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    Does Your Trust Discourage Guardianship? Most Don’t Do Enough!

    Most clients want to avoid a nursing home stay at all costs. Institutional care may be necessary, but no one invites it before absolutely necessary. If you have a Revocable Living Trust, you may even believe that you have done all that you can to avoid probate, guardianships, and unwanted institutionalization. Sadly, many people are mistaken.

    Most folks are told that their trusts discourage court-appointed guardianship, sometimes called living probate. This is probably true, but only to a very limited extent. By providing a surrogate decision-maker, it is thought that the trust, and the accompanying estate planning documents, make a court-appointed guardian unnecessary. Sadly, that assumption is not always true.

    Take the example of Mollie Orshansky. In preparing for her retirement, Mollie met with her lawyer and implemented a plan for her health care and the financial management of her two million dollar estate in the event she couldn’t make decisions for herself. Mollie established a revocable trust naming her sister as a trustee, and executed a health care proxy naming her niece.

    Her health began to decline in the year 2000, and despite her best efforts to plan for the worst, in 2001 a local court in Washington, DC, ignored her efforts to determine who would watch over her and where she would live. Instead, the court appointed a non-family member to act as Mollie’s guardian and an attorney to represent her, and placed her in a hospital in the nation’s capital city. A legal battle ensued between Mollie’s family members, people she had chosen to watch over her, and officials acting on behalf of the court and city of Washington.

    Michael Kutzin, the attorney that represented the family explained what happened: “[Mollie Orshansky’s] case demonstrates many of the problems that seniors and their families often face after falling into the guardianship whirlpool.” Mr. Kutzin testified that “[g]uardianship statutes generally recite lofty principals of honoring the wishes of an incapacitated person where possible, and call for a myriad of protections… In practice, however, once a guardianship proceeding is brought against someone, machinery begins that often presumes that a guardian is required, and runs roughshod over the wishes of the senior and his or her family. This is particularly true where…the proceeding is commenced by a hospital or nursing home, and family members live in another state. A similar disregard for the wishes of the senior and her family often occurs where the senior has significant assets. Both of these factors were present in the Orshansky case.”

    Most trusts actually become a weapon for public guardians, because, in addition to marshaling assets under a common control, they often require that in the event of disability, the trustee must pay all of the trust assets necessary to provide for the Grantor during the disability. A public guardian can rely on such a provision to quickly and easily control all of the estate assets. Moreover, deprived of assets, how does the victimized senior protect his or her rights? The combination of easing control and disarming a possible legal challenge may actually encourage the appointment of a guardian! At a minimum, one would hope that their estate plan would discourage a guardianship.

    In Mollie’s case, her family refused to leave her victimized by the court and the guardian. Her family, led by Mollie’s niece, expended their own monies for legal representation in an effort to free the imprisoned senior. Fortunately, they were ultimately successful, but not before spending more than $200,000.00 in legal costs and expenses. Sadly, if Mollie had been like most seniors, with family members unable to expend such sums in her defense, she would likely have ended her life imprisoned in an institution against her will, and the wishes of her loved ones. You can read about Mollie, in the testimony of her attorney and family before the United States Senate Special Committee on Aging, in “GUARDIANSHIP OVER THE ELDERLY: SECURITY PROVIDED OR FREEDOMS DENIED?,” a link to which can be found here.

    You can also read about the danger of guardianship. As Senator Craig explained:

    • “Guardianship can divest an elderly person of all of his or her rights and freedoms that we consider important as citizens in this great country. When full guardianship is imposed, the elderly no longer have the right to get married, vote in elections, enter into contracts, make medical decisions, manage finances, or buy and sell property. They cannot even make decisions on where they want to live. All these rights are taken away from the elderly and vested in a surrogate decision maker – the guardian. Our investigation has confirmed that some guardianships can have onerous effects on the elderly. For example, guardianship may drain the elder’s estate, result in protracted legal proceedings, and substitute the judgment of a total stranger for those of the elder and their family. A recent case has come to my attention where a court actually terminated a marriage pursuant to a guardianship.”

    And yet, witnesses and professionals agreed that an elderly person accused of being incompetent or incapacitated has less rights in state probate court, than does a person accused of committing a murder in a criminal court.

    If you want to disarm the third party public guardian, your trust must have complete advanced competency planning, including the following provisions:

    • The trust must define incompetency or incapacity;
    • The trust should appoint a personal physician by name to determine your competency, in agreement with another independent physician;
    • Your trust should restore to you legal authority to act on your own behalf upon recovery from a disabling medical condition without resort to a court or legal proceeding;
    • The trust should nominate your successor trustee and/or attorney-in-fact to act on your behalf in every respect in the event that you are deemed by your personal physician to be incompetent or incapacitated;
    • The trust should have provisions authorizing the trustee to refuse the request of a guardian appointed by a probate court to surrender trust assets to the guardian’s control; and,
    • In order to protect the trust assets, the trust should have a provision that permits the trustee to terminate the trust and transfer assets to another trust for the benefit of the beneficiaries if the court-appointed guardian threatens to commence, or commences legal action to seize the trust assets.

    These provisions should be permitted by the trust, but the operative provisions should be found in a separate addendum to the trust. Why? If the issue arises, the addendum permits the trustee to provide the operative provisions to third parties without compromising the confidentiality of the trust.

    In addition, you should consider clearly stating your preference for home health care over nursing home care, and consider empowering the trustee to keep you at home. These provisions will significantly reduce the risk that you find yourself in a nursing home against your will, fighting for your right to make life decisions. Moreover, these provisions will enable you and your family to retain control of major decisions, such as where you live, your medical treatment, and with whom you visit and associate.

    Only when you have a trust that aggressively protects your rights and interests in the event that there arises a question of your competency or capacity to make decisions for yourself, can you rest assured that your estate plan does all that it can to discourage probate during your life.

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