Guardianship is a legal process that involves the adjudication of an allegedly incompetent person and the appointment of a Guardian over that person. In other words, a court makes a determination, based on the evidence presented, as to whether a person is incapable of making important decisions concerning their own personal welfare and/or financial resources. Once a person is adjudicated incompetent, a suitable candidate is often presented to the court to determine their eligibility to act as guardian and whether they can faithfully execute and manage the many responsibilities that come along with being a guardian.
Once deemed incompetent, the individual is commonly referred to as the “ward.” A close family member that is both eligible and willing, may be appointed guardian over the ward’s person, estate, or both. Note that guardianship is not to be used as an attempt to control an individual’s behavior. It is most appropriate where there are no other simpler alternatives available, such as pre-existing General Durable or Healthcare Power of Attorney documents. The overall purpose of guardianship is to appoint a guardian to help an individual exercise their rights.
How do you know if someone is incompetent? Ultimately, the answer to that question lies with the court. However, there are numerous considerations that can be taken into account.
Pertinent questions include:
Whether the individual can understand and participate in regular conversations?
Whether they make decisions related to household chores, following a daily schedule, using a bank, or shopping at a store?
Do they understand and can they communicate their healthcare choices and follow medication instructions?
Can they pay their own bills and manage their own finances?
Are they subject to financial exploitation by others?
Can they recognize danger and seek shelter as needed?
Is the person able to eat and drink independently?
Is the person able to maintain their own personal hygiene?
Note that this list is not comprehensive, but it serves a logical purpose. Every guardianship involves a review of an allegedly incompetent person’s mental and physical condition. The primary focus is on their ability to be responsible for their own personal and financial welfare.
Once a person is adjudicated incompetent by a court, the next step is to determine who will be appointed as guardian. As previously mentioned, there are several ways that can happen. The court will seek to appoint a suitable candidate in every guardianship proceeding. A suitable candidate may be appointed as a “Guardian of the Person,” or GOP for short. A GOP is appointed for the sole purpose of performing duties related to the care, custody, and control of the ward. A “Guardian of the Estate,” or GOE, is appointed to manage the property, estate, and business affairs of a ward. A “General Guardian” is defined under the relevant statute as a guardian of both the estate and the person. In some situations, a limited guardian is appointed allowing the ward to retain certain legal rights and privileges, dependent upon the nature and extent of the ward’s capacity to make and communicate decisions related to their personal and financial welfare.
A guardian candidate’s suitability really hinges on their ability to make knowledgeable, informed decisions about the ward’s personal welfare and/or their income and property. Additionally, the court will consider the proximity of the proposed guardian candidate to the ward. It is preferred that a guardian be local to the ward’s area and available to the ward when needed. Be mindful that the court does not always appoint a family member as guardian. For example, the court, in considering the best interest of the ward, may appoint a third-party attorney to handle a ward’s financial matters where there is no other suitable candidate. Ultimately, the decision rests with the court.
Here at McIntyre Elder Law, we regularly help families decide whether guardianship is the best answer. Once confirmed, the need for guardianship becomes a legal process handled by our professional team. If you believe that guardianship may be in order or if you have concerns about a loved one’s competency and ability to handle and manage their own affairs, please call (704) 259-7040 to schedule your free consultation today.
I understand that the title of this article implies that some experiences with mail order brides go “go right.” That may be a leap, given the inherit pitfalls of post-office-initiated love. However, I am sure some folks have success on the retail side of courtship. And just like any bad relationship, the ones that go bad, go really bad. To demonstrate just how bad, let’s look at the legal implications.
By the way, mail order relationships aren’t the kind of relationship we elder law attorneys really care about, but they are the quintessential example of a perfect storm that can destroy a relationship and an estate plan. I say perfect storm because the mail-ordered variety of matrimony is typically rushed into by both parties. Such a relationship predicated on desperation (for citizenship or companionship) lacks something very important: a plan. This is my argument for the consideration of a prenuptial agreement.
