Making a Difficult Decision

When is it appropriate to have your elderly parent declared incapacitated?

After the death of her husband, Ellen was leading a busy life and staying on top of her financial matters. But then Ellen's daughter, Jackie, noticed that her mother was becoming forgetful and had missed paying a few bills. As Ellen's mental state continued to deteriorate, she became unable to manage her day-to-day activities.

Jackie now faced the difficult decision of whether to try to have her mother declared incapacitated by a judge, who could appoint a guardian or conservator to oversee Ellen's affairs. She had some important questions, which she posed to her estate planning advisor.


What is the difference between capacity and incapacity?

The legal definition of "capacity" varies from state to state, but generally it is the mental ability to adequately function. A person is presumed competent unless an adjudication process determines otherwise. That is, a judge must declare a person incompetent. Factors leading to such a decision will depend on the circumstances.

One barometer of whether someone is able to adequately function is the person's ability to understand basic financial matters. Another is whether a person is able to attend to his or her own health needs.


What is the role of a guardian/conservator?

If you make the decision to have an incapacity determination and the judge agrees that your parent is no longer competent, the court will appoint a guardian/conservator. He or she will be responsible for managing your parent's affairs.

More often than not, an incapacitated person's child is appointed guardian/conservator, but the guardian/conservator does not have to be a family member. In some states a person can designate whom he or she wants to act as his or her guardian/conservator.

The guardianship/conservatorship will specify if the guardian/conservator has been appointed for the management of all aspects of your parent's life or a specific aspect of it, such as for solely financial matters. Whatever the decision, the guardian/conservator will owe a duty of care to your parent and will be held accountable by the court for showing that his or her actions are appropriate.


Are there other options?

Sometimes an elderly parent knows he or she needs assistance and asks for it. This is ideal because it avoids the expense and emotional toll of a guardianship/conservatorship proceeding — and your parent will receive the help needed.

For example, perhaps you or a sibling can take care of bill paying. Or, you can retain a professional to handle it — the expense may be worth the increased sense of control your parent may feel from hiring someone rather than depending on a family member.

Another option may be a durable power of attorney for property or a living trust. If your parent executes one of these documents, generally the agent or trustee named can manage your parent's financial affairs. Similarly, a durable power of attorney for health care, or health care proxy, can allow the agent named to make health care decisions on behalf of your parent. These documents can provide the criteria under which your parent will be considered incapacitated so that a guardianship/conservatorship proceeding isn't necessary.


Make the right decision

After learning the answers to her questions, Jackie concluded that having her mother declared incapacitated was the right decision. If you are facing similar circumstances with an elderly parent, talk to your estate planning advisor to learn more about your options.

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