3 Reasons You May Need A Guardianship
Guardianships are complicated legal proceedings. Most people have no clue how complicated and expensive they are. In some situations, however, guardianship will be required to manage the affairs of a loved one.
Two types of guardians are required for a loved one needing assistance: 1) a guardian of the person, and 2) a guardian of the estate. A guardian of the person is responsible for the actual physical and medical care of your loved one. A guardian of the estate is responsible for managing all assets and business-related matters for the person, and making distributions from the estate for the benefit of the loved one.
Below, I'll explain the three main situations in which you may need a guardianship.
3 Main Reasons To Set Up A Guardianship
There are three main reasons you would need to set up a guardianship for another person.
1. A minor child's parents are deceased.
The most tragic situation in which a guardianship is required is when both of a minor child's parents die. As long as one parent is still alive, the surviving parent is the natural guardian of the child, without any court involvement needed. However, if both parents perish, and no prior planning has been done to designate who they want to serve as the guardian of both the person and the estate of a child, a surviving relative must apply to a probate court to determine who should be appointed the guardian of the child or children.
In this situation, the court has a list of persons who have priority to be appointed as the guardian of the person and of the estate. Some of those persons may be the last people you would want to be serving in those positions. You could end up with grandparents or siblings fighting each other over who should serve as guardians. This can ruin family relationships and cause extreme stress to the children.
The legal costs involved in any guardianship proceeding are extreme. In addition to legal fees for those persons seeking to be appointed guardians, an attorney ad litem (legal representative) for the children must be appointed by the court to protect their interests. The fees for the ad litem must be paid by one of the parties or out of the estate. Once the guardians are appointed, many actions on behalf of the children require prior court approval, and extremely detailed yearly accountings have to be filed until the child turns 18.
The other substantial drawback to having to create a guardianship for a minor child is that the guardianship must end at age 18. Whatever estate remains at that time must be distributed to the child, whether they are mature enough to handle it or not.
The simple solution to avoiding a guardianship of the estate of a minor child is to set up a trust for his or her benefit under your Will, to whatever age you believe is appropriate. You also have the right to name the trustee who would serve to manage the estate until that time. You also can state in your Will or a separate document who you would want to serve as the guardian of the person of the child, which means who would have custody.
2. An adult has become mentally incapacitated or incompetent.
This is by far the most common reason a guardianship is needed. If your loved one failed to draw up a statutory power of attorney and medical power of attorney before he or she became incompetent, a guardianship of the person and of the estate is the only option available to manage their business and medical affairs.
An applicant for guardianship in this situation must have a doctor's certificate based on an examination of the person, covering a wide range of areas, to determine whether a guardian is needed to handle all of the affairs of the incompetent or incapacitated person (called the "ward"), or whether the person is still able to do some things on his or her own. If the court determines that the ward is not able to take care of all of his or her needs, a guardian of the person and the estate of the ward likely will be needed.
Once again, an attorney ad litem (legal representative) must be appointed to represent the interests of the ward. These fees have to be paid by the guardianship estate. The ad litem, as part of his or her duty of representation, may question the applicant's motive in seeking the guardianship and their fitness to fill that role, in addition to whether the ward really is incompetent.
More than one person may seek to be appointed the guardian, again triggering potential family feuds. And, once again, court approval of many actions on behalf of the ward is required and yearly accountings must be filed as long as the guardianship remains in effect. Once the ward dies, additional accounting and other court proceedings are required to close the guardianship.
The simple way to avoid having to seek guardianship of the person and estate if a loved one becomes incompetent is to have had them execute a statutory and a medical power of attorney while still competent.
3. An adult is functioning with diminished capacity in some area.
There are many instances in which an adult with learning disabilities, for example, can manage much of his or her own affairs but still needs some assistance. This frequently happens when a child with diminished capacity turns 18, and the parents' authority to manage their affairs ends. In this instance, a limited guardianship may be appropriate.
A doctor may find the ward only needs assistance in certain areas of functioning but can make other decisions or take other actions on his or her own. Courts favor trying to reserve powers to the ward unless the doctor certifies he or she is not capable of exercising those powers. In these cases, the guardianship order will spell out what powers the guardian has and what powers are reserved to the ward.
The long-term expense of this type of guardianship may be less than a full guardianship but is still considerable. Unfortunately, if the loved one never had full competency to draw up a statutory or medical power of attorney, guardianship may be the only option. However, there are many resources available to individuals with such disabilities which should be explored before seeking guardianship.
If you think a guardianship may be necessary or need help getting your loved one to put in place a simple plan before a guardianship is needed, contact Adair M. Buckner for a free initial consultation*.
*(The free consultation does not cover actual review of documents or giving legal advice on a specific situation.)
** This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, specific tax, legal, or accounting advice. We can only give specific advice upon consulting directly with you and reviewing your exact situation.
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