Planning for Incapacity, Continued
In May we began a discussion about planning for incapacity. (Click here for May's Article) In that article we reviewed the basic legal tools needed to plan for incapacity. We also discussed the importance of communicating with your agents and family, your medical providers, and your financial and legal advisors about your plans. When these steps are taken the transition from independence to dependence is easier than when no plans have been made. But even the best laid plans cannot guarantee smooth transitions. This article deals with guardianships.
When someone loses the ability to make good or safe decisions and the powers described previously are not in place, are ineffective, or the principal is resisting his or her Agent’s direction, a Guardianship may be required. A Guardianship is an adversarial proceeding in the probate court. The parties to the litigation are the Petitioner, the person arguing for a guardianship, and the Proposed Ward, the person who is the subject of the Petition. Sometimes a guardian ad litem is appointed to represent the Proposed Ward’s best interests. The Proposed Ward always has an attorney. Sometimes it is his or her own attorney, sometimes it is an attorney appointed by the court. In New Hampshire the Petitioner has to prove beyond a reasonable doubt that the Proposed Ward is legally incompetent. In Vermont the standard is clear and convincing evidence. Both standards are substantially higher than the civil standard of preponderance of the evidence.
If the Petitioner proves his case, the Court will appoint a Guardian and grant him/her authority to make financial and/or health care decisions for the Ward. The Guardian’s authority can be very broad or it can be limited, depending on the circumstances.
Nominating the person(s) you would like to serve as your Guardian, if it becomes necessary, can be important. Designating the people who you do not want to serve as your Guardian can be even more important.
Once a guardian has been appointed, (s)he will be advised of guardianship duties by the Court. In addition, the Court will require the guardian to post a bond to ensure the guardian’s faithful performance of these duties. The guardian must conduct an asset search and file an initial Inventory of the Ward’s assets soon after being appointed. In addition, on each anniversary of the guardian’s appointment, the guardian must file an account showing all income paid to the Ward or earned by the Ward’s property, all expenses paid on behalf of the Ward and the Ward’s assets being held by the Guardian.
If the Guardian has authority over the Ward’s person the Guardian will also make health care decisions on behalf of the Ward and file an Annual Report regarding the status of the Ward’s health. People interested in the Ward’s estate and well-being, such as the Ward’s spouse, descendants, siblings and Will or Trust beneficiaries are entitled to receive accountings from the Guardian.
In certain cases, Guardians can engage in estate and long term care planning for the Ward. In our next article we will discuss long term care planning and how to pay for it.