When is a guardianship necessary? Is there any way to avoid guardianships? What kinds of things should people be thinking about when it comes to guardianships? Many people do not consider the consequences of guardianships before someone they care about is in a situation that makes a guardianship necessary.
Guardianships are often discussed in two contexts – when there are minor children and when there is an adult who is incapacitated. In Ohio, there are two types of guardians – guardian of the person and guardian of the estate. Often, the same person serves in both capacities. The guardian of the person is responsible for the day to day decisions regarding the ward (person under guardianship) such as where the ward lives, daily activities, and healthcare decisions. The guardian of the estate is responsible for the finances of the ward.
Parents with children under the age of majority are encouraged to execute a Will that will nominate a guardian for the children in the event the parents pass away before the child is over the age of majority (currently, 18 in Ohio). It should be noted that a parent can nominate one person as guardian of the person and another as guardian of the estate or the parent may nominate the same person to serve in both capacities. Parents should carefully consider who they choose to nominate. And, remember, the local probate court has the final say as to who is appointed as guardian. The court will take the nomination made in the Will under consideration and will usually appoint the person nominated unless there are compelling reasons to do otherwise.
If a person becomes incapacitated at some point in his or her life, another person may apply to become guardian. Again, depending on the situation, the court can appoint a guardian of the person and estate or only one or the other. Estate planners usually recommend you execute a health care power of attorney and a financial power of attorney. If these documents are drafted appropriately, they can take the place of needing a guardianship for an incapacitated adult.
A health care power of attorney allows you to name an agent who can make medical / health care decisions on your behalf if you are unable to do so. A financial power of attorney allows you to name an agent who will take care of your finances. This financial power of attorney can be effective immediately or can be springing – meaning the agent does not have power to handle your finances until you are incapacitated. With these documents in place, it is very likely a guardianship will not be required, which can save you substantial amounts of time and money in court costs and legal fees.
One very important thing to remember is that guardianships are controlled by the applicable probate court. The guardians have very specific rules and regular reporting requirements. If you are the guardian of the estate, you must obtain a court order for any expenditure from the ward’s funds. This is true for minors or incapacitated adults.
Parents of minor children should consider creating a revocable trust that will be funded upon the deaths of both parents. All of the parents’ assets will funnel into the trust upon their deaths and the trustee of the trust will be responsible for managing the trust assets and distributing funds to or for the benefit of the children. There are several benefits to this arrangement. The parents can choose a trustee whom they trust to handle the finances as they would. The language of the trust document can direct the trustee regarding the types of things the parents would like to pay for – i.e. health, education, maintenance, support, a wedding, a down payment on a house. Also, a guardianship of the estate of a minor terminates when the minor reaches the age of majority. The child receives the assets with no strings attached. A trust can provide for distribution of the trust assets to the child upon reaching certain ages, such as 25, 30, 35, at which point the child may be more financially responsible.