Protecting a Grandparent’s Assets?
Worried that grandmother is writing too many checks to a cause that seems questionable? Grandad gave his credit card number to who? Actually, what if they have unforeseen medical needs or a decline in capacity? These are the kinds of concerns that creep up on us as loved ones age. Experts offer a range of legal strategies to help protect them.
Fundamental Action: Powers of Attorney
An important, flexible and fairly easy to tackle basic step toward protecting loved ones is assisting them to create a power of attorney. As experts at JD Supra explain: “This document establishes an attorney in fact who is authorized to act for…the principal, in specific financial transactions or in an unlimited capacity. The biggest pro to this option is that the attorney in fact has no authority other than what the principal grants to them, so their powers can be as broad or limited as the principal chooses.” Because powers of attorney require that loved ones authorize them, and are cognizant of what they are signing, proactive and transparent communication with our aging loved ones is best.
More Drastic Intervention: Conservatorship
As Charles Hunsinger of Burns & Levinson points out, safeguarding the finances of a loved one is inherently challenging. How they spend their money is afterall their own business, but we certainly don’t want them to be misled or make decisions that put their long term financial well-being in jeopardy. If the risk of harm warrants strong intervention, a conservatorship might be called for. This is a strategy that requires court involvement. Tucker Allen explains: “Conservatorship is a legal proceeding in which the court appoints someone to manage another’s estate (finances, administrative and legal decisions) after determining that person lacks capacity to manage their own affairs.”
The most common reasons conservatorships are granted are cases of coma, mental incapacitation, Alzheimer’s disease, dementia, stroke, or brain injury. Generally, medical statements confirming the incapacity are necessary during the court proceedings that establish a conservatorship. A court-appointed conservator can be a relative, friend, professional, or, in some cases, an institution.Conservators are fiduciaries—they are obligated to always make decisions in the ward’s best interest. Because of this, courts typically require a bond, referred to as a conservator bond, before approving a conservatorship. A conservator bond is a type of fiduciary bond—it serves as a guarantee that the conservator will act in the best interest of the ward, following all applicable laws. At Colonial Surety it’s easy to obtain a conservator bond, anytime, from anywhere: get a quote online; fill out the information requested; and, enter a payment method. Bonds are instantly available to print or e-file, from a lawyer’s office or the court. Obtain Conservator Bonds Here.
Another Possibility: Establishing A Trust
Although sometimes conservatorships become necessary, legal advisors point out that once courts are involved, the protected person is formally losing control, and this may of course lead to resentment and family conflicts and even unforeseen decisions. Depending upon the circumstances, the establishment of a trust can be a viable alternative for safeguarding and distributing assets in support of a loved one. JD Supra offers this hypothetical example:
Your grandfather can create a trust, or someone can create one on his behalf, into which he will place his money. Trust distributions can be set up to occur on a fixed schedule for your grandfather’s health and welfare, or in some cases to bypass your grandfather altogether. For example, a trust can directly pay rent, utilities, or a mortgage on his behalf. Suppose you set up a third party as the neutral trustee with your grandfather as the beneficiary. In that case, your grandfather can continue to live as he wishes, albeit with some reduced authority over his own money. The biggest benefit of this option is that there is no need for court involvement whatsoever. The biggest con—in addition to the capacity issue—is that this option requires your grandfather to voluntarily put his assets out of his direct control.
This brief overview will help you understand the basics of trusts. As you consider the option, be sure to familiarize yourself with different types of trusts. If you set up a trust, you’ll designate a trustee—who can secure a trustee bond right here.
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