Understanding Guardianship for Older Adults

In years past, the effort to obtain guardianship of an adult was often a bitter process that stripped elderly people of virtually all of their rights. If a court determined that an older person was confused and couldn’t pay his or her bills or make independent decisions, a guardian was appointed to handle all of that person’s affairs and make decisions for him and her.

What is Guardianship?

Guardianship of the person gives the guardian the right to make decisions concerning living arrangements and health care.

Guardianship of the estate, also called conservatorship, gives the guardian, or the conservator, the right to manage the person’s property.

The all-or-nothing nature of guardianship has often led to fierce fights among family members and caregivers, to say nothing of the indignities suffered by elderly people who want to retain some semblance of autonomy.

So four organizations – the American Bar Association, the Commission on Law and Aging, the American Psychological Association and the National College of Probate Judges – have collaborated to produce a handbook that defines capacity, “Judicial Determination of Capacity of Older Adults.” Courts that follow the guidelines set in place by the handbook gather information for capacity in the following six areas.

6 Areas of Capacity

Medical Condition. What is the cause of the person’s diminished capacity and is it likely to improve, stay the same, or get worse?
Cognition. In what areas is the individual’s decision-making and thinking impaired and to what extent? Can the person understand, communicate and remember?
Everyday Functioning. What can the person do in the way of everyday activities? These include:

Care of self. Bathing, dressing and meal preparation.
Financial. Cash management, bill paying and investment decisions.
Medical. Healthcare decisions, medication management and ability to get help in the event of an emergency.
Home and community life. Ability to maintain a clean and safe home, be left alone, drive or use public transportation, use the telephone and avoid environmental dangers, such as the stove.
Civil or legal. Retain legal counsel, vote and make decisions about legal documents.

Values and Preferences. Are the person’s choices consistent with long-held patterns, or has there been a sudden, unexplained shift? The guidelines note that eccentricity does not necessarily indicate diminished capacity.
Risk of Harm and Level or Supervision. What level of supervision is needed? How severe is the risk of harm to the individual?
Means to Enhance Functioning. What treatments might improve the individual’s level of functioning? Consider whether education, training, rehabilitation, occupational therapy or assistive devices might help.

For each area of capacity, the clinician checks one of four boxes: independent, needs support, needs assistance, total care.

After gathering information in all of the areas of capacity, the court fills out a guardianship order stating that the person is incapacitated, not incapacitated or partially incapacitated. If partially incapacitated, the court will listed the retained capacities in the following five areas: care of self, financial decisions, health care decisions, living in the home and community, and other civil matters.

For example, it may be noted that a person is independent when it comes to handling small amounts of cash, but requires total care when buying or selling property. The guardianship plan would reflect these distinctions and give the guardian or conservator the appropriate powers.

Crafting the Guardianship Plan: Values and Financial Decisions

The new guidelines encourage courts to take into account the incapicitated adult’s values and preferences when crafting a guardianship plan. The guardian can use the guidelines to accommodate the person’s wishes when making decisions on his or her behalf by getting answers to a series of questions. Among the questions the incapicated adult might be asked about financial decisions are the following:

What is your financial history? Are you in any debt? Are you able to plan ahead and save for the future?
Do you have enough money to provide for yourself in your retirement?
Have you made a will?
How knowledgeable are you about financial investments? What, if any, types of investments do you currently have?
What are the things you like to spend money on? In spending money, what are your highest priorities?
Are there people or organizations to which you generally make gifts or contributions?
How would you like to invest and manage your money in the future? Do you want to stick with what you know, or are you open to new investment options?
Do you prefer higher-risk investments with a possibility of higher returns, or lower-risk investments with a smaller, guaranteed return?
If you needed help with your finances, who would you like to help you? Who can you trust to ensure your best interests?
Is there anyone you specifically would not want to be involved in helping you make financial decisions on your behalf?
Do you currently have, or would you like to obtain, a financial advisor? Are there certain people with whom you’d like your financial advisor to discuss financial decisions on your behalf?

While there is no assurance that all counts will follow the guidelines, the handbook is a good start in recognizing that elderly people should be entitled to retain some rights despite diminished capacity.

By taking the time to explore the cause and nature of the incapacity, and by incorporating the person’s values and preferences into the guardianship plan, we can help ensure that people will not be stripped of their dignity due to illness or aging.

If you’re seeking further assistance regarding finances in guardianship matters, please feel free to schedule a complimentary consultation with our team of experienced, financial advisors below.

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Elaine Floyd, CFP, is Director of Recruitment and Life Planning for Horsesmouth, LLC.