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By definition a guardianship, also known as conservatorship, is a person lawfully invested with the power, and charged with the obligation, of taking care of and managing the property and rights of a person who, because of age, understanding, or self-control, is considered incapable of administering his or her own affairs.

When we think of legal guardianship or conservatorship, several scenarios typically come to mind:

•  a minor child without parents; 
•  a child with cognitive disabilities who is nearing his or her 18^thbirthday;
•  an elderly parent with dementia;
•  an adult who has been severely injured and can no longer take care of himself; 
•  young adults who are making unsafe, dangerous, or destructive decisions -   impaired decisions that often involve alcohol or drug abuse.

Minor Children

Generally, when a biological or adoptive parent dies, the surviving parent has the right to have sole custody of the child, which the court will award unless the surviving parent has legally abandoned the child or is considered unfit as a parent.

If the surviving parent is not suitable to take custody of the child or if the surviving parent dies, then someone will have to take care of the child and some arrangement will have to be made for the child's financial support. However, money or property cannot simply be left to minors, because state law restricts the amount of money or property that minors may own, nor can minors receive the proceeds of a life insurance policy.

Money and property must be managed by an adult, who is usually the personal guardian of the children, but it can also be someone else acting as property guardian for the minor.

In most states, a personal guardian for the child can only be appointed by will and the financial support that has been provided for the child should also be mentioned in the will, even if the support is being provided by a trust or some other arrangement. Otherwise, the omitted child will be entitled to some portion of the deceased parent's property under the omitted child doctrine. Since some states specifically define omitted child as one who is not mentioned in the will, omitted child laws may apply even when the child's financial needs are provided for by a trust. Hence all children should be listed in the will and their source of support should be mentioned if it is not otherwise provided by the will.

A) Personal Guardian

There must be a personal guardian appointed for minor children, unless they are emancipated, which is defined by state law, but usually requires that the child be within a few years of reaching the age of majority and that they are already living independently, such as being married or being in the military service, or showing any other independence that would allow a court to validate the emancipation.  If there is no will or the will does not appoint a personal guardian, then the court will appoint one.

In the vast majority of states, only a will - not a living trust or any other type of document - can be used to name a child's personal guardian. However, the personal guardian that is appointed by the will does not become the legal guardian until approved by the court. The judge does have the authority to name someone else if she is convinced that it is in the best interest of the child.  However, the court will generally approve the nominee if the nominee has no obvious problems, such as alcoholism, a criminal background, or child abuse history, and if no objections have been filed. An alternate personal guardian should also be selected, if the first cannot serve or refuses to serve.

B) Property Guardian

Generally, the property guardian is also the personal guardian for the children. However, sometimes it is wise to appoint someone different for the property, if the property has to be managed or if the personal guardian is not financially savvy. Different property guardians can be named for different children without court approval.

Because a child cannot own more than a minimal amount property - the range depends on state law, a property guardian or custodian must also be appointed to manage the property for the child.

If there is no will or the will does not appoint a property guardian and there is no other means of managing the property for the child, such as a trust, then the court will either appoint a property guardian or a conservator. A property guardian cannot sell any property without court approval and must give a regular accounting. A conservator takes title to the property as a trustee, and thus, does not need court approval to sell property, but is still required to give an annual accounting.  Property guardians are subject to court review, reporting requirements, and strict rules as to how they can spend the funds.

Although not as advantageous as a trust or a UTMA custodianship for leaving property to minors, it is generally wise to name a property guardian as a backup in the will, because sometimes property is acquired that was not put in the trust or custodianship before the donor dies.  UTMA is further discussed below.  Naming a property guardian can help these cases if the minor children earn a substantial amount of money, or receive a large gift that does not name the property manager, or if the minors receive property after the will or trust has already been executed and before the documents were amended, then the property guardian can manage these assets.

