On Behalf of | Nov 10, 2022 | Estate Planning

What is a guardianship, and when does it come into effect?

A guardianship is a legal designation for a situation where a person is deemed to be incompetent by a Court, and a trusted individual has been appointed by the Court to manage their affairs on their behalf. Incompetence may result from old age, senility or memory loss, mental health conditions, substance abuse, or even when an individual is a minor and a legal adult needs to manage their assets.

A Court must confirm or appoint a guardian. Sometimes, the guardian is already chosen by the family member and the Court is only needed to determine that person is in fact appropriate for the role and confirm the appointment. However, there are many cases when the Court is appointing a guardian who may not be family or may not be related or involved in any way, and the third-party guardian is meant to be an impartial role to act in the best interests of the beneficiary.

Much of the following is summarized from the Department of Justice’s website on guardianship and conservatorship. Please be sure to check their website for in-depth information, resources, and other helpful tools.

Guardians are also known as fiduciaries, who “are people or organizations that act on behalf of someone else and have high duties of trust, care, honesty and confidentiality.” Guardians are responsible to the person for whom they provide care as well as to the court, and often must report to both.

Four Types

There are four types of guardianships. The first two are guardian of the person and guardian of the property. The first type allows the guardian to make decisions regarding health care choices, living situation, and other personal matters. The guardian of the property is responsible for managing the finances and financial assets, and generally manages the flow of income, investments, expenses, real estate purchases or sales, donations, and more. Although the second type of guardian is called “guardian of the property,” they don’t necessarily control or manage tangible property unless it needs to be bought or sold. Tangible property, like household items the beneficiary owns, are more likely to be managed by the guardian of the person.

A full guardianship is one which gives virtually all control of the individual, and their assets, to the guardian. This may occur when the person is deemed incapable of making any decisions on their own, such as in advanced dementia or severe substance abuse that impairs decision-making.

A limited guardianship is one with specific duties outlined in a court order. The guardian is limited to only those duties as specified by the court, and the beneficiary generally retains control of the rest.

Guardianships or conservatorships are typically a last resort because they remove rights from an individual – sometimes permanently. Estate planning is so crucial because it can help the elderly (and others) avoid guardianships by establishing care through powers of attorney.

If you have questions about guardianships, take a look at the Department of Justice website or talk to a qualified professional.