Contributed by: Michele Procino-Wells, Esq.
Management of household finances can be complex, particularly when a surviving spouse is left with the daunting task of decoding a recently-departed partner’s precise methods of paying bills and keeping accounts in order. For many adult children, watching their parents endure this can bring about added stress and concern, as well as anxiety over whether timely payments are made and assets are handled prudently.
This conundrum, coupled with the onset of senility and forgetfulness, can leave many adult children pondering what they should do – legally speaking – to ensure their parent’s affairs are well-managed and in order. The answer, as we will explain, depends on the parent’s mental state and life situation at the time intervention is needed, and can get especially complex depending on the level of support (or lack thereof) offered by family members. As always, if you find yourself facing this all-too-common situation – and are looking for your best options moving forward – be sure to consult with a knowledgeable attorney right away.
Executing a Durable Power of Attorney
The first – and generally easiest – option to help an aging relative with his or her financial and legal affairs is to have that person execute a durable power of attorney naming one or more agents to assist in paying bills and other transactional tasks. A durable power of attorney is executed by the principal (aging parent), and names one or more agents – who may work together or successively, depending on the principal’s preferences – who then have the legal right to access accounts and financial information. The term “durable” – which is key here – refers to the sustainability of the arrangement past the point of the principal’s incompetence. In other words, the power of attorney will still be “good” once the principal has become too incapacitated to understand his or her financial situation.
Executing a durable power of attorney is relatively inexpensive, and is considered a vital component to any comprehensive estate plan. Agents are bound by the duties of good faith and loyalty (i.e., fiduciary duties) and are only permitted to use the durable power of attorney at the principal’s direction (if competent) or in the principal’s best interests. Agents who step outside these bounds are legally liable to the principal for the amount of money wrongfully transmitted.
Obtaining a Guardianship
If the aging parent is considered mentally incompetent, he or she will be unable to legally execute a power of attorney. Incompetence may be determined by a physician, or may be recognized by an attorney after attempting to ask simple questions at a consultation appointment. A principal must be of sound mind to execute a durable power of attorney, otherwise obtaining a guardianship will be required to accomplish the same result.
To receive the title of “guardian,” an interested person must petition the Court of Chancery by filing a Petition for Guardianship. In most cases, the petitioner will seek both guardian of the person and guardian of the property. Filing a Petition for Guardianship requires the drafting of a lengthy pleading, a physician’s affidavit, consent of the proposed disabled person’s next-of-kin, and several other supporting documents.
From there, the Court will appoint an independent guardian ad litem to interview the proposed disabled person and determine if a guardianship is in his or her best interest. During this time, family members may object to the proceeding, and a hearing will be held in the Court of Chancery approximately one month after the Petition is filed. At the hearing, the Court will either enter the Order granting guardianship, or will entertain testimony and objections from next-of-kin as to why the guardianship should not be granted. In rare instances, a Petition for Guardianship may drag on for many months, resulting in costly and frustrating litigation. And, the process will generally cost anywhere between $3,000 and $5,000 if not contested – and much more if family members object.
Contact Procino-Wells & Woodland, LLC for more information
If you are facing this situation with your parent, or you yourself would like to prepare for the future with a durable power of attorney, we encourage you to contact our office for a consultation. You can reach Procino-Wells & Woodland, LLC by dialing 302-628-4140 today.