Should I have a Plan Before Marriage?
Love is blind. That’s something you’ve probably heard before. But it’s just not true. Let’s go ahead and relegate that sort of shortsighted thinking to the Lifetime movie it belongs to. Love can see and folks can lovingly plan for the future when love may not be a factor in the relationship any longer.
It’s crazy that people will spend time, money, and sleepless nights putting together an estate plan (it’s much easier if McIntyre Elder Law is doing it) but they just don’t plan for the possibility of divorce—which, by the way, should be a consideration in your estate plan. What makes it even crazier, is that the likelihood that any one couple will divorce is super high. Planning for the possibility of future separation is not a statement of lack of trust or an attack on the character of either party. Rather, it’s a prudent understanding of the fact that stuff happens, and people can change.
What If I Fail to Plan and Get Divorced?
Other than mail order bride situations, the arrangement that scares me the most (as an elder law attorney) is second, third, or fourth marriages. Many subsequent marriages take place between two people who already have their own children, their own assets, and their own estate plan. Because marriage—assuming there is no prenuptial agreement—gives either spouse inherit rights, a separation of the couple or death of one of the spouses can lead to straight up disaster.
Let’s look at an example: Bob and Shirley. Bob has 6 kids and Shirley has 2. Bob’s previous wife died and left Bob everything she owned. Shirley’s ex-husband gave her more than 50% of the marital assets in their divorce. Bob and Shirley, despite being in their twilight years, find each other and the connection is instant. They decide to marry without ever consulting an attorney. After a brief honeymoon, Bob and Shirley realize that they never really got to know each other and, now that they have, it’s awful. Bob snores and Shirley chews with her mouth open. Due to those irreconcilable character flaws, they decide to split up. However, for his trouble, Bob wants to get a piece of Shirley’s big ‘ol retirement account and after a messy divorce, Bob gets his wish. Both Shirley and her two kids are angry and lose faith in love forever.
Alternatively, let’s say Bob and Shirley get married and Bob dies on the honeymoon (don’t worry he’s not real). They’ve known each other all of 10 days so Susan is devastated but moves on quickly. She probates his estate and recovers her marital share. This time, it’s Bob’s kids that are mad because this lady they haven’t ever met just robbed them of their inheritance.
I could pretty much drop the mic at this point. However, let me just say once again that if you’re planning on getting married, especially a subsequent marriage, talk to an attorney first. I promise, it will be easier than getting a bride through the mail.
If you have questions about prenuptial agreements or generally want to be talked out of ordering a mail order bride, call McIntyre Elder Law at (704) 259-7040.
So, your loved one did the right thing. They planned ahead and utilized a trust to pass their assets safely and efficiently. You know enough about trusts to know that you don’t need to go through probate. However, what do you need to do?
Distribution of Assets
The trustee needs to distribute the assets of the trust based on the terms set forth in the trust. How that’s done depends on the type of asset being distributed. Cash is pretty easy: the trustee writes a check. Same with non-titled personal items, the trustee just hands them over and the beneficiary signs a receipt. However, if it’s real property, a deed of distribution must be drafted allowing the trustee to distribute hat asset out of the. trust and to the rightful beneficiaries.
IRAs and other retirement accounts can be kind of funky as well. IRAs, if left to the trust, may be inherited directly with immediate tax consequences or they can be paid out to the beneficiaries pursuant to a mandated schedule, which would spread out the tax burden over at least 10 years.
The point is, how assets will be distributed directly depends on the type of assets in the trust.
Property to Stay in Trust
How property in a trust will be distributed also depends on the terms of the trust document. Some trusts are set up to keep assets in trust for the benefit of generations to come. These trusts may outlive generations of successor trustees and last for many years. If the trust to which you’ve been appointed trustee is one of these “legacy trusts”, then your job is straightforward. Follow the terms as set forth in the trust document.
