While most proactive individuals know the importance of having a well-rounded estate plan, many people don’t know that a will alone is not enough to avoid court. Most people who reach old age come to a point at which they are no longer in a position to handle all of their affairs on their own. In many cases this incapacity is due to dementia or other cognitive impairments associated with the elderly. Unless you’ve structured your estate plan to avoid court interference, a court could make decisions about your care that can have major repercussions on your lifestyle and the handling of your wealth.
Take Alex for example. Long before Alex retired from his long and successful career as an IT manager at a large corporation, he put a cursory estate plan in place with a will detailing who would get which of his assets upon his death. But, Alex didn’t update his plan as he aged. In his late seventies, he developed Alzheimer’s and it became unclear to his family how to proceed with his medical care and wealth management. Since Alex did not formally choose an individual to be in control of his affairs in the event of incapacity, it fell upon the court to appoint a guardian or conservator.
Unfortunately, that’s where things can get complicated.
What is guardianship?
Guardianship goes by a few other names, so it’s important to get familiar with various terms used to indicate similar and somewhat overlapping concepts. The other terms you may hear include “conservatorship,” “plenary guardianship,” and “living probate.” It’s important to note that these terms are used in slightly different manners from state-to-state, with some states using “guardian” and “conservator” interchangeably. Others maintain the distinction of a guardian being a person who makes decisions about medical care and living arrangements, whereas a conservator makes decisions about property and assets. In either case, the guardian or conservator is essentially a substitute decision maker that’s authorized by the court to make decisions on behalf of the incapacitated person.
3 Reasons You Should Avoid Court
In the process of living probate, the court tries to settle on solutions that will fit the incapacitated individual’s best interests. That being said, there is a much better way. Here are just a few of the reasons guardianship and conservatorship are not ideal fallbacks:
- Cost: To put it simply, living probate is expensive. The legal fees associated with court-appointed attorneys representing incapacitated individuals can chip away at their estates very quickly.
- Privacy: One of the primary reasons so many people want to avoid court is its lack of privacy. Most of us care a great deal about our personal affairs being discussed in a public forum. Moreover, guardianship hearings can require the individual to appear in person so the judge can make a determination. While this may be merely challenging for someone with limited mobility or impaired memory, it could be humiliating for someone who is bedridden or severely cognitively impaired.
- Clarity: In addition to it being costly and a compromise of privacy, living probate is also full of guesswork. If Alex had assigned powers of attorney and established long-term care provisions in his estate plan, his affairs would be handled exactly as he wished in the event of his incapacity. When the court is involved, they usually apply default rules of state law, which means the legislature is essentially making some choices for you and your family, choices that may not take into account your specific situation and personal wishes.
How to Structure Your Estate Plan
So what does an individual like Alex need to do in order to avoid court and prevent his family having to go through living probate? There are a few specific steps we can take to ensure your affairs never end up in a court-appointed guardian’s hands:
- Powers of attorney: A complete estate plan includes named powers of attorney who will fulfill the roles of guardians and conservators in the event of your incapacity. The difference is that these individuals will be chosen by you rather than by the court. There are a number of different types of powers of attorney for specific purposes, such as a healthcare power of attorney or a general durable power of attorney, the latter of which controls the management of your finances.
- Long-term care planning: Although you may never need long-term care, building a strategy for it into your estate plan will allow you to relax knowing that you’ll receive long-term care according to your wishes if that becomes necessary. This type of planning also helps protect the assets in your estate plan from being used up on medical expenses before going to your beneficiaries. Avoiding guardianship and conservatorship through living probate is a relatively pain-free process if handled well ahead of time.
There are many ways in which comprehensive estate planning can have a positive impact on your life while you are still around to reap the benefits. Get in touch with us today to go over the parts of your estate plan that may need amending to give you and your family the best possible outcomes.