Saugus Advertiser February 26, 2004

Legislative Update and Guardianship, When is it necessary?

I’m back from vacation and have to admit I prefer the balmy weather we are having today, Sunday, the last day of school vacation. My thermometer told me it was 44 degrees today. Quite a change from the 7 below zero we faced in New Hampshire on our way to go skiing at Bretton Woods.

Nothing much new from the legislature this week. We have been expecting a vote on an override of the Governor’s veto concerning the delay in implementation of the expanded estate recovery, but that hasn’t happened yet. I think there were too many legislators away for the school vacation to have a vote. In my humble opinion, an override doesn’t look too promising. That’s probably why Senator Berry and Representatives Speliotis and Grant have introduced Senate Bill 2173, more on that later.

The whole issue here is that medical costs, including nursing home costs, have gone up dramatically. Your Governor has vowed to not raise taxes and as a businessman, looks to see where all the money is being spent and tries to fix the problem. His cure for the problem is that if you are unfortunate enough to need nursing home care, you should give all of your money to the nursing home. When all of your money is gone you should then give good old Mitt your house. That way he won’t have to raise taxes. Prior to July 1, 2003, the effective date of the expanded estate recovery, the Governor would only go against your probate assets (assets in the decedent’s name alone). The expanded estate recovery law allows Mitt to go after many assets that had been protected in the past and is being applied retroactively.

Senate bill no. 2173 has been introduced in the Senate, written by Senator Berry and Representatives Theodore C. Speliotis and Mary Grant. To find this bill on the internet, go to this web page, http://www.state.ma.us/legis/bills/st02173.htm. This bill would exempt people from the expanded estate recovery if they had completed their estate planning prior to July 1, 2003. This is basically a grandfathering of plans done prior to July 1, 2003. Now, although this is a good step to protect those who transferred assets in the past, it does nothing for those who wish to protect the family home or other assets now or in the future. I’ll keep you advised on what happens in the legislature.

Guardianships

In the past, I have written about the importance of having a valid durable power of attorney and health care proxy. The reason that these documents are so important is their ability to avoid guardianship proceedings.

When a person looses competency due to dementia, stroke or other illness the court appoints someone, called the petitioner, to represent the ward. The ward is the person who needs a guardian.

The overriding concern for everyone involved is the wards’ best interest. Usually, the wards’ major concerns are:

· loss of privacy;

· court intervention;

· loss of control over assets;

· inconvenience and discomfort associated with not handling

funds on his or her own; and

· expenses of court filings, annual accounting, attorney fees and surety bonds.

The guardianship proceedings take place in the local probate court. Because all filings in the probate court are a matter of public record, there is no privacy concerning the wards financial affairs. All transactions involving the wards’ assets are subject to court review and any gifts or transfers must be approved, even if to the spouse of the ward.

The expenses involved in a guardianship can be substantial and do not end once the petitioner has been appointed. The initial costs include attorney fees, corporate surety bonds and court-mandated expenses such as the court appointment of an attorney for the ward and a guardian ad litem. The court will usually appoint an attorney for the ward. The guardian ad litem is a person, not necessarily an attorney, who investigates and reports back to the judge. It doesn’t end there. Continuing expenses include annual accounts detailing income and expenses of the ward as well as income tax returns that the guardian must file for the ward. If the ward is taking anti-psychotic medication, the process gets even more involved with the court requiring annual review of the medical treatment plan. This is known as a “Rogers” guardianship.

A guardianship strips the ward of just about all their rights that we often take for granted. You no longer have the right to decide where you will live, who your doctor will be or how your money will be handled. It is for these reasons that the court is hesitant to appoint a guardian. Guardianship should only be used when the impaired judgement or capacity poses a major threat to the person’s welfare. A major threat does not mean that the person merely shows poor judgement or difficulty in making decisions. An elderly person was once able to fight off a guardianship proceeding by telling the judge that, “I always made some bad decisions and just because I’m getting older it doesn’t mean I’m going to stop.”

I’ve talked about how a durable power of attorney and health care proxy can avoid a guardianship and next week I’ll review those documents again and talk about some other options that can be used to avoid the need for a guardianship.

This article gives general information and not specific advice on individual matters. Persons wanting individualized advice on matters discussed should contact an advisor experienced in those matters. To the extent this article provides information on legal matters, it is based on law in effect in Massachusetts on the date of posting (laws in effect in other states are often quite different).

Ronald H. Surabian is a CPA and attorney who works at the Elder Law Center in Saugus, Massachusetts. He also holds a masters in accounting and a masters in tax law. He currently serves on the board of directors of the Massachusetts Chapter of the National Academy of Elder Law Attorneys.

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