Notwithstanding the straightforward-ness of the job, the “how” may still be illusory. For example, the trust may direct—as many. Trusts do—the trustee to pay out money for the health, maintenance, and support of the beneficiaries. What does that mean? If you’re not a lawyer or otherwise familiar with trusts, you could have hundreds of questions like this.
Thus, upon the death of the trust maker, you should seek advice as to the left and right parameters of your discretion as a trustee.
Everything is Out: What Now?
Once everything has been distributed out of the trust, it time to dissolve it. This is a step that many folks miss. The trust will have a tax identification number. It may also have accountings, bank accounts etc. The tax ID number should be canceled, the bank accounts should be closed down, and the accountings should be finalized.
Having a trust avoids the. headache and perils of probate. However, it still must be administered and dissolved correctly. If. You have questions about trusts, give the experienced attorneys at McIntyre Elder Law a call at (704)-259-7040.
Under Federal law and the Nursing Home Reform Act of 1987, virtually all nursing facilities nationwide must meet specific requirements and adhere to certain standards. Most importantly, federal law prohibits these facilities from requiring financial guarantees from third party individuals. In other words, a facility cannot require a resident’s family member to sign or co-sign an agreement to take on financial liability incurred by the resident. Nonetheless, there is a long history of facilities using admission agreements that do just that.
As a condition of admission, family members and friends of prospective residents are often given admission agreements, and then instructed to sign those admission agreements. Sadly, a resident’s family members and friends often have no realistic opportunity to understand or to even read the admission agreements before signing them. Facilities have been known to then use those guarantees to pressure a family member or friend into paying bills for which the family member or friend should not be responsible.
Many facilities use forms that are confusing and deceptive, even to some attorneys. For example, many facilities will use express language disclaiming any notion that the agreement operates as a third-party guaranty, only to turn around and enforce the agreement as such. One of the most common strategies employed by nursing facilities today include the use of admission agreements that obligate a “responsible party” or “financial legal representative” to use the resident’s money to pay medical expenses. Then, if the resident incurs a large bill prior to death or if the resident’s bills remain unpaid, the facility will bring suit against the third-party representative in an attempt to hold them personally liable. Lawsuits such as these are not only questionable from a professional and ethical perspective, but also conflict with the general rule that duly appointed agents are not liable for the debts of a principal.
In sum, be aware of ambiguous language and terms within a nursing home contract. Does the contract serve to admit the resident into the facility and detail the care and services provided? Or, does it attempt to impose a legal duty on a family member unlawfully? Does it appear to do both? If it’s not obvious what the contract does, you should be hesitant to sign. A credible facility will be considerate of the family’s need to understand the operative language. Pertinent federal law includes but is not limited to: 42 C.F.R § 483.15(a)(3), 42 U.S.C. §§ 1395i-3 (c)(5)(A)(ii) and 1396 r(c)(5)(A)(2).
Here at McIntyre Elder Law, we regularly assist individuals and their family members with navigating placement of their loved ones in a long-term care situation. If you or your family have been the target of a lawsuit under similar circumstances, please do not hesitate to contact our professional team. Our mission is to help seniors maintain their assets and preserve their legacies.
Probate: why I study the process just to try to avoid it
Before I began to practice in Elder Law, I always assumed that if you went through the probate process then that meant you were doing something right. Probate is the legal process that a court uses to authenticate a will, or in situations where someone passes without a will it is how a court administers someone’s assets according to the law.
In those situations where someone was probating a will, I would think that was a person who was really on the ball. Hey, you planned ahead and had a will to probate so you took care of business and did what was best for everyone involved. But here I am, screaming from the mountain top (specifically from our new office in Hendersonville, come and see me) that you want to avoid probate whenever possible!
Here is why: North Carolina is a limited recovery state. This is a big deal and an important legal right that you have in our state. What that means is that creditors, whether that be credit card companies or those trying to collect medical bills, are limited to going after the possessions in your estate as it passes through the probate process. If any of your assets in your estate can be passed to someone else without going through the probate process, then creditors don’t get the chance to take them. So, if creditors never get a chance to collect on debts because your possessions are passed on without going through probate, then that means more of your estate will get into the hands of your loved ones.
