can Be a Guardian?
The guardian can be any competent adult –a member of the incapacitated person’s family, a friend or even a professional guardian (an unrelated person who has received special training). The guardian need not be a person at all — it can be a non-profit agency or a public or private corporation. In naming someone to serve as a guardian, courts will usually try to choose close family members — people who know the incapacitated person well and are aware of and sensitive to the incapacitated person’s needs and preferences. If two individuals wish to share guardianship duties, courts can name co-guardians.
What is the Guardian’s Role?
Once appointed, the Guardian has the legal responsibility to take care of the affairs of the incapacitated person in accordance with the court order establishing the guardianship. The court order can authorize the Guardian to make legal, financial, and health care decisions for the Incapacitated person. This may include where the Incapacitated person should reside and what medical care he or she should receive. Since every incapacitated person has varying levels of capacity a court will generally favor limited guardianships where only specified areas of decision making are granted to the Guardian. In other words, the guardian may exercise only those rights that have been removed from the Incapacitated person and delegated to the guardian. If the Guardian seeks to make any decision not authorized in the initial court order, the guardian must return to court for approval of these decisions.
Guardians are expected to act in the best interests of the Incapacitated person, but given the guardian’s often broad authority, there is the potential for abuse. For this reason, courts hold guardians accountable for their actions to ensure that they don’t take advantage of or neglect the Incapacitated person.
One of the ways the courts hold Guardian’s accountable is by requiring annual reporting. A Guardian of the property must marshal the Incapacitated person’s property, use prudence in investing the Incapacitated person’s funds so that they can be used for the Incapacitated person’s support, and file regular, detailed reports (usually annually) with the court. Many states also require Guardians to report on the incapacitated person’s status. Guardians must provide details about the incapacitated person’s residential arrangements, health care and treatment, social activities and educational and training programs. Guardians who do not adequately care for the incapacitated person may be removed and replaced by the court.
Alternatives to Guardianship
As mentioned earlier, because guardianship involves a profound loss of independence, state laws require that guardianship be imposed only when less restrictive alternatives are lacking. Less restrictive alternatives that should be considered before pursuing guardianship include:
- Durable Financial Powers of Attorney: A document granting legal rights and powers by a person (the principal) to another (the agent or attorney-in-fact). The attorney-in-fact, in effect, stands in the shoes of the principal and acts for him or her on financial and business matters. In most cases, even when the power of attorney is immediately effective, the principal does not intend for it to be used unless and until he or she becomes incapacitated. Note: this document would have to be prepared and signed by the incapacitated person prior to becoming incapacitated.
- Health Care Durable Powers of Attorney (or Health Care Proxy): A document granting a person (the principal) to another (the agent or attorney-in-fact) to act for him or her on medical matters and treatment decisions. Note that this document would have to be prepared and signed by the incapacitated person prior to becoming incapacitated.
- Representative or Protective Payee: A person appointed to manage Social Security, Veterans’ Administration, Railroad Retirement, welfare or other state or federal benefits or entitlement program payments on behalf of an individual.
- Conservatorship: In some states this proceeding can be voluntary, where the person needing assistance with finances petitions the probate court to appoint a specific person (the conservator) to manage his or her financial affairs. The court must determine that the conservatee is unable to manage his or her own financial affairs, but nevertheless has the capacity to make the decision to have a conservator appointed to handle his or her affairs.
- Revocable Trust: In some states, and under some specific circumstances, a revocable or living trust is a tool set up to hold an older person’s assets, with a relative, friend or financial institution serving as trustee. Alternatively, the older person can be a co-trustee of the trust with another individual who will take over the duties of trustee should the older person become incapacitated.
So, as you can see, not having the appropriate documents in place before a person becomes incapacitated can lead to a nightmare situation for his loved ones if they are suddenly faced with having to put a Guardian in place all of a sudden.
Call me to discuss how you can get prepared.