Why Are Guardianships Necessary In Estate Planning?
Guardianships are necessary in estate planning under three main categories. First, the ward does not have legal estate planning documents in place. Second, the ward may be at risk of physically harming him or herself. Third, the ward may be subject to financial harm by him or herself or from other parties. In the first scenario, there is a situation where the court appoints someone as guardian when there are no legal documents executed for the ward. In most circumstances, court supervised guardianships can be avoided by having a durable power of attorney, a designation of healthcare surrogate, and joint ownership and/or a living trust in place. However, if those documents are not in place, there is nothing allowing others to manage finances or make medical decisions for an individual if they become physically or mentally incapacitated. The most common instances where a guardianship is needed and there are no documents in place is due to a personal injury lawsuit.
Sometimes, people in their 20s and 30s may not have had any reason to make estate planning documents, so they don’t have the necessary documents in place to handle that lawsuit, settle that lawsuit, or create a special needs trust to protect assets after a recovery in that lawsuit. Another reason that somebody may not have any documents, and so no legal authority to act on their behalf, is because the incapacitated person refused to do estate planning in the first place. An individual may have been in the mindset of saying, “I’ll get around to making my estate planning documents when I need it.” Estate planning documents are needed to avoid guardianship.
Another instance where there are no estate planning documents, or where the documents have been improperly drafted, is if the durable power of attorney or designation of healthcare surrogate is not worded properly because the incapacitated person used an online legal document service or went to a non-elder law attorney to prepare the documents. The estate planning documents may not have been drafted correctly in order to act in the proper way or to fix any of the problems in the documents. Guardianship is needed in that situation to get those fixed. Another reason that someone wouldn’t have estate planning documents is because they feel like they don’t have anyone who they trust enough to assist them if they become incapacitated, so they never get around to it. The guardianship process is a court supervised process where the judge and any other related family members should be monitoring the guardian’s actions and a professional guardian could be appointed.
Somebody may not have estate planning documents because they are a minor. In many cases, if there is a minor who receives an inheritance or other windfall exceeding $15,000, or a minor is in a personal injury accident and receives a settlement, that minor of course will not have estate planning documents because they are too young to execute them. The minor would need a guardianship for the court to review any form of settlement or action relating to the personal injury lawsuit.
Lastly, a person may not have estate planning documents because he or she is developmentally disabled and won’t be able to sign a durable power of attorney or healthcare surrogate. Parents and other family members need to make medical and financial decisions for the developmentally disabled person after they reach the age of 18.
The reasons discussed above for needing guardianship are due to an individual lacking estate planning documents are related to somebody being incapacitated. The remaining two subjects focus on situations, either medical or financial, requiring guardianship due to risk of harm to the incapacitated person. Guardianship is needed if the incapacitated person is a harm to him or herself. This occurs when the incapacitated person is actively making bad decisions, such as when a person is incapacitated, and the doctor tells him or her to stop drinking, and the individual continues to drink excessively. Another situation is when the individual has dementia or other medical conditions and refuses to take medicine or lacks proper hygiene and is purposely isolating themselves and refusing to receive medical care such as in-home caregivers or placement into a facility. Harm to oneself also occurs when somebody is schizophrenic and refusing to seek any kind of medical treatment and they have no ability to rationalize between right or wrong. This lack of rationalization also impacts elderly people who may be experiencing dementia or memory loss.
An individual may be at risk of harming him or herself when refusing medical advice to go to assisted living and lacking the care that they need at home. They unnecessarily suffer physically due to their mental decline. Medical harm can also result from extreme behavior, such as aggression caused by Alzheimer’s disease. A person may attempt to fight people and cause physical harm to others or demonstrate erratic behavior such as walking outside nude resulting in problems in the neighborhood. Another sign of extreme behavior that is a risk of harm to oneself is driving when the person has no capabilities regarding directions or the rules of the road. Guardianship is one option to remove driving privileges if other avenues to remove those abilities have not been used.
Lastly, another extreme behavior that may harm an individual would be if the person or the ward is prone to escaping and leaving the house and getting lost; that’s when an incapacitated person is at medical harm to themselves. They can also be subject to medical harm from others. This could occur when somebody with mental incapacity is kidnapped or occurs where a parent has dementia and his or her caregiver is keeping the parent at their home and refusing other people access who want to see that parent and no one knows if the incapacitated person is being assisted. Another reason to get a guardianship when facing medical harm from another is when we have an existing designation of healthcare surrogate, but the person named as such is refusing to act or make proper decisions according to the incapacitated person’s previously stated wishes, or the named healthcare surrogate is actively harming the incapacitated person.
The last section would be if there is an incapacitated person who is facing financial harm, whether they are causing financial harm to themselves or they are at financial harm because of other people’s actions. Financial harm occurs to an incapacitated person when they are being exploited by others, including when someone is stealing from a loved one and taking advantage of them. In that situation, a guardianship is definitely appropriate. In cases of sibling disputes between care of a parent, there is always a perceived financial exploitation between the siblings. One sibling may be living for free at Mom and Dad’s house and not taking care of Mom and Dad but living off their income; that is very common. Another reason why somebody might be facing financial harm from others is when there is one child or somebody else taking the incapacitated person to a brand-new attorney to redo their estate planning documents. If somebody is asking an incapacitated person to do new estate planning documents, then guardianship court is needed to preserve any existing estate planning wishes.
Finally, someone faces financial harm from others when they have an existing power of attorney but the person who is named power of attorney is either not acting and paying bills, or they are refusing to pay for care. There have been instances where someone receiving in-home care, which could cost $13,000 a month, but the named power of attorney does not want to pay for it because that person wants a larger inheritance, even though there is plenty of money to pay for such a thing. That situation would require a guardianship to make sure that care is paid for using the incapacitated person’s money because the purpose of the power of attorney is to use that individual’s money for the his or her care, rather than inheritance purposes.
Guardianship may be needed when an incapacitated person is causing financial harm to his or herself by spending or giving money away recklessly. A parent may order items from the home shopping network, sweepstakes, or generally spending money on everything impulsively, just to have it sit in the garage. An individual may continue writing $10 or $20 checks to charities, resulting in financial harm. Charities share donor lists and a parent may continue sending money to their detriment. The last reason why somebody may cause financial harm to themselves is if they are forgetting to pay bills, and the bill paying problem can’t be solved by a new power of attorney. If bills aren’t getting paid, then a person’s needs are not being met. All in all, guardianship is necessary when somebody who is incapacitated is at risk of financial or medical harm, and there is no legal document in place to remedy the situation.
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