As someone ages, he may not notice a diminishing capacity to handle financial matters or to make decisions about healthcare. If a durable power of attorney has been signed, the person holding the POA can simply exercise their authority, but if no such POA exists, then a probate court must appoint such a person.
When the court appoints a guardian of a person (in some states, called a conservator), it will first look to the person’s spouse or other family member before appointing an outsider. In many states, a spouse will not need a formal declaration of guardianship to make healthcare decisions for their spouse. If it is determined that a situation is too volatile or there is in-fighting over the appointment, the court may look to an attorney or some other such professional person to act as guardian. Proof of mental or physical incapacity of the person subject to guardianship must be presented to a judge at a hearing before guardianship is granted.
A guardian must keep strict records of all transactions and decisions made regarding the person, and reports must be given to the court from time to time on the state of affairs of the person’s accounts and well-being. Because of the time and paperwork investment needed on the part of the guardian, guardians are compensated for their care and reimbursed for expenses. A guardian who has control over a person’s finances must act in the best interest of the person and the assets they have. Investments must be managed, and retirement accounts monitored and maintained. The financial responsibility placed on a guardian can be overwhelming for someone not comfortable in handling financial matters. For this reason, a guardian should be able to demonstrate a good command of their own financial matters.
A guardianship ends when the person either passes away, their condition improves so they no longer need a guardian, or the guardian can no longer carry out the duties of guardianship (in which case a new guardian will be appointed).
For questions about guardianships, contact an estate planning attorney today.