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Category: Guardianship

What Should I Know about Guardianship?

In a perfect world, a child would be raised by its parents. However, this isn’t always possible, and legally enforceable decisions must sometimes be made to name the person who is best positioned to look after a child.

Guardianship is generally only needed when a person is incapable—whether legally or practically—of looking after their own affairs, says VENTS Magazine in the article “Legal Guardianship 101: What You Need to Know.”

Courts have the power to appoint guardians for adults and children. This is usually a person who is unable to make decisions for themselves.

It may be a disabled person, and guardians are appointed for children when parents consent to it, when their parental rights are removed by a court, or when both parents are dead or permanently incapacitated.

Guardians have duties as to both the protected person and their estate. The duties to the person include providing necessities, education and appropriate medical treatment, where necessary. As far as the estate of the protected person, the duties are to manage any funds properly and to spend them, pursuant to the protected person’s needs. Guardians must prepare an inventory of assets within 60 days of their appointment to the role.

Custody is only granted for children. When appointed, a custodian is given parental rights over the child. Guardianship does not bestow these rights.

A guardian is appointed to take care of a protected person and to safeguard their estate. Biological parents, if alive, keep their parental rights over the child.

To become a guardian, you must file a petition with the court. There will be a hearing on your application. You must present proof (from a doctor, for example) that guardianship is necessary under the circumstances.

Guardianship litigation can eb stressful, but it is frequently necessary, so engage an attorney to help you.

Reference: VENTS Magazine (April 13, 2020) “Legal Guardianship 101: What You Need to Know”

 

Retirement Planning and Declining Abilities

Whether the reason is Alzheimer’s, Parkinson’s or any of a number of illnesses that lead to dementia, it’s hard for families to think about legal or financial concerns, when a diagnosis is first made. This can lead to serious problems in the near future, warns the article “Cognitive Decline Shouldn’t Derail Retirement Planning. Here are Some Tips to Prepare Your Finances” from Barron’s. The time to act is as soon as the family realizes their loved one is having a problem—even before the diagnosis is official.

Here are some useful tips for navigating cognitive decline:

Take an inventory. Families should create a detailed list of assets and liabilities, including information on who has access to each of the accounts. Don’t leave out assets that have gone paperless, like online checking, savings, credit card and investment accounts. Without a paper trail, it may be impossible to identify assets. Try to do this while the person still has some ability to be actively involved. This can be difficult, especially when adult children have not been involved with their parent’s finances. Ask about insurance policies, veterans’ benefits, retirement accounts and other assets. One person in the family should be the point person.

Get an idea of what future costs will be. This is the one that everyone wants to avoid but knowing what care costs will be is critical. Will the person need adult day care or in-home care at first, then full-time medical care or admission to a nursing facility? Costs vary widely, and many families are completely in the dark about the numbers. Out-of-pocket medications or uncovered expenses are often a surprise. The family needs to review any insurance policy documents and find out if there are options to add or amend coverage to suit the person’s current and future needs.

Consider bringing in a professional to help. An elder law estate planning attorney, financial planner, or both, may be needed to help put the person’s legal and financial affairs in order. There are many details that must be considered, from how assets are titled, trusts, financial powers of attorney, advance health care directives and more. If Medicaid planning was not done previously, there may be some tools available to protect the spouse, but this must be done with an experienced attorney.

Automate any finances if possible. Even if the person might be able to stay in their own home, advancing decline may make tasks, like bill paying, increasingly difficult. If the person can sign up for online banking, with an adult child granted permission to access the account, it may be easier as time goes by. Some monthly bills, such as insurance premiums, can be set up for automatic payment to minimize the chances of their being unpaid and coverage being lost. Social Security or Supplemental Security Income benefits are now required to be sent via direct deposit or prepaid debit card. If a family member is still receiving a paper check, then now is the time to sign up for direct deposit, so that checks are not lost. Pension checks, if any, should also be made direct deposit.

Have the correct estate planning documents been prepared? A health care representative and a general durable power of attorney should be created, if they don’t already exist. The durable power of attorney needs to include the ability to take action in “what if” cases, such as the need to enroll in Medicaid, access digital assets and set up any trusts. A durable power of attorney should be prepared before the person loses cognitive capacity. Once that occurs, they are not legally able to sign any documents, and the family will have to go through the guardianship process to become a legal guardian of the family member.

Reference: Barron’s (Jan. 11, 2020) “Cognitive Decline Shouldn’t Derail Retirement Planning. Here are Some Tips to Prepare Your Finances”

What are the Main Estate Planning Blunders to Avoid?

There are a few important mistakes that can make an estate plan defective—most of these can be easily avoided by reviewing your estate plan periodically and keeping it up to date.

Investopedia’s article from a few years ago entitled “5 Ways to Mess Up Estate Planning” lists these common blunders:

Not Updating Your Beneficiaries. Big events like a marriage, divorce, birth, adoption and death can all have an effect on who will receive your assets. Be certain that those you want to inherit your property are clearly detailed as such on the proper forms. Whenever you have a life change, update your estate plan, as well as all your financial, retirement accounts and insurance policies.

Forgetting Important Legal Documents. Your will may be just fine, but it won’t exempt your assets from the probate process in most states, if the dollar value of your estate exceeds a certain amount. Some assets are inherently exempt from probate by law, like life insurance, retirement plans and annuities and any financial account that has a transfer on death (TOD) beneficiary listed. You should also make sure that you nominate the guardians of minor children in your will, in the event that something should happen to you and/or your spouse or partner.

