One reason why estate planning is so appealing to me is that it helps to keep family assets in the family. Generally, if you’ve had a Last Will and Testament, Trust, and Powers of Attorney (POAs) for financial matters prepared, your loved ones can enjoy your gifts upon your passing and, equally important and relevant for this discussion, you and the fruits of your labor will be protected during your lifetime.
I used the term “generally” because sometimes even when these instruments are in place, caca happens, and I’ll get to those situations in a minute. But let’s just consider the usual and oh so unfortunate situation…
Mom is elderly and has all of her marbles. Mom, unfortunately, catches COVID-19 and as a result, even after surviving it has “COVID brain.” Her mind wanders as she mops the kitchen floor and she slips and falls. During the fall, Mom hits her head on the kitchen counter before landing on the floor where she hits her had again. The blows to her head cause Mom to suffer a stroke.
Until the fall, Mom not only had all her marbles but was fully functional – paying all her bills and was the only one on her financial accounts and deed. Now, she’s relearning basic self care, has no idea how to pay for anything, and depends on you and her healthcare providers. So you need to access her accounts to pay her bills. However, Mom has no estate planning in place – no financial POA and no Trust. You research “the Google” and even check out ChatGPT, which tells you what a POA is, and you decide that’s what you need. So you phone an attorney, who just renewed their license, and you tell them that you need a Power of Attorney and why, and my colleague responds, “Sorry, your Mom lacks the required mental capacity to sign a POA.”
Now what?
In Illinois and other jurisdictions, what is needed is guardianship. But obtaining and sustaining guardianship can be arduous and costly and, for many seniors, permanent. This means the court-appointed guardian, who could be you or a financial institution or your or their attorney must go to court almost every time you Mom wants something that falls outside the court-approved budget, until she dies.
If Mom recovers from the stroke but needs help managing finances and getting around, she will likely be subject to guardianship for the rest of her life, which means her assets (or yours) will be going to pay court and attorneys’ fees for the rest of her life.
Once a disabled elderly person becomes subject to guardianship, they are usually in the court system permenantly.
However, like I stated earlier, estate planning instruments, like a Trust or a financial POA can prevent this from happening…most of the time.
When these instruments don’t work, it is often because relatives of the POA agent or Trustee see Mom’s health fading, whereby her morbidity is in sight along with her estate. And so the battle begins to change the POA or the Trust. And this battle more often than not ends up in guardianship court, costing the family or Mom or both tens of thousands of dollars.
Indeed, avoiding guardianship is one reason why having a solid estate plan, where fiduciaries are ot so easily challenged, is critical.
And yes, the Q&A I hate most:
Q: How long will my parent need to stay in guardianship.
A: Until they pass away.
Dead silence.
