Guardianship … and how to avoid it

Guardianship … and how to avoid it

No one plans on becoming incapacitated. That only happens to the other guy. But the hard truth is that the older we get the more likely we’ll suffer some loss of mental capacity.

In fact, the American Speech-Language-Hearing Association cites says the risk of developing Alzheimer’s doubles every five years once you hit 65.

Once you get to age 85+, between 25% and 50% of people will exhibit signs of the disease.

It’s a sobering truth: As many as 5.3 million Americans currently have Alzheimer’s.

And by 2050, the number is expected to more than double due to the aging of our population.

To add insult to injury, our legal system has an unfriendly tool that could come into play if you can’t take care of yourself.

It’s called guardianship

Laws vary among states. But generally it works like this:

The person who wants to become your guardian (the petitioner) must go to court to have you (the ward) declared incompetent based on expert findings.

You can object and have the right to be represented by an attorney.

But if the court rules that you are incompetent, it will order that the responsibility of managing your finances, your health care decisions, even your living arrangements be transferred to the petitioner.

Once that happens, it can be extremely difficult to restore your rights.

It’s a timely and costly process. And if family members are squabbling over the need for guardianship or who should become your guardian, it can become even more painful.

There have been many cases where the petitioner, friends, or family members weren’t willing or capable to serve as the guardian. So the court selects a professional guardian to fill the role.

These guardians, and the attorneys, make their money off the nest eggs of the elderly, many suffering from dementia.

In fact, abusive guardianship is a growing problem.

It can certainly look like a rigged system of well-connected lawyers and professional guardians when people lose their rights to a stranger who may not have their best interest at heart.

Two recent examples…

In Florida, a professional guardian has been accused of double-billing and paying off her debts, including a mortgage, with a client’s funds. Once she was exposed more victims came forward.

Then a local newspaper reporter found out that she was getting assigned many more cases than other guardians.

And guess who the assigning probate and guardianship judge was?

Her husband!

It was clear that he had no incentive to screen potential guardians, ascertain the wishes of the person to be placed under supervision, or locate family members.

On top of that, his fellow judges, some of whom he had close social relationships with, were responsible for approving his wife’s fees!

He has been since been transferred to civil court.

As for the wife — the professional guardian — it’s business as usual, although maybe not quite as brisk as it once was.

Across the country in another retirement haven, Nevada, guardianship abuse was highlighted by the indictment of the owner of a guardianship company.

Along with several others, including a Las Vegas police officer, the owner is accused of fraudulently assuming guardianship over an elderly couple and stealing $700,000.

Guardianship can even trump a durable power of attorney (DPOA), which we talked about in a recent issue of the Roadmap.

As a hypothetical example:

Suppose your mother had selected you to be her attorney-in-fact for her durable power of attorney (DPOA). Now she is incapacitated and no longer able to manage her affairs. So you’ve assumed your role. Plus you moved her into your home to better care for her.

However, your brothers don’t like the way you’re handling her finances. They object to the money you’ve spent for modifications to your house, like installing a ramp to get her inside and out, and widening the door to your mother’s bedroom to better accommodate a wheelchair.

Yet they aren’t willing help with her daily care.

To sum it up, your brothers think your mom should be put in a nursing home and you should be relieved of your powers. Even though when she was feeling well she selected you to be the one to make important financial and medical decisions for her if her health changed!

They hire a lawyer who is eager to stir the pot and drag the messy situation into court. That forces you to hire one for your mother, too. Thousands of dollars are spent by both sides.

The proceedings are open to the public. Embarrassing allocations come out.

The judge rules that the family is so divided that he places your mom into involuntary guardianship under the care of a professional guardian where she loses many of her human and constitutional rights.

What a mess, right?

Now, for the good news: You can take steps to help prevent these types of outcomes.

With the help of an attorney who specializes in elder care there are steps to take to reduce the chances of you or your loved ones ever needing guardianship:

Step 1. Draft a DPOA for your day-to-day finances.

Step 2. Draft a revocable living trust that includes a successor trustee to manage your investments if you lose mental capacity. A backup benefit here is that guardians cannot access assets in the trust.

Step 3. Draft an advance healthcare directive. This document names a surrogate decision maker (an agent) for your healthcare decisions. The power given should include the right of the agent to refuse or terminate life-sustaining medical care based on your wishes. And it can be farther reaching than a living will, which usually applies only when death is at the doorstep.

Step 4. Make improvements to your home so that it is safe for when you age. Or consider downsizing to more appropriate housing.

And above all … discuss your wishes and all the documents with your family members so they know how to put your plan into action under any type of future event.

To a richer life,

Nilus Mattive

Nilus Mattive
Editor, The Rich Life Roadmap

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Nilus Mattive

Nilus is the editor for the daily e-letter The Rich Life Roadmap and a Paradigm Press analyst.

Nilus began his professional career at Jono Steinberg’s Individual Investor Group, where he published his original research through a regular investment column. Later, he worked for a private equity business and spent five years editing Standard and Poor’s...

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