©2013 John B. Payne, Attorney
What happens when a person becomes incompetent?Unfortunately, many accidents happen every day. Some accidents are external to the victim, such as a car accident, a slip-and-fall, or a natural catastrophe. Other accidents happen within the victim, such as an aneurism or a stoke. Fortunately, they do not all happen to the same person.Accidents are spread thinly over a large population. Most of us do not get more than our share. On the other hand, the person who suffers an accident may endure great pain, loss of the ability to communicate, or total loss of consciousness. Even discounting accident, almost everyone will have a period of reduced mental capacity toward the end of life.A person may lose the ability to comprehend who or where he or she is, or lose ability to make meaningful decisions. When that happens, the person may be determined to be “legally incompetent” by a judge. A person may also be committed to an institution if a judge decides that the person is a danger to himself or herself because of mental illness, incapacity or incompetence.The question of competence usually comes before a court on a petition. Petitions may be filed by anyone, but usually they are brought by family members, police officers, or social workers of various kinds. Where the subject of the petition, who we will call the “protected person,” does not have an attorney, the court may appoint one to look into situation. The attorney who is appointed, called the “Guardian ad Litem,” talks to the person, caretakers and others. The Guardian ad Litem then reports to the judge.If the “GAL” report indicates a need for a guardian, the court will attempt to find a responsible person to be the guardian. If the protected person has signed a power of attorney or states a preference, the court will try to comply with the protected person’s wishes. In some cases, the court may appoint a person from a list of eligible attorneys and other qualified individuals and organizations. Such an appointment is made when the protected person has not nominated a guardian or when there is a dispute over who should be appointed.These “professional” guardians are appointed because they are considered neutral or objective in making decisions for the protected person. However, they are often disinterested and may even exploit the protected person. I advise clients that it is better to nominate someone than to have a stranger appointed by the court.Once appointed, the guardian acts generally like the parent of a minor child, making decisions for the protected person about where the person will live, what kind of medical treatment is authorized, and with whom the person can associate. The guardian may also direct the protected person’s income and nominal property. This is the Michigan use of the term “guardian.” The guardian’s rôle is supplemented by the responsibilities undertaken by the “conservator,” who handles substantial assets for the protected person. In some states, the terms are reversed, or the persons who fill the rôles are referred to by other terms. In Pennsylvania, the person who makes personal decisions is the “guardian of the person” and person handling the assets is the “guardian of the estate.”The process of naming a guardian can become very hard for the family if a disagreement develops. A court battle over who will be guardian is expensive and usually creates lasting hard feelings.This court battle might be avoided if the protected person signs a durable power of attorney. A durable power of attorney is signed by the “principal” and gives the “agent” some or all of the powers of a guardian. Since there is someone with the authority to make decisions if the principal becomes incapacitated or incompetent, a probate petition may be avoided.What happens to the property when a person becomes incompetent?On death a person becomes a “decedent.” A decedent’s property goes into an imaginary hat called the “estate.” The person who holds the hat is called the “personal representative,” “executor” or “administrator.”A living person also has an estate: everything the person owns. However, it is not referred to as an estate until the person becomes incapacitated and another person must take over the assets.Property may be kept out of an estate if it is owned jointly with a survivor, or if it is assigned to someone in a deed, account heading or document of title. For example, if the home is owned jointly, it does not go into the probate estate of the first joint tenant to die. If a bank or brokerage account is designated “pay on death” or “in trust for,” the account is not part of the probate estate. On death it usually goes automatically to the person designated as the beneficiary. Assets in trust may also avoid becoming part of the probate estate. Joint tenancies, trusts and other forms of ownership that avoid probate are called “will substitutes.”When a person becomes incapacitated, joint bank accounts remain available because other joint owners have access to the funds. Other types of joint property, such as securities, real estate, and motor vehicles, cannot be liquidated without the signatures of all joint owners. In the absence of a valid power of attorney, a conservator would have to be appointed to sign for the incapacitated person.What rights does a protected person retain?A protected person retains all rights that are not taken away by a court. Most states provide for guardians with limited powers and may include protection of the protected person’s rights in the guardianship statute. Whether the protected person voluntarily agreed to the appointment of a guardian or conservator or was determined to be incompetent by the court will also expand or contract the list of rights retained by the protected person. Whether a protected person may vote, marry, divorce, buy or sell property, or change residence are subject to state guardianship laws and the court order appointing the guardian or conservator.How does a person avoid court supervision?A power of attorney will authorize a person called the “agent” to act on behalf of the “principal.” A valid power of attorney granting authority to handle financial and personal matters may make it unnecessary for the family to seek guardianship or conservatorship. If the agent is exploiting the principal, a petition for court supervision may be filed, but most agents act properly and protect their principals, making court action unnecessary.Placing all or a part of the estate in a trust may also avoid court supervision over the estate during the person’s life and even after death. A trustworthy trustee can manage the trust estate for the person’s benefit more easily and economically than a conservator. The trustee should be carefully chosen and the trust professionally drafted, but the families of decedents whose estates were in trust are pleasantly surprised at how easily things can be handled during disability or after death. A trust is not appropriate for everyone, but for complicated or large estates a trust may be extremely cost-effective and may avoid inconvenience and delay.Consult an attorney about these important estate-planning issues. There are trust kits available on the Internet and from insurance agents, but having an estate plan drafted by an experienced attorney avoids problems and saves money in the long run. Contact Garrison LawHouse, PC for a consultation.