Fong Law Group

Are There Alternatives to Guardianship and Conservatorship?

“Both the guardianship and conservatorship can also take away a person’s right to bring and defend actions in court. There are several other, less intrusive ways to act on behalf of someone with diminished mental or physical capacity.”

Guardianships and conservatorships are used when family members no longer believe their loved ones are able to make decisions or when they are physically incapacitated. A guardianship takes away a person’s right to consent to medical treatment, establish a residence, sign a contract or even to marry. A conservatorship lets the appointee manage their ward’s finances and assets, buy and sell businesses and enter into commercial transactions.

Are there other, less intrusive ways you can act on behalf of someone with diminished mental or physical capabilities? The article “Alternatives to guardianship and conservatorship,” from On Common Ground News, offers some different approaches.

One is a petition for a temporary medical consent guardian. Based on the facts in the petition, the court can determine whether there is cause, to believe the proposed medical consent ward needs a temporary medical consent guardian immediately. This occurs after all the preliminary steps have been taken, which includes a hearing. That temporary guardianship terminates, when either the court removes it, if a permanent guardian is appointed, when the hospitalization or stay in another healthcare facility ends or sixty days after the appointment is made.

An alternative option to conservatorship is the Durable Power of Attorney (DPA), which permits a competent individual to name another person as their legal representative regarding finances and other matters. There can be specific instructions, and this also can include an agent who is named to make health care decisions. A DPA is broader in power than a living will and applies any time the individual becomes incapable of either making or communicating health care decisions on their own behalf.

If you are a resident of Georgia, the state’s Advance Directives for Health Care combines the living will and health care power of attorney into one document. This gives instructions regarding how the person wants medical decisions to be made. Note that every state has its own laws and processes for these documents.

A Special Needs Trust (SNT) is a trust that can be established for a person with a disability and the assets can be used in specific ways. This kind of trust permits a person with a disability to have access to funds that might make them ineligible for certain types of programs funded by the state or federal government. The SNT allows for much more flexibility than a conservatorship and should be considered for a special needs individual first.

There are many different tools to achieve goals in the estate planning attorneys’ tool box. An in-person meeting with an experienced estate planning attorney is the best means of exploring what tools are available and appropriate to your family’s situation.

Reference: On Common Ground News (Nov. 29, 2018) “Alternatives to guardianship and conservatorship”

Expensive Mistakes People Make With Life Insurance

“Life insurance provides a financial safety net for families. Sounds simple, but decisions over whether and how much to buy can get complicated, and mistakes can be costly.”

Life insurance sounds like a simple enough concept: you insure your life to protect your family. If something should happen to you, your family receives enough money, so it can pay for the things your income would have otherwise provided. According to an article from The Washington Post, “Don’t make these big life insurance blunders,” many people get it wrong.

Here are the common mistakes that financial planners see:

Too much or not enough. Not everyone needs life insurance. If no one is depending on your income, you may not need any. However, if you have young children, and especially if you are the only breadwinner, then you need a lot. Even a stay-at-home parent needs coverage. If you died, how would the surviving spouse cover the cost of child care and all the other tasks that are done by the stay-at-home parent?

One rule of thumb is to purchase seven times the amount of your annual salary, plus money for college educations. That’s a lot of insurance, but the protection is well worth it.

Buying the wrong kind of policy. There are two kinds of policies, and they serve very different purposes. Term life is simple and cheap. It offers coverage for a specific amount of time, usually 10, 20 or 30 years. If you die while the policy is in effect, it pays proceeds to the beneficiaries. If you live past the term, it has no value. It’s a good pick for most families, offering protection when kids are young or there’s a mortgage that needs to be paid. The idea is that, at the end of the term, you don’t need the insurance anymore.

There’s also permanent or whole life insurance. Many people get sold these policies, usually with the argument that they are building cash value. The problem is that the fees and agent’s commissions consume a lot of that value. One school of thought says to instead put money into tax-advantaged retirement accounts. If you’ve got money left over, use a low-cost index fund instead of funding a life insurance policy.

Permanent life insurance is valuable, if there is a special needs child who will be financially dependent on the parents. In that case, speak with an elder law attorney with special needs planning experience.

Depending on the life insurance in your employee benefits package. Check with the HR department to make sure you know how much coverage your work benefits provides. It’s likely not enough to protect your family. When you leave the company, the coverage ends.

Procrastinating the purchase. Many people treat the purchase of life insurance the way they do having their wills and estate planning done. There’s always something else that needs to be done first. However, if you wait too long, it may become more expensive. Get a few quotes from reputable companies and make a decision.

Reference: The Washington Post (Nov. 1, 2018) “Don’t make these big life insurance blunders”

ABLE Accounts

It is possible for some people with special needs to be able to save and invest their own money, without losing government benefits.

For the most part, government safety nets are designed for people who do not have access to other money. This is true of the most common safety nets used by people who have special needs, such as Supplemental Security Income and Medicaid. However, that has always made it very difficult for family members of people with special needs to leave them money, without making them ineligible for needed benefits.

In response to this problem, ABLE accounts were created. These special accounts allow people who developed certain disabilities before the age of 26 to save and invest their own money or money that family members give them, according to the Wills, Trusts & Estates Prof Blog in "ABLE Accounts Give Disabled More Financial Freedom."

ABLE accounts are somewhat flexible. They allow the disabled to have up to $100,000 to use to supplement their benefits and still stay eligible for those benefits. It is not too difficult to get money into the accounts. A 529 educational savings account can be rolled into ABLE accounts. Some states even offer tax credits for putting money in an ABLE account.

One of the drawbacks to ABLE accounts, however, is that they can be tricky to set up properly to qualify under the law. For that reason, it is important to use the services of an estate planning attorney, if you have a child with special needs and you would like to leave an inheritance.

Reference: Wills, Trusts & Estates Prof Blog (June 8, 2018) "ABLE Accounts Give Disabled More Financial Freedom."