If you are like most people, you are concerned about what happens to your property after you become “old and funny.” You have worked hard your entire life to accumulate what you have and you want to make sure it is there when you need it.
As you age, there is a gradual decline in your physiological systems. You become more vulnerable to environmental and other conditions. You may start making financial decisions that you would have considered unwise or foolish when you were younger. This may include buying sprees on QVC or giving unusually large cash gifts to relatives or others who may take advantage of your vulnerability.
If you have done no estate planning and have no documents in place, the only choice your family has is to ask the probate court to appoint a conservator to take control of your property and to make financial decisions for you. However, the court can only appoint a conservator if the court by clear and convincing evidence, determines that as a result of some physical or mental deficiency, you are unable to effectively manage your property or business affairs and your assets would be wasted without proper management or needed for your support.
Unfortunately, the court may be not be able to appoint a conservator if you are only making poor choices. The court can’t fix stupid. If you are only making unwise or foolish decisions, the court cannot substitute its or your family’s judgment for yours.
If you have a power of attorney in place, your appointed agent can handle your financial affairs in these circumstances, but has no authority to stop you from making these inappropriate decisions. Even with a power of attorney, your family may still be required to petition the probate court for conservatorship to remove you as a signer on your accounts in order to protect your assets.
A conservatorship proceeding can be traumatic for your family, especially if at the time, you feel you do not need a conservatorship. Most of the time, if you are able, you have to attend the hearing along with your children who have requested the conservatorship. Your children then have to explain to the judge in front of you, all of the problems you have had, all of the poor decisions you have made and the result of those poor decisions. This can create ill will between you and your family.
One of the best ways to protect yourself and your property from yourself when you become old and funny is to have a fully funded living trust. A fully funded living trust is a revocable living trust into which all of your assets have been transferred. You include mental disability provisions in the trust by naming a disability panel, usually made up of family or family friends. Your disability panel can make the determination that you are unable to appropriately manage your financial affairs without court involvement. At that point, all that has to happen is that your disability panel members sign disability certificates and your successor trustees sign acceptances of trust. Your successor trustees then take over for you and your property is protected from your inappropriate decisions. With this type of plan, you control when you give up control.
By: Matthew M. Wallace CPA, JD
Published edited September 21, 2008 in The Times Herald newspaper, Port Huron, Michigan as: How to protect your property from you