What is Guardianship?
Guardianship is a legal decision made by the Probate Court in a County. There are two parts to this decision. First, the Court determines whether or not an individual has the capacity to manage his own affairs. If the answer to the first question is "no", then the Court determines who will manage an individual's affairs on that individual's behalf.
There are two types of guardianship: guardian of a minor and guardian of an "incapacitated person". Guardianship of a minor will not be addressed in this webpage. This webpage will focus on guardianship of an "incapacitated person". Usually, this means the individual either suffers under a disability from birth, suffers under a disability caused by some type of an accident, or suffers from the diseases that primarily affect the elderly, such as Alzheimer’s Disease or a stroke. When a Court makes a decision that an individual cannot handle his own affairs, it profoundly affects the role of that individual in society. For example, the individual can no longer sign a contract, change his Will, get married, or do many of the other things competent adults can do.
There are two types of guardians: a guardian of the property, and a guardian of the person. Normally, one person will be named as both the guardian of the person and guardian of the property.
New Jersey law presumes that the spouse is the most appropriate person to act as guardian of the person and property. If the spouse is not willing or is not available, the Court then looks to the children. If neither the spouse nor the children are able or willing to serve, the Court will consider appointing another appropriate person as guardian. The Court may appoint a friend or a business associate. If the incapacitated individual is 60 years of age or older, the Court may appoint the Public Guardian. The Public Guardian is a state official who is appointed by the governor to help elderly individuals who have no other appropriate person to act as their guardian.
Finally, if the Public Guardian is not appropriate, or if the Public Guardian cannot take the case, the Court may appoint a stranger to act as guardian. This is the least desirable alternative.
Guardian of the Property
A guardian of the property is responsible for his ward's assets and holds those assets for the benefit of his ward. For example, the guardian does not pay income taxes on the income generated by investments he makes on behalf of his ward. Instead, the ward's assets are used to pay those income taxes.
The guardian, however, can spend his ward's funds only for certain limited purposes. The guardian can spend his ward's funds for the support, maintenance, education, general use and benefit of his ward and his ward's dependents. The guardian is given broad discretion to determine what constitutes his ward's benefit, but the guardian is ultimately responsible to the Court that appointed him to account for his actions.
In determining whether to spend his ward's funds, the guardian should consider the following five factors:
1. Size of the ward's Estate;
2. Duration of guardianship;
3. Ward's standard of living;
4. Possible return to competency; and
5. Ward's estate plan.
Before a guardian of the property can do certain things, however, the guardian must gain the approval of the Court. He cannot make gifts unless he receives Court approval. A guardian cannot purchase or sell a house or mortgage property without Court approval.
Finally, when a ward is returned to competency, or when he passes away, the guardian of the property must provide a final accounting for all of his ward's funds. This means the guardian must account for every cent of his ward's money that he handled over the years he served as guardian.
Guardian of the Person
The guardian of the person has the same powers, rights, and duties as a parent has for a child, except that the guardian of the person is not responsible to support his ward from his own funds. The guardian of the person is responsible for his ward's care, comfort and maintenance. It is the guardian of the person who consents to medical treatments on behalf of his ward, and who can direct medical personnel to withhold treatment from the ward.
If the guardian of the person is not also the guardian of the property, he can compel the guardian of the property to provide support for the ward. The guardian of the person also has certain limited powers to receive money from the guardian of the property for his ward's current support, care, and maintenance, but must conserve any excess which is not used for that purpose and must account to the guardian of the ward's property for the money he expends.
How is Guardianship Obtained?
In order to start a guardianship action, one must file four documents with the Court:
1. Order to Show Cause;
2. Complaint;
3. Certifications of 2 Physicians; and
4. Certification of Assets.
The Order to Show Cause is drafted by the attorney but completed by the Court. The Court sets a date for the Court hearing, appoints an attorney to represent the alleged incapacitated person, and directs that the heirs of the alleged incapacitated person be notified.
The Complaint identifies the next of kin of the alleged incapacitated person, briefly summarizes the assets owned by the alleged incapacitated person, which is discussed at length in the Certification of Assets, and suggests a particular person as guardian.
The two Physicians' Certifications must report the results of two doctor's examinations of the alleged incapacitated person. The examinations must occur no more than 30 days before the Complaint is filed. The Certifications of the doctors must explain the medical basis of the incapacity.
The Certification of Assets lists all real estate, stocks, bonds, and bank accounts held by the alleged incapacitated person. It also lists all income that the alleged incapacitated person receives. Gathering this financial information is often the most difficult part of initiating a guardianship.
Once these documents are filed with the Court, someone must physically hand them to the alleged incapacitated person and explain their significance.