Preserving your estate may seem easier said than done, but that is where the planning comes into play. This is why our firm has made it our mission to provide excellent estate planning services. You bring the estate, that you have worked very hard for your entire life to achieve, and we work with you on a plan to preserve those assets and ensure that you are able to leave behind the legacy that you want. Every plan is different because every estate is different. However, the goal of preserving your legacy remains the same. Our goal is to help you. Sometimes probate is unavoidable and we have to be prepared for what that means. But, one of our strongest tools we have is to help you locate the potential to avoid the probate process.
I found that this opportunity to work with clients to achieve these goals brings with it a very personal reward. I like to see you win! So it would be a personal favor to me to meet with you and see what plan fits your estate. Since you have made it this far, I look forward to meeting you and working with you on a plan to achieve your goals.
Greg is really struggling with some tough decisions with growing the firm and his role. All of life’s best decisions are the toughest and that includes estate planning. In this Elder Law Report we examine the value of not holding on too tight. If we can help with your tough decisions let us know: mcelderlaw.com.
Hi, I’m Greg McIntyre with McIntyre Elder Law, and this is the Elder Law Report, our weekly show where we talk about legal issues that affect you and your family. Brenton, what’s our topic today?
Well, we get a question all the time and that question is, how in the world do I put stuff in my trust? That’s a question that’s really important. It’s different for different assets. So, we want to tackle that topic today and really let everybody know how to fund your trust, which is pretty important because-
[crosstalk 00:00:35] so let’s say I go to an attorney and I say, “I want to draft a trust for my family.” The attorney agrees it’s the right thing, understands my goals, believes for tax purposes, for asset protection purposes, for liability protection purposes, and probate avoidance purposes, and maybe even for benefits qualification to pay for long-term care down the road, for those purposes, that it’s the right thing to do.
And then the attorney drafts the trust for me and I have this trust in a nice trust binder, and I say that I want to have my house in that trust. I want to have some investment accounts in that trust. I talk about those being in the trust and how they’re disposed of within the trust. Does that mean that the trust automatically has control over those investment accounts or over my home?
No, not at all. You have to put those assets in the trust. So, that’s part of, well that is funding your trust. So, let’s talk about the real property. Real property. You know, every piece of property in the United States has a deed associated with it, some type of deed charter, whatever. So-
Real estate, sure.
Real estate. That’s right. To be able to put property into a trust, you have to title it in the name of your trust. So, your trust, if you have one, it has a name. For things to be in that trust name, right, you have to title them in the name. So, you have a deed and that deed will just go from you to your trust. So, you’re the grantor giving the property to your trust, the grantee. That is how you can put property in your trust. Now, you probably haven’t drafted a deed if you’re a layperson, so you need an attorney to do that. Thankfully for our clients, that’s one thing we do for them. We ask them what properties they want to put in the trust, or we suggest what properties they should put in the trust, and we do that part for them. We draft those deeds that go along with the trust and we record those and register deeds in the county in which that property is located to put that on record.
But the investment property or the investment assets are a little bit different because they don’t have deeds. So, you have an investment account and that account is in someone’s name. It might be in your name, might be in your wife’s name, might be in both of your names. To be able to put that in the trust, you can do a couple of things. You can cash it out and open up another investment account in the trust and just transfer all of that cash over into the trust account. Or you can simply transfer the ownership of the account to the trust. Now-
That can be handled at the bank.
Or a financial advisor, right? The financial advisor or a company where you hold those investment accounts can handle the transfer of the name of that. And they would want the trust document, to be able to see the trust, so you’d want to take the trust binder in. And really, they want on file generally the trust certification document, right?
That’s right. [crosstalk 00:03:56]-
How is the trust certification document different than the larger, bigger trust?
