To keep assets from disappearing or being claimed by a creditor, your estate plan should…
When a client walks into a bank to make a withdrawal the bank has certain safeguards in place, like personal identification number (“PIN”) to ensure that the disbursed funds go to the rightful account owner, and not the unintended third party. But when the client cannot be present in person, is permanently or temporarily unavailable (but necessarily alive), the bank would require a valid power of attorney from a person purporting to act at the bank on the client’s behalf.
But what happens when the client is unable or unavailable to act on their own behalf, but they never designated an agent in a properly executed a valid power of attorney? If the client cannot perform the necessary financial tasks, and they never executed such a simple document as a power of attorney, there is no one with legal authority to address many potential issues, especially if the client is aged or has medical concerns. Depending on the severity and the urgency of the matter, a Guardianship under Article 81 of Mental Hygiene Law may be required.
The usual circumstances warranting a petition for guardianship is when a person is suffering from such a diminished capacity that they are no longer legally able to execute a valid power of attorney. An example of such situation would be if the client is suffering from dementia, or advanced stages of the Alzheimer’s Disease. A language barrier may also present an issue with the proper execution of the document.
While the power of attorney is a purely voluntary act presumed to have been valid at the time of execution (subject to potential challenge of, among other, fraud, duress or undue influence), the Court when considering a grant of essentially the same powers under Guardianship must be presented with a satisfactory proof that the Guardian is ready, willing and able to act in the best interest of their ward. Needless to say, the entire process for the grant of Guardianship is longer and more expensive. It also has a much higher likelihood of a contest from persons competing for the right to be appointed a Guardian.
Courts will generally not entertain a petition for Guardianship when there is a presumably valid power of attorney in place. The Guardianship Petitioner must overcome a burden of proving that the power of attorney is somehow defective, limited or insufficient, or should no longer be valid.
Guardianship must be tailored to give the Guardian as much power as possible to act for their ward while serving as the least restrictive means of achieving the proposed goals and affording the ward as much personal freedom to act as possible. Therefore, the Court, after conducting a hearing and reviewing all of the submitted proof and testimony, may on rare occasions decline to grant the Guardianship, or more often will limit the requested relief in scope of powers and/or time frame.