Guardianship is a protective legal proceeding for incapacitated persons who are unable to manage their own affairs. Through the process of guardianship, certain or all of an individual’s rights are removed. The law provides extensive procedural safeguards to insure that this process is not abused. However, because of those procedures, the process is not only expensive but also can be traumatic.
Guardianship is usually necessary for one or more of the following reasons: lack of access to finances; vulnerability to exploitation; refusal to receive appropriate care; and need for amendment or creation of trusts.
Lack of access to finances occurs when an alleged incapacitated person’s assets are held individually and no legal documents authorize another trusted individual access for bill paying and asset management. Guardianships necessary for this reason are the type that could be avoided by proper estate planning done prior to incapacity. Legal documents such as durable power of attorney or trusts which are done prior to impairment authorize another to manage finances.
Typically, the durable power of attorney authorizes an agent to do virtually anything that a person could do with property. Durable power of attorney is a helpful way of avoiding guardianship in cases where the alleged incapacitated person is compliant with the assistance that his or her named agent is providing and when the agent is acting in the interest of the incapacitated person. Durable powers of attorney are not helpful in avoiding guardianship when the incapacitated individual is insistent upon making independent decisions and writing checks. The agent under the durable power of attorney does not have the control necessary to limit the incapacitated person’s access to their property. An agent under a durable power of attorney cannot merely re-title the assets to the agents name in order to limit access. Such re-titling would be a breach of fiduciary duty and could be interpreted as elder exploitation.
Trusts can be more useful in dealing with incapacitated persons who are not as compliant. Trusts typically provide for a triggering mechanism (such as a doctor’s determination of lack of ability) for the successor trustee to assume control. The successor trustee can then limit the incapacitated person’s access to the trust assets. Non-cooperative incapacitated persons can thwart such measures by entering into contracts which the trustee may be forced to honor.
Both durable power of attorney and trusts are sometimes helpful in avoiding guardianships. Neither is 100 percent effective in avoiding the need for guardianship because many guardianships are required to address vulnerability to exploitation, refusal to receive appropriate care and the need to amend or create trust documents.
Vulnerability to exploitation is a problem for an incapacitated person who may become the subject of scams or sweepstakes. In these cases guardianship may become necessary to remove the right to contract. An incapacitated person may also be exploited by a fiduciary named under a durable power of attorney or a trust. It is imperative that the fiduciary be chosen when a person is still competent to make decisions. When a fiduciary exploits an incapacitated person, guardianship may be necessary to bring a lawsuit against the fiduciary.
The refusal to receive appropriate care is a difficult problem. Mentally impaired persons may cause fire hazards by leaving items on stoves, may easily get lost when out of the home, may forget to take medications or even eat, may be a hazard to themselves and others when driving, and are at high risk of becoming victims of crime. In some instances, personal care needs can be addressed informally by having family or friends routinely check on a person living at home.
Alternatively, these needs can be addressed by placing the individual in an elder care facility. As long as these procedures are working effectively and the incapacitated person is cooperative, there is no need to establish a guardianship. However, under Florida Law, a person cannot be forced to allow visitors into their home and cannot be involuntarily placed in a facility (except for short-term evaluation initiated by the state). If the incapacitated person is uncooperative or it is not practical to rely on assistance from friends and family, a guardianship may be the only answer.
The need for amendment or creation of trusts sometimes necessitates a guardianship where the execution of a trust will allow certain tax or asset protection planning to take place. If such planning is warranted and not already in place when a person becomes incapacitated, then a guardian, after obtaining court authority, can create or amend trusts. The guardian will have to convince the court that such planning is in the best interest of the incapacitated person.
In conclusion, effective estate planning and careful selection of fiduciaries can eliminate the need for a guardianship in most instances and can, in all instances, insure that the persons or institutions you select will manage your financial and personal affairs should it become necessary.