The Court-Appointed Attorney
Since a guardianship action is so important, the Court appoints an attorney, in the Order to Show Cause, to represent the alleged incapacitated person. The attorney's job is to, again, explain the documents to the alleged incapacitated person and explain to the alleged incapacitated person his legal rights.
The Court appointed attorney will interview the alleged incapacitated person to determine if he has a defense to the guardianship. The attorney then renders a report to the Court indicating whether the attorney will contest either the question of capacity or the appropriateness of the proposed guardian, on behalf of the alleged incapacitated person. If either of these issues is contested, the cost of the proceeding and the time involved will greatly increase.
Uncontested Proceeding
If the proceeding is not contested, the Court will consider the documents filed with it and the report of the Court-appointed attorney.
The Court will also have a hearing at which it may require one or both of the physicians providing Certifications to testify. The Court will also expect the proposed guardian to appear and explain why he wishes to act as guardian. At the hearing, the alleged incapacitated person may also testify, if he wishes, and has a right to trial by jury. Attorney's fees are usually paid out of the assets of the alleged incapacitated person, if sufficient.
Contested Proceedings
In contrast, if a proceeding is contested, either as to capacity or as to guardian, a trial is held. The trial can take two or three days and can cost more than $10,000.00.
If the issue of capacity is contested, the Court-appointed attorney can request that another physician examine the alleged incapacitated person. Others who know the alleged incapacitated person may also testify as to his ability to handle his own affairs. The Court will almost certainly want to speak to the alleged incapacitated person himself. Based upon all the testimony, and the testimony of the examining doctors, the Court will determine capacity.
If the attorney for the alleged incapacitated person contests the choice of a particular guardian, the Court will decide, at the trial, whether the guardian suggested is appropriate.
What a Guardian Does
Immediately after the guardian is appointed by the Court, the guardian must complete papers in the County Surrogate's office to "qualify" as guardian. The Court may require a proposed guardian to obtain a bond insuring against misappropriation. The guardian must obtain this bond before he can start acting as guardian.
The first step a guardian must take is to gather together the assets of his ward. After he qualifies in the Surrogate's Office, he will obtain Surrogate's Certificates. He will present those Certificates to the banks and stockbrokers, or whoever holds assets of the incapacitated person, to prove he is the guardian.
Using these Surrogates Certificates, a Guardian should either withdraw the assets from the accounts of his ward and open new accounts, or rename the accounts. Either way, the accounts should be titled in his name, as guardian for the ward.
Only one checking account should be established for the incapacitated person. This allows the guardian to easily account for the money that has come into the guardianship and the money that has been disbursed. If the incapacitated person has a large amount of money, only a small amount should be kept in the checking account, and any additional funds should be kept in a C.D. account, or in an account that a stockbroker holds.
If his ward receives Social Security payments, a guardian should complete a Representative Payee Application, requesting that his ward's Social Security checks be sent directly to the guardian. If the ward receives a pension, the guardian should request that the checks be forwarded to him, as well.
Finally, as guardian of the person, the guardian must determine what type of medical care his ward will receive, and may determine to withhold care from his ward in an appropriate circumstance.
The guardian of the person must also arrange for the appropriate nursing care for his ward. That may mean arranging for home health aides at the individual's home, or arranging for assisted living or nursing home care.
A guardian may be required to plan for and apply for Medicaid or Municipal Welfare if the ward's funds are insufficient to provide this care. The guardian may also need to apply for PAAD benefits if his ward uses prescription drugs. He may need to apply for housing loans and grants, if the property of the ward needs renovations.
Finally, if the ward owns a house, the guardian may also need to sell the house, either to provide funds for a nursing home, or to qualify for Medicaid. Any house sale by a guardian on behalf of a ward must be approved by the Court. Therefore, any contract for the sale of a ward's house should be made contingent upon Court approval.
When the ward passes away, the guardian usually makes the funeral arrangements. The guardian also may distribute the ward's estate, if the ward has no Will. If the ward has a Will, the ward's funds should be sent to the Executor.
Lastly, the guardian renders an accounting to the Court. The accounting lists all of the money the guardian has received on behalf of the ward, all the payments the guardian made on behalf of the ward, and all the funds remaining. Every single penny put into the hands of the guardian should be accounted for in this accounting.
At the final account, or before, the guardian is entitled to some compensation for his work. The guardian is entitled to 6% of the annual income of the ward. The guardian is also entitled to a 0.5% commission on all the ward's assets each year. He may also be entitled to additional amounts at the final accounting.
SUMMING UP
As one can see, a guardianship is not a simple matter. It arises, however, from the simple desire to help someone who cannot help themselves. It can be tremendously gratifying to do this. Acting as a guardian is not for everyone, but it is a rewarding experience in which you have a positive impact on someone's life.
For information about guardianship, including questions regarding nursing home placement and Medicaid, please contact Michael D. Bolton, Esq. at (973) 425-0497.
