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How do Financial Guardianships Work

Financial guardianships exist in every state. In some states, they are called a conservatorship. In New York, they are called commonly known as guardianships of the property. Financial guardians are usually appointed by the court for incapacitated adults (for minors, a guardian is appointed appointed both for the person and for the minor’s property).

When is financial guardianship needed

When an adult suddenly becomes mentally incapacitated to conduct his affairs, a financial guardian may be appointed by the court. Some tell-tale signs for when a financial guardian is needed are when the alleged incapacitated adult:

  • Forgets to pay taxes;
  • Forgets to pay bills;
  • Is being financially and/or physically abused by another person;
  • Is unable to do basic activities, such as grooming, dressing, bathing, and getting food;
  • Forgets to clean the house; and
  • Forgets where he or she lives.

Who can petition for financial guardianship

Usually, the spouse and children of the alleged incapacitated person (AIP) file the petition for financial guardianship. But under Article 81 of the Mental Hygiene Law, a lot of people can file the petition, such as:

  • The AIP;
  • The heirs of the AIP;
  • An executor or administrator where the AIP is a beneficiary of the estate;
  • The trustee where the AIP is a beneficiary of the trust;
  • A person the AIP resides with;
  • Department of Social Services;
  • The CEO of the facility where the AIP is a patient or resident.
  • Anyone who is concerned with the welfare of the AIP;

Under the broad provision, “anyone who is concerned with the AIP’s welfare,” almost anyone can file a petition for financial guardianship over the AIP, including a creditor.

Who can be appointed as financial guardian

The nominees of the AIP or the AIP’s family members are usually given preference in being appointed as financial guardian. Usually, however, the AIP won’t have any nominees because by the time the petition is filed, the AIP is already lacking in understanding of the proceedings involved and does not have the capacity to even nominate a financial guardian. For this reason, one of the AIP’s family members, usually the spouse or adult child, is appointed as financial guardian. At times, the court will appoint an independent co-guardian to serve with the family member as guardian.

To be appointed as financial guardian, the court may require a bond. The court may also dispense with the bond requirement, but more often than not, the court imposes a bond. If the family member cannot post a bond, the court may decide to appoint an independent guardian.

Procedure in appointing a financial guardian

The process of appointing a financial guardian begins with a petition. A family member will file a petition with court together with an order to show cause, requesting for the appointment of a financial guardian for the AIP. The AIP, the AIP’s spouse, parents, adult children, adult siblings, the nursing facility, the person with whom the AIP resides, the AIP’s attorney (or if none, the Mental Hygiene Legal Service), and the court evaluator are given notice of the petition.

Once the petition is filed, a hearing is set to determine whether the AIP is incapacitated. Prior to this hearing, the court will appoint a court evaluator, who will make an independent report on whether the AIP is incapacitated. The court evaluator will visit the AIP (usually in the nursing facility), talk to the AIP’s closest relatives and friends, and get the AIP’s medical reports to see whether the AIP is indeed incapacitated. Just because the court evaluator says the AIP is incapacitated does not mean that the court will agree with the report. There have been times when the court evaluator made a report saying the AIP is incapacitated, but the court decides that the AIP is not incapacitated. The court, however, will give the court evaluator’s report weight and consideration.

The most important determining factor that will help the court decide on whether the AIP is incapacitated or not is during the hearing. Here, the judge will be able to talk to the AIP and determine for himself whether the AIP is incapacitated. The judge will ask questions to see whether the AIP understands the proceedings and what is happening. After this hearing, the judge will make its decision on whether the AIP is incapacitated or not.

Provisional remedies

The court may also appoint a temporary guardian who can act as guardian from the time of the filing of the petition until a guardian is appointed. This can be requested when there is urgency in the appointment of a guardian, such as when bills have piled up and taxes have not been paid that could result to the loss of the AIP’s property. You must allege this as a relief in the petition if you wish to be appointed as temporary financial guardian.

How to avoid guardianship proceedings

If you are aging and would like to avoid having someone else being appointed as guardian, you can already plan your estate by executing a springing and durable power of attorney.

A power of attorney is a legal document allowing you to authorize another person to act in your behalf. If the power of attorney is springing, the authority of the agent to act is conditioned upon the happening of an event, when you lose capacity. A durable power of attorney, on the other hand, ensures that the power of attorney remains valid even if you lose capacity. For this reason, if you would like to retain control over your property and finances while you still have capacity, you can execute a springing durable power of attorney that only allows your agent access to your property if and when you lose capacity.

This power of attorney is revocable at any time while you have capacity. An estate planning lawyer will be able to help you plan your future to ensure that your instructions, objectives, and wishes regarding your property will be complied with in the unfortunate event of incapacity or death. Should you need assistance in filing a petition for financial guardianship, the Law Offices of Albert Goodwin are here for you. We have offices in New York, NY, Brooklyn, NY and Queens, NY. You can call us at 718-509-9774 or send us an email at attorneyalbertgoodwin@gmail.com.