Understanding the Guardianship Process

You are nine times more likely to become disabled than to die in any given year, according to the Social Security Administration. While that’s good news, in the sense that we all want to avoid death, it’s important to consider what it means to be disabled. Further, it’s important to plan today for that possibility.

Another fact from SS may drive this point home. One out of every three 65-year-olds today will live past age 90, and about one out of seven will live past age 95.

There are not many of us at age 90 who will not need some assistance. This means that everyone should have a plan for incapacity – a time when you cannot physically or mentally manage your own affairs.

Planning for incapacity does not necessarily mean planning for someone to “take over.” It does mean taking the time today – while you have a clear head – to make decisions about who do you want to assist you if you need assistance.

There are many ways to plan for incapacity but if you fail to plan, then a likely result is a court- imposed guardianship.

Guardianship occurs when:

1. An adult can no longer take care of him or herself and there is no power of attorney.
2. When a disabled person has a power of attorney, but it is being misused.
3. When the disabled person has a power of attorney, but the power of attorney is inadequate.
4. When a person is being exploited.
5. When medical decisions must be made and there is not a valid healthcare directive.
6. When healthcare decisions need to be made and there is no next of kin.
7. When several parties with conflicting interests are trying to act for the disabled person.

There are two types of guardianships: guardian of the person and guardian of property.

A guardian of the person is appointed to meet the daily needs of an individual and make decisions about healthcare, living conditions and medical treatment. A guardian of property is appointed to safeguard and preserve property and to make financial decisions. Most of the time one person takes on both roles, but there are times when there are separate guardians for property and person.

GUARDIANSHIP PROCESS

Guardianships are started when an interested party files a petition in the Court of Chancery. All the property of the proposed ward should be listed in the petition along with marital status, age, current residence, all interested parties, next of kin, whether there is a will or power of attorney, and whether the proposed ward has an attorney.

A physician’s affidavit confirming incapacity is also required –more often than not, this is the longest delay in the process, as it must be notarized. This means the physician must sign it in front of a notary.  

Along with the petition and physician’s affidavit, the proposed guardian must file several affidavits and authorizations. There will be a background check on the proposed guardian looking for a recent bankruptcy or conviction of a serious crime. And, the proposed guardian must promise to follow all of the court rules.

As soon as a petition for guardianship is filed, a second attorney is appointed by the court. This attorney will visit the proposed ward and file a report with the court.

Based upon the physician’s affidavit, and the second attorney’s report, the court may require the proposed ward to be served with the petition for guardianship.

All interested parties must be served with a copy of the petition and asked to consent. If someone entitled to notice does not sign a consent to the guardianship, then the court will conduct a hearing.

Guardianship proceedings are paid for from the proposed ward’s property.

When the guardianship begins, an inventory of all the property found by the guardian must be filed with the court and the court may require annual accountings.  When the ward dies, the guardianship property is frozen and the guardianship must be dissolved by the court.

While this seems very intrusive, all guardianship proceedings are confidential.

ACT NOW TO AVOID GUARDIANSHIPS

Guardianships can be avoided by having an adequate power of attorney or an appropriate trust.

In my experience, most power of attorneys are inadequate. Power of attorneys are complex, and financial institutions review them carefully and impose their own requirements upon them. The New York Times in May 2016 ran an exposé on financial institutions and banks rejecting valid powers of attorney because of internal or perceived regulatory rules.

In addition, the State of Delaware statutory form is rarely filled out correctly and the form itself does not contemplate common estate planning or elder law scenarios.

Another method of handling property in incapacity is to create a trust. Trusts are more complex than power of attorneys, but when property is held by the trust (not by an individual) it is easier for a trustee, who has legal title to the property in a trust, to manage trust property, than an agent for a power of attorney.

For these reasons, it’s important to work with an experienced estate planning attorney to draw up a power of attorney or create a trust now while you are healthy and able to make sound decisions about your future.

Then, when you reach age 90 or 95, if you need help, you’ll get the help you expected from the person you selected and not the State or the court.