Lousy Recordkeeping. There are few things that your family will like less than having to spend a huge amount of time and effort finding, organizing and hunting down all of your assets and belongings without any directions from you on where to look. Create a detailed letter of instruction that tells your executor or executrix where everything is found, along with the names and contact information of everyone with whom they’ll have to work, like your banker, broker, insurance agent, financial planner, etc.. You should also list all of the financial websites you use with your login info, so that your accounts can be conveniently accessed.

Bad Communication. Telling your loved ones that you’ll do one thing with your money or possessions and then failing to make provisions in your plan for that to happen is a sure way to create hard feelings, broken relationships and perhaps litigation. It’s a good idea to compose a letter of explanation that sets out your intentions or tells them why you changed your mind about something. This could help in providing closure or peace of mind (despite the fact that it has no legal authority).

No Estate Plan. While this is about the most obvious mistake in the list, it’s also one of the most common. There are many tales of famous people who lost virtually all of their estates to court fees and legal costs, because they failed to plan.

These are just a few of the common estate planning errors that commonly happen. Make sure they don’t happen to you: talk to a qualified estate planning attorney.

Reference: Investopedia (Sep. 30, 2018) “5 Ways to Mess Up Estate Planning”

 

How to Plan for Nursing Home Care for Parents

The median annual cost of care in a skilled nursing facility in South Carolina is $42,000, according to a cost of care survey by long-term care insurance company Genworth. You can’t expect Medicare to cover it. Medicaid coverage doesn’t start in, until the value of your assets is reduced to $2,000, says The Columbia Regional Business Report’s recent article entitled “Nursing home care requires advance planning.”

Many people don’t know that to qualify for Medicaid, your assets have to be spent down to almost nothing. Planning for long-term care includes both insurance and financial planning. However, the long-term care insurance options are limited. There are only a few providers remaining in the industry, but it’s worth the effort to see what they have.

Long-term care insurance is a plan that lets you pay a premium in exchange for coverage for a stay in an assisted care facility, full-scale care facility, or even at home. Without a policy, those financial costs can be catastrophic.

Because the cost of long-term care is so high, begin planning for your later years as soon as possible. It’s likely that in the next few decades, when the baby boomer generation starts requiring long-term or assisted living care, paying for it could become a crisis.

For people who are starting to save for future care needs, financial planners earmark 10% to 15% of your income. If you’re older and see that you don’t have enough money saved, put away at least 20% of your income. IRS guidelines include catch-up provisions for people older than 50 for IRAs and 401(k)s.

Some group insurance plans offer long-term care options. There are some additions for life insurance policies that could extend living benefits for elder care. You should plan on paying for three years of long-term care.

How to pay for skilled care is just one of the issues a family may face in later years. You also should have a will, advance directives, medical or health care power of attorney and durable power of attorney in place to help your family with difficult decisions. Remember to make sure the beneficiaries on your insurance plans are up-to-date.

Talk to an attorney about late-life concerns.

It’s never too soon to develop some kind of plan that can ease the financial burden for you and your family.

Reference:  Columbia Regional Business Report (March 10, 2020) “Nursing home care requires advance planning”

 

What is the Difference between Guardianship and Power of Attorney?

Protecting yourself or a loved one can take many different forms, since aging takes a toll on the ability to handle financial and medical decisions. In most situations, guardianship or a power of attorney does the trick, says the article “Guardianships vs. Powers of Attorney” from the Pittsburgh Post-Gazette.  How to know which is the best one to use?

A guardianship is a court-authorized assignment of surrogate decision-making power for the benefit of a person who has lost the ability to make informed decisions on their own, often described as a person who has become incapacitated. The decisions that another person can make on their behalf can be very broad, or they can be very specific.

If a person becomes incapacitated, either through a slowly progressing illness like dementia or quickly, as the result of an accident, a judge will appoint a person or sometimes an organization to handle health care and financial decisions. The court-appointed guardian or organization could be a person or agency you have never heard of and would not know your family or anything about you.

Yes, that is scary. However, guardianship takes place when families do not plan in advance to appoint a surrogate decision maker, also known as an “agent.”

Here’s even more scary news: once the court has appointed a guardian, that relationship may continue for the rest of the incapacitated person’s life. That means annual accountings and involvement with the court, legal fees and other professional fees the guardian or court deems necessary.

There are some guardians who have made headlines for stealing money and making care decisions that the individual and their families did not want.

Meeting with an estate planning attorney to prepare for incapacity as part of an overall estate plan is a far better way. Why don’t more people do it?

  • They aren’t aware of the importance of power of attorney.
  • They don’t want to spend the money.
  • They don’t know who to choose as their power of attorney
  • They don’t want to think about incapacity or death.

In contrast to a court-supervised lifetime guardianship, a properly drafted power of attorney can provide for an agent to make a variety of financial and medical decisions. The person named as a power of attorney (the agent) can serve for the person’s lifetime, just like a guardian.

This is the most fundamental estate planning document, after the last will and testament. Once it’s prepared, you can always change your mind and you or your agent never need to go to court.

Reference: Pittsburgh Post-Gazette (Feb. 24, 2020) “Guardianships vs. Powers of Attorney”