Several options exist for leaving property to minor children:

1.  UTMA - A Custodianship under the Uniform Transfers to Minors Act.

Gifts to a child can be transferred in a will or living trust under the UTMA.  An adult custodian is appointed by will or by living trust to be responsible for the property until the statutory age when the child must receive the property.  The UTMA custodian has great discretion to control and use the property for the child's interest - to collect, hold, manage, invest, reinvest the property and to spend as much of it as necessary for the use and benefit of the minor. The custodian must also keep records so that tax returns can be filed and must otherwise act as a prudent person would.  No court supervision of the custodian is required. The UTMA requires that only one person be named as custodian for each minor.

2.  A Child's Trust or Family Pot Trust

A child's trust is one which holds specified property for one child. A separate trust can be set up for each individual child. However, all of the property can also be put in the family pot trust, which provides for more than one child. Both trusts are legal in all states.

The trust document sets out the trustee's responsibilities and the beneficiaries' rights, and it can be established by either will or living trust.

The trustee pays for the education, medical needs, and living expenses of the beneficiaries. The one advantage of a pot trust is that the trustee can spend differing amounts on each beneficiary, depending on their needs.

The main advantage of the trusts over the UTMA is that the children can be prevented from receiving the trust property until they reach an older age such as 30, 35 or 40, when, presumably, they will be more mature and financially savvy. However, the pot trust exists until the youngest child reaches the age of majority - 18, or in some cases, 21, in which case, a pot trust can be converted into an individual child's trust. A pot trust is less desirable when there's a large difference in the ages of the children, since the oldest child will have to wait a long time to receive his remaining entitled property from the trust until the youngest beneficiary reaches 18 or 21.

If the trust only becomes effective after the children are no longer minors or beyond the age when they were supposed to get the trust property, then the trust is never created, so the property will simply pass to them.

3.  Property Guardianship; Educational Accounts, such as a 529 plan or a Coverdell account.

A.  The 529 plan- a qualified tuition program, is a tax-free investment account established to pay for higher education expenses of the named beneficiary, who must be a family member, including children, grandchildren, nieces and nephews, or other relatives.  

Income accumulates tax-free.  No tax is paid for money distributed from the 529 plan if it is for qualified higher educational expenses, which includes tuition, books, fees, supplies, equipment necessary to attend college, graduate school, or vocational institutions, and can also include special services for a disabled student.  Up to $13,000 per year can be contributed to the 529 account for each individual free of gift tax by using the annual exclusion for gifts, which is adjusted for inflation, and married couples can double that amount.

A person can also contribute $60,000 in one year and a couple can contribute $120,000, which is equal to the gift tax annual exclusion for 5 years.  Any additional contributions during the 5-year period will be subject to gift tax.  If a donor does contribute $60,000 in one year, but dies before the 5-year period, then the amount of the annual exclusion for those years after the death are added back to the estate of the donor.  A new beneficiary can also be named for the account, if it is necessary or desirable.  Taxes and penalties will be assessed if the money from the 529 plan is withdrawn for non-educational purposes.

B.  Coverdell educational savings accounts were formally known as educational IRAs, because they work much like a Roth IRA.

The main advantage of a Coverdell account is that the money can be invested in any way that the donor desires. Generally, Coverdell accounts are preferable for families that cannot contribute a lot of money. 

This benefit applies not only to higher education expenses, but also to elementary and secondary education expenses.

Naming Children as Beneficiaries of Life Insurance

Minors cannot receive the proceeds of a life insurance policy, so if no other means are provided, then the court will appoint a property guardian, who will be subject to court supervision, reporting requirements, and other stipulations under state law.

However a custodian can be named under UTMA.  The other alternative is to leave the proceeds using a child's trust or family pot trust as a part of the living trust.  Because insurance companies require that the beneficiary exist at the time of death, the trust must already exist, and thus, cannot be created by will.

Guardianship - Youths with Cognitive / Developmental Disabilities

As a youth with cognitive / developmental disabilities nears his or her 18th birthday, parents often wonder whether they should seek a guardianship over their child. The short answer to this question is, "it depends."

