Being unable manage your own affairs is not something any of us want to thing about. However, most of us have probably come into contact with someone who has Dementia, Alzheimers or another disease that effects cognitive abilities. When this happens, managing personal finances, or making informed decisions about health care, becomes nearly impossible.
If a person does not have proper estate planning and cannot make their own decisions, then they will often need a guardianship. Under a guardianship, the court determines that a person is incapacitated, and therefore unable to make their own decisions. The court removes that person’s rights, and appoints a guardian to manage their affairs. The guardian will get full control of that person’s finances, can determine where they live, and even who can interact with the person. Sometimes the guardian is a relative, but often it is an independent professional. And everyone gets paid. The guardian gets paid. The lawyer for the guardian gets paid. And the court appointed lawyer for the alleged disabled person gets paid.
If you have proper estate planning in place, a durable power of attorney for finances and a designation of health care surrogate for medical decisions (or sometimes, a properly funded revocable living trust), a guardianship will not be necessary.
And where do they get paid from? The ward’s assets.
The importance of having good planning documents in place cannot be stressed enough. The alternative can be so invasive and costly.
What spurred this post is the recent coverage of Britney Spears Guardianship (or Conservatorship, as it called in California). Nearly 13 years ago, when she was suffering from what appeared to be a serious mental breakdown, her father went to court to have Guardianship established over her. Since that time, Ms. Spears was unable to make key decisions, personal or financial, without the approval of her conservators: her father, Jamie Spears, and a lawyer, Andrew M. Wallet. Her most mundane purchases, such as a drink at Starbucks, were tracked in yearly accounting to the courts of California to safeguard her fortune that she earned but had no control over. The Guardianship affected her most personal choices, such as getting married or having children.
And how expensive are guardianships? According to some reports, her father, the Guardian, received $5 million dollars in fees, and one can imagine the fees award to the attorneys for the guardian, which at times have been estimated to be over $6.9 million.
Proper planning can help avoid a costly and restrictive Guardianship. If you are interested in learning more about alternatives, please contact us.