GuardianshipGuardianship can arise in several situations but some easy planning can eliminate one of the most common reasons for guardianship.

When does guardianship arise? In situations such as:

— A minor when a parent is not available or able to care for the child

— An elder who is no longer capable of handling his or her financial affairs

— Someone who is not capable of making appropriate healthcare decisions

Typically, the person seeking guardianship will need to show the court that the potential ward lacks the mental capacity for self-care – either of finances or health.

What Does Guardianship Mean?

Guardianship is more than simply obtaining the court’s blessing to make decisions for the ward.  A guardian is responsible for ensuring the ward’s finances are properly administered and that the ward’s health is appropriately cared for (if the guardianship is over both the person and estate).

A guardian must also provide periodic reports to the court advising what the guardian has been doing with the ward’s money and assets, and the guardian typically must notify the court before moving the ward.

Guardians must work in conjunction with an attorney, which means the process requires court costs, the guardian’s time, the guardian’s possible compensation, and attorney’s fees.

When is Guardianship Not Needed When Someone is Incapacitated?

There are many people who lack the capacity to handle their own finances who do not have a guardian.  How is this possible?  They used a good Power of Attorney to give someone (or more than one person) the ability to act on their behalf.

A Power of Attorney can either be effective on the date it is executed or when the person becomes incapacitated.  When adult children are already assisting informally with their parent’s finances, a good Power of Attorney can ensure that assistance continues even if the parent is no longer able to sign checks, direct the bank in transactions, and direct other institutions.

But for those who are still handling their own affairs, a good Power of Attorney can help keep the parent’s adult children from being forced to seek guardianship simply to be able to pay the parent’s bills from the parent’s own bank account, among other reasons.

What is a Good Power of Attorney?

A Power of Attorney which is good for those in their 20’s may not be the best Power of Attorney for those in their 60’s or 70’s.  For those in their 60’s and 70’s, the Power of Attorney may need to include all powers which may be necessary to completely take over the elder’s affairs if the elder’s physical or mental health leads to the elder’s incapacity.  This is commonly seen in situations where the elder develops Alzheimer’s disease but may also be needed if the parent has a stroke or other physical complication which makes them unable to handle their affairs.

What types of powers should a good Power of Attorney for an elder include?

Certainly, a good Power of Attorney for an elder should include the basic powers included in most standard Power of Attorneys involving banking, investing, selling investments, communicating with life insurance companies, managing business affairs, and other matters.

But it may also need to include the power to create an irrevocable trust for the elder.  This is necessary because of a quirk in Medicaid rules that may require an irrevocable trust called a Qualified Income Trust to be created if the elder’s income is above a certain limit before the elder can obtain Medicaid for the aged, blind, or disabled.

Another good power to include is the ability to sell life insurance or to change the beneficiaries.  There are various reasons why this may be necessary – both for Medicaid planning and for end of life types of situations which are beyond the scope of this discussion.  However, a Power of Attorney can be crafted however the client wishes.  Powers can be added, eliminated, or modified.  And powers can change depending upon whether the client currently has or lacks the capacity to assist with financial affairs.

What is the Take Home?

Guardianship can sometimes be avoided when a good Power of Attorney is in place.  Those who are not planning with a Power of Attorney may find they end up planning for guardianship.

Did you know that in 2013, the Indiana General Assembly provided funding to establish the Adult Guardianship Office under the Indiana Supreme Court’s Division of State Court Administration? Read more about that here: http://www.in.gov/judiciary/admin/3169.htm

At Dillman Law Group we focus our practice on seniors and their families.  Some elder law attorneys charge for an initial consultation, but some do not.  There is nothing to lose by signing up for a free consultation with an elder law attorney at Dillman Law Group to talk through ways to protect your parents’ assets.  Discussing these options and the future of your parents could save you money and stress later. 

What is keeping you from scheduling a free consultation?  Give our office a call today to schedule your free consultation at 317-492-9569.