Not every child who has disabilities needs to have a guardian. If the child is able to make good decisions, then he or she may not require a guardian or conservator at all.  In some cases, a limited guardianship may be appropriate where a person may have the capability to make some, but not all decisions.  For instance, a person under guardianship may retain the right to vote and handle a limited sum of money, such as up to $5,000.00, with all assets above that amount being managed by a conservator.  In many states the family and lawyer are required to explore the possibility of a limited guardianship as opposed to a full guardianship.

If the youth is unable to make health care decisions independently, there are several options to consider and procedures to follow in order to obtain legal guardianship.  In New York State it is important to make these decisions before the youth's 18th birthday. This is because an 18 year old is considered a legal adult in New York State unless actions are taken to establish guardianship.  In other words, guardianship is not automatic.

The process of establishing guardianship can be daunting for some families, but it is essential because guardianship guarantees advocacy.  Once obtained, guardianship papers should be kept in a wallet so that they can be presented at all health care encounters. Guardianship papers are as important as an insurance card when patients with developmental disabilities enter the adult health care system.

If health care guardianship has not been established before age 18, parents may be surprised to learn that they cannot legally communicate with health care providers about their adult child without the written permission of the young adult patient. This is because the Health Information Portability and Accountability Act (HIPAA) states that at age 18 years, youths who are capable of understanding the HIPAA privacy form must give written consent in order for records to be shared with others.  If a youth cannot understand the HIPAA consent form, then   legal guardianship should be established. There are two types of guardianship in New York State, Article 17-A of Surrogate's Court Procedure Act and Article 81 NYS Mental Hygiene Law:

Article 17-A of Surrogate's Court Procedure Act

The process typically includes an informal hearing with the Surrogate's Court Judge.  After reviewing the application, medical certifications from two physicians, or one physician and one psychologist and with approval from the Office of Child and Family Service, the Surrogate's Court Judge will confirm the appointment of the guardian.  These guardians can be a friend, family member, an individual identified by the court, an agency, or the State.

Article 81 NYS Mental Hygiene Law

An attorney is always necessary for establishing guardianship under Article 81 NYS Mental Hygiene Law. This type of guardianship involves specific time frames set by law, appointment of a court evaluator, a full hearing in front of a Judge, and very detailed financial reporting to the Court.  It also requires bonding of the guardian and a trustee.   A stand-by guardian is also designated by the court.  The standby guardian has authority to assume the responsibilities of the guardian in the event of death or disability of the appointed legal guardian.  The qualifications of both the guardian and the standby guardian must be reviewed and approved by the New York State Office of Child and Family Services. Establishment of guardianship under Article 81 of the New York State Mental Hygiene Law is a lengthy process that includes a functional assessment and specific restrictions so that accountability of the guardian is assured. 

Regardless of the type of guardianship that is established, it is important to know that guardianship does not have to be permanent.  A re-determination hearing can be scheduled at any time. At this hearing the guardian must show why an individual still needs a guardian.  If a guardian breaks the law or does not act in the best interest of an individual, the Court can revoke guardianship.

Elderly Guardianship

Those of us who are members of the Baby Boomer generation who are still lucky enough to have one or both parents living are now facing some tough decisions when it comes to caring for our parents.  Some aging parents suffer from mild dementia and, while they may still live on their own, they often have several caregivers who monitor their situation every day.   As their mental state deteriorates and their confusion increases, more and more of their everyday decisions and activities are taken over by those caregivers.

It's important to help our parents retain their independence and personal dignity as they grow older, but if they have reached a point where they can no longer make decisions on their own, then it's time to consider appointing someone close to them to take over those actions and decisions that they are no longer able to handle.

If an elderly person still maintains his/her mental faculties, they can make a Power of Attorney and appoint an agent (an attorney-in-fact) to make healthcare decisions, handle the finances, pay bills, and look after their personal or financial affairs. But if they no longer have capacity and they haven't already made a Power of Attorney, it's not possible to do so now. So what can be done?

In most elderly guardianship cases, the elderly person is no longer able to make decisions about his or her medical treatment, living conditions, dependents, and financial issues.  A court may choose to limit this guardianship to certain areas, however.  For example, if an elderly man is able to make decisions about finances but can no longer physically care for himself, the court may limit the guardianship to overseeing the man's physical needs.

