Alternatives to Guardianship - Power of Attorney
The guardianship process can be extremely expensive and time-consuming. Likewise, it can be difficult on families, and it can many times result in the appointment of a guardian that the Ward would not have chosen had they had the opportunity. As a result, lawyers often discuss the alternatives available to their clients who wish to avoid the guardianship process. Some options are available for those who plan ahead and make appropriate decisions before they ever need a guardian, and some options are available only after the need for a guardian has arisen. Following is a discussion of those options.
Powers of Attorney....
The best way for an adult to avoid the necessity of a guardianship is to create both a Medical Power of Attorney and a Durable Power of Attorney. As has been discussed elsewhere in this website, powers of attorney allow someone to designate another person(s) to make both medical and financial decisions for them in the event that they become incapacitated. Although it seems elementary, the best attribute of the power of attorney is that it allows you to designate the person that you would want to make these decisions for you, rather than relying on a Court to appoint someone to do this for you. Likewise elementary, powers of attorney must be created and signed before someone becomes incapacitated and actually needs a surrogate decision-maker.
Designation of Guardian....
The Texas Legislature has authorized a document that allows you to designate a guardian for yourself in the event that you later have need of a guardian. While this document will not necessarily avoid the necessity for the guardianship, it will ensure that the Court appoints the person that you would have chosen yourself to serve as your guardian, rather than appointing someone that you would not want. In addition to allowing you to designate someone to serve as your guardian, this document also allows you to specifically exclude any individual that you would not want to serve as your guardian. Obviously, the creation of this document helps to ensure that you are cared for by those you choose, rather than by someone you would not choose.
867 Management Trusts....
Section 867 of the Texas Probate Code lays out a mechanism for a Probate Court to create a Management Trust through which all of a Ward’s assets can be held and managed by a professional trust company. These trusts are commonly referred to as “867 Management Trusts” because of the section of the Code under which they are created.
As we have discussed in more detail elsewhere in this site, the 867 Trust is professionally managed by a bank or trust company under standards laid out in the Probate Code. These standards are set forth to help ensure that the Ward’s money is adequately protected from unreasonable investment risk, but at the same time, the assets of the Ward can be invested to achieve a higher rate of return than if they were simply held in cash.
Placing the Ward’s assets into Trust alleviates the need for a guardianship of the Ward’s estate, which reduces the cost to the Ward, eliminates many of the difficulties related to guardianships of estates, and it generally allows the assets to be utilized better for the Ward’s benefit. Obviously, however, the 867 Management Trust is an option that is only available after the need has arisen to have someone step in and make decisions for an incapacitated individual.
