The possibility of living a longer, healthier life has never been greater. Nonetheless, capacity declines are a real possibility for all of us. Proactively designating a power of attorney (POA), ensures someone we trust can take over financial affairs if needed. Alternatively, if necessary, guardianship can be established, but must be done in court.
Proactive Planning
In the course of our ordinary lives, we make countless decisions, big and small, involving our assets. Which bank? Credit or debit? Rent or buy? Splurge or save? We are in fact so used to these decisions–and having the mental capacity to make them, that we can’t imagine not doing so. Nonetheless, it’s a strong likelihood that we may need to trust someone else to act in our best interest at some point. Attorney Paul W. Norris of Stark & Stark explains that while we have the capacity to decide, executing a power of attorney is a wise move:
A power of attorney is a written instrument pursuant to which the principal authorizes another individual to undertake actions on their behalf which typically involves their finances, real estate, or other real property….People may also execute a health care power of attorney which allows another to make decisions concerning their health care….At the time the power of attorney is executed, the principal must be competent in order to enter into the arrangement whereby they grant a third party the discretion which is set forth in the instrument. The…discretion allowed in a power of attorney, can vary greatly and is entirely dependent upon what the person issuing the power of attorney is willing to grant….. Once the power of attorney is executed, it can be utilized while the individual remains competent, or it can take effect should the principal become incompetent.
In the event of a capacity decline, if no proactive plans have been put in place, a guardianship can be established, but requires court involvement. Guardianships are also typically necessary should both parents of a minor child die, which is why it’s especially wise for parents to carefully designate guardians using a will. As the guardianship and conservatorship arrangements of Britney Spears illustrate, court matters are by nature public, and can become quite complex. Experts at Stark & Stark offer this overview of the basics of appointing a guardian or conservator:
It must be demonstrated that the alleged incapacitated person is incapacitated, and further, that they require the care or assistance of the person who is seeking to be guardian. There are also varying levels of guardianship and the application to the court may specifically depend upon whether the person needs a complete guardianship, or a lesser level of guardianship, such as a conservator to protect the assets of this individual. Once a person is installed as guardian, they essentially step into the shoes of the incapacitated individual and may take actions on their behalf. The guardian, however, remains subject to review by the court and can be removed for cause if there is an abuse of these powers. During a guardianship proceeding, other individuals may wish to become the guardian of the alleged incapacitated person, and thus, they have the right to either contest the proceeding or to seek to become guardian themselves.
Given the seriousness of the role and responsibilities involved, courts typically require guardians to secure a guardianship bond. Essentially, a guardianship bond is a type of fiduciary bond, which protects the interests and affairs of “the ward.” Learn more about guardianship bonds with this short video. The requirements of guardianship bonds vary, but as a national, direct writer, Colonial Surety provides bonds to meet the specific requirements in every state. At Colonial, all fiduciary bonds, including guardianship bonds, are available directly and digitally. The steps to obtaining guardianship bonds are easy: get a quote online, fill out the information, and enter a payment method. Print or e-file the bond from anywhere—even while at court.
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Good To Do: Think Ahead
To curtail family stress–and have a say in the appointment of a guardian, it is possible to execute a POA that actually expresses our wishes should a guardian become necessary down the road. Here, for example, is the advice of Norris:
Generally, it is our recommendation that a power of attorney be prepared by a person prior to the time that they may become incapacitated in order to deal with any future contingencies. It is also suggested that this power of attorney designate the potential guardians should they become incapacitated. On the other hand, if a sudden incapacitation arises due to an unfortunate event, then the only option would be to seek a guardianship.
Family and Estate Law?
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