Yeah, trust certification document is [inaudible 00:04:05]. So, trust is a private document, and that’s important to know. It’s not registered anywhere, on file anywhere. It’s your private document that what you put in there can remain private. And that’s one of the benefits of a trust. So, you don’t want to have the full trust document on file somewhere because it’s private. That’s your private business.
Like the register of deeds, right?
That’s right. That’s right.
It shows [crosstalk 00:04:30] that he has control of a property. I wouldn’t want to record the whole big fat detailed trust that told all the details. Right?
That’s right. That’s right.
[crosstalk 00:04:37] business.
Right. So, if something needs to be recorded, you can record the trust certification, which is a summary of your trust. And it goes over the basic elements of the trust that anyone would need to know to be able to prove that your trust exists, who the parties to the trust are, the type of trust that it is, and the powers that the trustees have over that trust, and generally what type of property it holds.
So, if I had a piece of real estate and I deeded that into the trust, I record that deed at the register of deeds, I would also want to record the trust certification document to show that the trustee now had control and how the trustee had control over that piece of land. And that’s in the public record and chain of title, right?
And same thing with the bank. They’ll want a copy of that trust certification, but it’s a way that you can show the nuts and bolts, a summary of the trust without disclosing the entire trust or keeping it on record somewhere.
That’s right. And it’s very important because a will is something that becomes public record. It gets filed in the courthouse and anyone can go and pull that file and take a look at it. But a trust, it’s different. You avoid having to deal with the courthouse, and you avoid having to go through that Probate process and you avoid having to subject your private wishes to public scrutiny.
That’s one of the reasons why a trust is so beneficial, is you avoid the opportunity for outsiders to come in and challenge your estate plan, which is very important.
Sure. Absolutely. So, funding a trust, I just find that people have such a misconception generally-
Yeah. [crosstalk 00:06:29]. One fear that a lot of people have is, and one question I get all the time is, “Hey, am I going to have to list out every dish, every picture, every chair, every rug, every piece of furniture that I have to be able to put all this stuff in the trust, because I don’t want all of that going through Probate.” So, let me ask you, what do we do to prevent that from being reality, where you have the list and inventory-
At the time you sign the trust, we have you sign an assignment of all personal property that’s non-titled assets like household assets, goods, things like that to the trust, so that we can go ahead and claim the protection of the trust. And so, the trust can handle those assets outside of the Probate process, which is a very nice luxury for a trust that we draft.
Right. And it’s very important to have that along with the trust so that you know that all your personal items or non-titled assets are in the trust. Whatever you have now or hereafter acquire will go in there. But sometimes things are left out. Sometimes people make mistakes, they might get something and forget to put it into the trust. Is there any safeguard, safety net there to make sure assets pass by the terms of the trust if someone forgets to put something into the trust?
There is. We draft wills that go along with the trust that would take something that wasn’t in the trust and go ahead and put it in there at the time and let the trust do the heavy lifting. However, also we draft personal property memorandums with our trust as well that allow you to list assets that are in the trust that might get placed all the personal property in the trust, and then if you want to say, “You know, little Johnny gets the baseball card selection. My daughter Jane, she gets my doll collection and my china and other…” And so on and so forth. You can fill that part out at your leisure, with the more voluminous items. So, we try to make it as convenient as possible and explore funding with you and make sure you’re educated on funding.
We also draft a letter that details how to fund a trust with any type of asset and put that in the front of your trust binder so that you can answer your own questions as the trust funding and anything else that you have left over, we’d be glad to answer those questions for you and help you with funding.
So, if you have any questions on drafting trusts or funding trusts, call us at McIntyre Elder Law at 704-749-9244, or schedule your free consultation today at mcelderlaw.com. Thank you so much, Brenton, for helping me explore trust funding.
This website is attorney advertising and does not establish an attorney-client relationship, which is only formed when you have signed an engagement agreement. We cannot guarantee results; past results do not guarantee future results.
McIntyre Elder Law 112 S. Tryon St. STE. 760 Charlotte, NC 28284