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Adult Guardianship: What happens if you can no longer manage your affairs?

Adult Guardianship: What happens if you can no longer manage your affairs? by Tom Sciacca

{Read in 8 minutes} Every now and then, an adult may lose his or her capacity to make important medical, financial, or other decisions. This may be a result of a major medical incident, such as a stroke, or because of the effects of aging that some people experience. Regardless of the reason, if someone has not adequately planned for their incapacity, they may need the intervention of a Court to have a Guardian appointed for them. This article (1) provides insight into how a client can potentially avoid the need for a guardianship proceeding, and (2) provides an overview of such a proceeding should the need arise.

Planning for Incapacity

When clients come to see me, often they are planning for end-of-life transitions, whether it’s ensuring their funeral wishes are respected or they want to transfer assets upon their deaths. However, it’s just as important to plan for incapacity. Who is going to make important medical and financial decisions for you when you cannot make them yourself?

-The most common set of documents you need are a Power of Attorney and a Health Care Proxy. A Power of Attorney is a document whereby you appoint an agent to handle your financial affairs. If you have signed a Power of Attorney prior to your incapacity, there’s no need to have a Guardian appointed for you. This person already has the power to collect your income, manage your bank accounts, pay your bills, renew your leases, etc.

-A Health Care Proxy allows you to appoint someone to make medical decisions for you when you can no longer meaningfully communicate with your doctor. Most people think of a Health Care Proxy as a “pull the plug” type of document, but it is really so much more than that. It can certainly allow your agent to terminate artificial or heroic efforts to extend your life, but it could also allow them to consent to a very minor procedure, such as a root canal, if you have dementia and cannot meaningfully communicate with your dentist.

Avoiding Guardianship

It is advisable to avoid guardianship. You can do this simply by ensuring that someone has the authority to make important decisions for you if there ever comes a time when you cannot make them yourself.

On the financial side, there are other options to executing a Power of Attorney (although executing a Power of Attorney is strongly preferred): You can hold assets in a way that someone already has the legal authority to transact on them, regardless of any legal documents. For example, if you and your spouse hold a joint account and something happens to you, your spouse can write checks on the account, make deposits or withdrawals, and otherwise manage your financial affairs. However, there are two potential drawbacks:

-The joint owner’s ability to transact is limited to the assets in that account. If you run out of money, and the only pool of money left is composed of bank accounts held solely in your name, your spouse may need to go to court in order to transact on them.

-The power you give is limited to banking or brokerage transactions on the joint account. If your spouse needs to file an income tax return, renew a lease, or take a loan to make improvements to a home, they would lack the ability to do that.

On the medical side, it’s interesting to note that family members have the authority to make certain medical decisions for you. Within the last few years, New York passed a law known as the Family Health Care Decisions Act. This allows certain people (spouse or domestic partner, followed by adult children, parents, siblings, and more remote relatives) to make medical decisions on your behalf. However, not every state and country recognizes this legal authority, so having a Health Care Proxy is always a good idea.

What happens during a guardianship proceeding?

If you haven’t prepared these documents or otherwise allowed people to transact on your accounts, or if you do not have appropriate and available family members to make medical decisions for you, you may need to initiate a guardianship proceeding. Unlike other experiences within the Court system, it is not uncommon for a Court to review the application, hold the hearing, and appoint a Guardian in two or three months. When you think about it, it is really a testament to judicial efficiency.

With some limited exceptions, the New York State Supreme Court handles guardianship proceedings, and involve:

-Finding that the subject of the proceeding either consents to the appointment of the Guardian or is incapacitated (as that term is defined in our statutes);

-Making a determination of who the Guardian should be; and

– Determining what powers that Guardian will have.  

However, everyone should avoid guardianship proceedings if at all possible. First, they are expensive. While attorneys’ fees vary from person to person and firm to firm, it is not uncommon for a family to spend $10,000 to $15,000 in legal and court fees on this proceeding, even if it’s uncontested. If it is contested, there is a longer proceeding with increased legal fees. Second, the proceeding itself is a very public intrusion into your private life, as it is done in open Court. The Court will appoint a Court Evaluator, usually an attorney or social worker. The Court Evaluator is tasked with meeting the person seeking guardianship and their family, then making an independent recommendation, which is not the same as a recommendation from someone you’ve known for years. While not binding on the Judge, the Court Evaluator’s recommendation is very persuasive.

It’s also important to note that the Court has discretion as to whom they appoint as the Guardian. Usually, they appoint the person who brings the guardianship proceeding (or the person whom they nominate to be the Guardian)—but not always. Sometimes the Court will appoint a different family member or the Court decides that no family member is appropriate and appoint someone off a list of people who have taken the required training course to serve as Guardians. Regardless of whom the Court appoints, that person will deal with some administrative hurdles. There will be training, the completion of various formal Court reports, and ongoing legal fees to assist with the guardianship.

In closing, it’s advisable to make your wishes known and plan for your own incapacity by signing a Power of Attorney and a Health Care Proxy. If you haven’t, ensure you have jointly held accounts and that the family decision-making provisions described above are consistent with your wishes. If those are not available, guardianship may be the only option. An experienced attorney can walk you through the guardianship process and will try to achieve the best result possible.