Guardianships and conservatorships are drastic and very invasive. They strip individuals of their legal autonomy and establish the guardian as the sole decision maker. To become a guardian requires strong evidence of legal incapacity, and approval by a judge, explains an article titled “Guardianships Should Be a Last Resort–Consider These Less Draconian Options First” from Kiplinger. They should not be undertaken unless there is a serious need to do so. Once they’re in place, guardianships are difficult to undo.

If an elderly person with dementia failed to prepare a durable power of attorney and health care directive before becoming ill, a guardianship and conservatorship may be the only ways to protect the person and their estate. There are also instances where an aging parent is unable to care for themselves properly but refuses any help from family members.

Another scenario is an aging grandparent who plans to leave funds for minor beneficiaries. Their parents will need to seek a conservatorship for the young child, so they can manage the money until their children reach the age of majority.

Laws vary from state to state, so if you might need to address this situation, you’ll need to speak with an estate planning attorney in the elderly parent or family member’s state of residence. In Minnesota, courts require less restrictive alternatives to be attempted before guardianship proceedings are begun.

Alternatives to guardianship most commonly include powers of attorney and health care directives for financial and medical decisions. These documents are typically prepared proactively, before they are needed, and are far less burdensome to achieve and equally less restrictive. A health care directive will allow a family member to be involved with medical care, while the durable power of attorney is used to manage a person’s personal financial affairs.

Some families take the step of making a family member a joint owner on a bank, home, or an investment account. This sounds like a neat and simple solution, but assets are vulnerable if the co-owner has any creditor issues or risk exposure. A joint owner also doesn’t have the same fiduciary responsibility as a POA. While client’s are often quick to suggest this solution, it often comes at the cost of family harmony.

Some banks will allow an assisted decision-making agreement, which creates a surrogate decision-maker who can see the incapacitated person’s financial transactions. The bank is notified of the arrangement and alerts the surrogate when it sees a potentially suspicious or unusual transaction. This doesn’t completely replace the primary account holder’s authority. However, it does create a limited means of preventing exploitation or fraud. The bank is put on notice and required to alert a second person before completing potentially fraudulent transactions.

Trusts can also be used to protect an incapacitated person. They can be used to manage assets with a successor trustee. For an elderly person, I often encourage including a “co-trustee” to serve alongside the client. The co-trustee can be involved under the guidance of the grantor and is readily available to step in upon the grantor’s death or if they lose the capacity to make good decisions.

If these alternatives are no longer an option, a limited guardianship focuses on specific aspect of the person’s life and may be preferred to a full guardianship. This can be established to manage the person’s finances only (in which case it’s a limited conservatorship), or to manage only their medical and health care decisions. Limited guardianships need to be approved by a court and require evidence of incapacity.

Planning in advance is the best solution for incapacity. Talk with an experienced estate planning attorney to protect loved ones from having to take draconian actions to protect your best interests.

Reference: Kiplinger (July 7, 2022) “Guardianships Should Be a Last Resort–Consider These Less Draconian Options First”