While most proactive individuals know the importance of having a well-rounded estate plan, it is typically considered as something that will take effect after they have passed away. But there are in fact many ways in which comprehensive estate planning can have a positive impact on your life while you are still around to reap the benefits.

Planning for Incapacity

Most people who reach old age come to a point at which they are no longer in a position to handle all of their affairs on their own. In many cases this incapacity is due to dementia or other cognitive impairments associated with the elderly. At that point, the decisions they’ve made with their estate planning attorney can have major repercussions on their lifestyle and the handling of their wealth.

Take Alex for example. Long before Alex retired from his long and successful career as an IT manager at a large corporation, he put a cursory estate plan in place with a will detailing who would get which of his assets upon his death. But, Alex didn’t update his plan as he aged. In his late seventies, he developed Alzheimer’s and it became unclear to his family how to proceed with his medical care and wealth management. Since Alex did not formally choose an individual to be in control of his affairs in the event of incapacity, it falls upon the court to appoint a guardian or conservator. Unfortunately, that’s where things get complicated.

What is guardianship?

Guardianship goes by a few other names, so it’s important to get familiar with various terms used to indicate similar and somewhat overlapping concepts. The other terms you may hear include “conservatorship,” “plenary guardianship,” and “living probate.”  In Texas, the term guardianship is used.

It’s important to note that these terms are used in slightly different manners from state-to-state, with some states using “guardian” and “conservator” interchangeably. Others maintain the distinction of a guardian being a person who makes decisions about medical care and living arrangements, whereas a conservator makes decisions about property and assets. In either case, the guardian or conservator is essentially a substitute decision maker that’s authorized by the court to make decisions on behalf of the incapacitated person.

In Texas, there are two types of guardian.  A guardian of the person who makes decisions about medical care and living arrangements and a guardian of the estate who makes decisions about property and assets.  There can be one person serving in both roles or two different people serving in each role. 

3 Reasons You Should Avoid It

In the process of living probate, the court tries to settle on solutions that will fit the incapacitated individual’s best interests. That being said, there is a much better way. Here are just a few of the reasons guardianship and conservatorship are not ideal fallbacks:

1. Cost: To put it simply, guardianship is expensive. The legal fees associated with court-appointed attorneys representing incapacitated individuals can chip away at their estates very quickly. You may have family members that are not in agreement over who should serve in the different roles.  So, the proceedings end up being contested and that is really expensive.  Most if not all of the funds for the contest are going to be paid by the proposed ward’s estate (that means Alex). 

2. Privacy: Guardianship also brings your affairs into the public sector. Alex may not have wanted his family to have to experience the financial and emotional costs of guardianship proceedings, but he may also have felt less than enthusiastic about his personal affairs being discussed in a public forum.

3. Clarity: In addition to it being costly and a compromise of privacy, the guardianship process is also full of guesswork. If Alex had assigned powers of attorney and established long-term care provisions in his estate plan, his affairs would be handled exactly as he wished in the event of his incapacity. A little planning could prevent the need for a guardianship.  If we still ended up needing a guardian, in Texas, Alex could have designated who he wanted to serve as the guardian of his person and estate.  If the family situation is so contentious that the court deems no family member is suitable, then Alex could end up with a stranger being in charge of his care and his money.  Sometimes, that is the best result but it may not have been what Alex wanted.  Failing to plan often leads to undesired results. 

How to Structure Your Estate Plan

So what does an individual like Alex need to do in order to avoid the chance of his family having to go through living probate? There are a few specific steps we can take to make in planning your estate to ensure your affairs never end up in a court-appointed guardian’s hands:

• Powers of attorney: A complete estate plan includes named powers of attorney who will have the authority to manage his financial affairs and make medical decisions for him. Alex gets to choose these individuals instead of a court. There are a number of different types of powers of attorney for specific purposes, such as a healthcare power of attorney or a general durable power of attorney, the latter of which controls the management of your finances.
• Long-term care planning: Although you may never need long-term care, building a strategy for it into your estate plan will allow you to relax knowing that you’ll receive long-term care according to your wishes if that becomes necessary. This type of planning also helps protect the assets in your estate plan from being used up on medical expenses before going to your beneficiaries. As previously mentioned, Alex could have designated who he wanted to serve as his guardians if he ever needed one.  In Texas, the court is obliged to appoint the person named unless the court finds them unsuitable based upon a list of exclusions in the Estates Code. 

Avoiding guardianship aka living probate is a relatively pain-free process if handled well ahead of time. Get in touch with us today to go over the parts of your estate plan that may need amending to give you and your family the best possible outcomes. We are here to help and can quickly get your estate plan in optimal shape. 

Texas Estate Law and Planning for Incapacity

When it comes to estate planning and avoiding the pitfalls of guardianship and conservatorship, it’s important to understand how Texas estate law operates. Texas has specific regulations and provisions in place that can impact the planning process and protect individuals in the event of incapacity.

When structuring your estate plan in Texas, here are some key considerations:

• Statutory Durable Power of Attorney: Executing a Durable Power of Attorney (DPOA) is crucial. This document allows you to designate a trusted agent to handle your financial and legal affairs in the event of incapacity. By specifying the powers and limitations of your agent, you retain control over your affairs.
• Medical Power of Attorney: A Medical Power of Attorney enables you to appoint an agent to make healthcare decisions on your behalf when you’re unable to do so. Your agent is tasked with making medical decisions in line with your preferences and values.  But, you must tell them what those preferences and values are.  Don’t leave them guessing. 
• Directive to Physicians and Surrogates aka Living Will: A Directive to Physicians, also known as an Advance Directive, allows you to express your wishes regarding end-of-life medical treatment. It guides your healthcare providers and loved ones when making critical decisions.
• HIPAA Authorization: Including a Health Insurance Portability and Accountability Act (HIPAA) Authorization in your estate plan ensures that your designated individuals can access your medical information and communicate with healthcare providers on your behalf.
• Long-Term Care Planning: Considering long-term care in your estate plan is essential. Explore options such as long-term care insurance, Medicaid planning, and establishing a trust to protect your assets while ensuring you receive the necessary care.

By understanding Texas estate law and incorporating these elements into your estate plan, you can take proactive steps to avoid guardianship and conservatorship. Be sure to consult with an experienced estate planning attorney who is knowledgeable about the intricacies of Texas law.

Remember, addressing these matters ahead of time can provide peace of mind and protect your interests, ensuring that your affairs are handled according to your wishes, even in the face of incapacity.

Reach out to us today to discuss your Texas estate planning needs and make the necessary amendments for the best possible outcomes.

The Law Office of Antoinette Bone, PLLC provides legal concierge Estate Planning services to create an Estate Plan that helps safeguard the legacy you’ve built and efficiently transfer it to your loved ones. Call our office at (682) 428-3046 today to request an appointment.

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