Guarding Against Guardianship

When a person can no longer manage his or her own affairs, a court-ordered guardianship is one solution ... but it's not the only solution.

A guardianship and its close cousin, conservatorship, often become necessary when a person becomes incapacitated. While it is helpful to understand the difference between the two, they are so closely related that they are frequently established in tandem so that the affairs of incapacitated persons -- and the persons themselves -- can be fully cared for.

In simple terms, a conservator is responsible for the money and other assets owned by the incapacitated person, known as a ward. If the ward has no assets, if the ward has signed a power of attorney, or if the ward's assets are in a trust, there probably is no need for a conservator.

A guardian takes legal responsibility for the ward. A guardian's decision-making powers are far-reaching; they include deciding where the ward will live, what sort of medical treatment the ward will receive, what the ward will eat -- in short, every decision that the ward would normally make for him- or herself if not incapacitated.

It almost goes without saying that asking the court to declare a person incapacitated, and to make him or her subject to the decisions of another person, is a major step in the lives of all concerned. A ward under full guardianship literally has fewer rights than a prison inmate and is no longer free to choose where to live, to marry or divorce, to spend money, to travel, or even to vote.

Guardianship and conservatorship work reasonably well in most cases, but even in the best of situations it can place a strain on family relationships and force children into uncomfortable decision-making roles.

It is important for elderly persons and their family members to understand the safeguards, alternatives and problems associated with guardianship and conservatorship.

Safeguards

Because the powers of a guardian or conservator over the ward and his or her affairs are so great, the law provides important procedural safeguards to help ensure that a guardianship or conservatorship is appropriately established and properly maintained. Five major steps are designed to preserve the rights of allegedly incapacitated parties and to protect their interests after they become wards.

1. A physician must submit to the court a report attesting to the person's capacity or lack thereof.

2. The court appoints an attorney to represent the person in the legal proceedings and, perhaps, thereafter.

3. A court investigator (a social worker employed by the court) visits the person and writes an opinion regarding the person's capacity.

4. If the person wishes to challenge the proceeding, he can use the court-appointed attorney or an attorney of his choosing.

5. If the court finds that the person is incapacitated and sets up a guardianship or conservatorship, the guardian or conservator must file with the court an annual accounting or other appropriate report.

The guardianship or conservatorship expires upon the death of the ward, after which his or her estate is managed by the personal representative named in the ward's will.

Alternatives to Guardianship

With proper planning and open communication, elderly persons and their families can often avoid the need for a conservatorship. Avoidance methods include the following:

Power of attorney. By giving his power of attorney to a trusted family member or friend (known as the attorney-in-fact), a person can designate who will oversee his affairs without court intervention. However, there is one significant drawback to this option: A person granting a power of attorney can also revoke it, a possibility that may gain in likelihood as the grantor approaches the point of incapacity. Even the threat of revocation may prevent the attorney-in-fact from being able to use the power of attorney effectively.

Joint ownership of bank and investment accounts. A person can also avoid the need for a conservatorship by making a family member or friend a signer on his bank account. This method can work very well, but it also carries significant drawbacks:

• A signer becomes a joint tenant on the account and, in the eyes of the bank, a "co-owner" and has as much power over the use of the funds as the original owner. A dishonest or reckless joint tenant could easily clean out the account or use the money improperly.

• If the original owner dies before the joint tenant, whatever money is in the account remains available to the surviving joint tenant, who is presumed to become the sole owner of the account. Short of a court order, he or she has no legal duty to share that money with siblings or other parties named in the owner's will.

• If the joint tenant should have a money judgment rendered against him, all of the funds in the jointly owned account could be seized to satisfy the joint tenant's debts.

Trusts. By placing assets in a trust, an owner (or trustor) can escape the need for a conservatorship. If the trust agreement provides that the trustor is also the trustee, he can manage his own affairs for as long as he is able. The trust agreement should also name an alternate or successor trustee, selected in advance by the trustor, to take over management of his affairs when he or the court finds that he is unable to continue in that capacity. While no estate-planning method is perfect, a trust is often a desirable alternative.

Difficulties of Incapacity

One of the difficulties involving incapacity is that it is a subjective condition, and whether or not a person is found to have the capacity to care for him- or herself may depend on which judge hears the request.

Another difficulty of incapacity is that, especially in the early stages, it is often a fluctuating condition. A person suffering from Alzheimer's Disease or another form of dementia may swing between good days and bad, making it difficult for family members, loving friends or judges to recognize the need to have the person declared incapacitated.

After the need becomes clear, asking the court to declare a loved one incapacitated is almost always emotionally challenging, even if no one opposes the request. The request becomes even more difficult when it is challenged by the allegedly incapacitated person or by third parties who have an interest in keeping the person's affairs outside the supervision of the court.

Finally, once established, a guardianship or conservatorship may involve legal and other professional costs, normally paid from the ward's funds, and it places reporting responsibilities on the person whom the court appoints to be the guardian or conservator.