Usually, a guardian is a family member or friend of the elderly person.  In the event that a friend or relative does not wish to become the person's legal guardian, a public or private agency, attorney, or other court-appointed individual can also serve.  Typically, it must be a competent person over the age of 18, without a criminal record.

An elderly guardianship appointment is generally made once a court has determined that an elderly person is incompetent. The specific requirements for incompetency vary from jurisdiction to jurisdiction. As a general rule, however, whether a person is legally competent or not hinges on his ability to make informed and educated decisions about his affairs.  Another influencing factor is whether the person is able to meet his physical needs. If not, the person may need to be placed in a nursing home or other care facility, such as an adult daycare center.

Guardianship for Parents of Impaired Adults

The law does not make it easy for someone to obtain guardianship or conservatorship, unless the person they are trying to help really needs it, because doing so takes away so many legal rights of the protected person.  Just because someone makes bad, or even unsafe decisions, does not mean that they qualify for having a court-ordered guardian or conservator.  If they did, then every substance abuser would need one.  

Rather, these types of court proceedings are typically used for those who have a mental illness caused by age, injury, or disability, not those who make bad choices.

It's tricky to determine when it makes sense to appoint a guardian for a young adult whose decision-making is impaired.  Many young adults make bad, and sometimes unsafe, decisions.  These often involve alcohol or drug addictions.  Even so, the key question is whether that is enough to justify taking away their personal liberties and overruling their rights.

It is difficult to put adults under guardianship or conservatorship against their will.  Many states define competence for legal purposes differently from competence for medical purposes.  In all states, however, those seeking to place someone under involuntary guardianship or conservatorship must first produce ample medical evidence to support this course of action.

Every year we witness news reports of celebrities who have significant mental health and addiction issues.  The decision to seek guardianship may be the only alternative left for their loved ones.  Singer, Britney Spears and actress, Amanda Bynes are just two examples of cases that have gained public notoriety.     

Britney Spears' history of erratic behavior, drug abuse and possible psychological disorder made news headlines worldwide.  In 2008 her father successfully obtained conservatorship.  While this type of court proceeding is normally used for seniors with dementia or Alzheimer's disease, Britney met the legal standards and qualified for conservatorship at the time.  Spears continues to record albums, performs worldwide, and is one of the most recognizable celebrities in America. Yet while she is under conservatorship, she does not have the right to make financial or legal decisions for herself.

The conservatorship petition filed in July 2013 by the parents of Amanda Bynes detailed her public incidents of disturbing behavior, including several arrests, and it also reveal that the former child star stated fears that she was being watched by smoke detectors and devices in the dashboard of her car.

Ventura County Superior Court Judge Glen M. Reiser delayed ruling on the conservatorship petition, but awarded temporary conservatorship pending the actress' psychiatric hold at a hospital.  The petition was subsequently dropped in September.

Conservatorship / Guardianship is an extreme form of intervention in another person's life because control over personal and/or financial decisions is transferred to someone else for an indefinite, often permanent period of time.  Once established, it can be difficult to revoke.  Therefore, it should only be used as a last resort.

Few people want to have court oversight and be unable to make decisions without getting someone else's permission.  That's a big reason why proper legal planning is so important. The very same protections can usually be achieved without any court proceeding, through the use of good Power of Attorney documents for medical and financial decisions.  If you and your loved ones don't already have up-to-date power of attorney documents in place, then it's critical to do so.  Certainly there are times - as with the celebrities described - that Powers of Attorney aren't enough to help.  But those instances are the exceptions, not the rule.

We understand the sensitive, emotional components that are involved when dealing with such issues and when making decisions of this caliber.  Providing for the care and well-being of an ailing or disabled love one brings with it a substantial amount of stress and pressure without compounding the challenges by having to manage complicated financial issues as well.

Our extra attention to empathy and simplifying the process for our clients truly takes the sting out of providing for the continued care of loved ones.

"These things I warmly wish for you - Someone to love, some work to do, A bit o' sun, a bit o' cheer, And a guardian angel always near"