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Category Archives: Guardianships
Assisting Aging Parents with Their Finances
While it may not be easy for an aging parent to admit they may need help managing their affairs, it is best to have the conversation before that parent’s capacity is diminished. By having the conversation about incapacity planning before it becomes an issue there is still time to execute financial power of attorney and health care power of attorney thereby avoiding the need for a separate legal proceeding.
Options Are Different Depending on Capacity
The specific option you may take to assist a parent with his or her finances depends on their level of competency and understanding of his or her own financial matters. If your parent does not have memory or competency issues, and want to maintain some level of financial independence, then options such as a power of attorney or signatory authority on accounts may make sense. However, if you are concerned that a parent may be showing signs of dementia or has significant memory problems, then you may need to seek appointment as his or her conservator through a court process.
Conservatorships in Montana
If your parent or parents already have significant memory or capacity problems, but do not already have a power of attorney in place, then you (or another trusted family member) would need to seek appointment as that parent’s conservator through a court order. A conservator is an individual appointed by a court with a duty to make financial decisions and manage finances for an incapacitated individual.
The appointment of conservator in Montana requires the filing of a petition with district court. This includes a general statement of property owned by the alleged incapacitated person. A hearing in district court is required to determine the issue of incapacity, as well as to determine the appropriate individual to act as conservator. Notice of the hearing and petition must be served on all interested parties, which includes spouses, children and other family members.
The process of seeking appointment as a conservator through the court system, can be time consuming and expensive. The process also can be confusing and overwhelming for an incapacitated individual, so it is not often a first choice. However, if a parent already has significant memory or capacity problems and has not planned appropriately with a financial power of attorney, then a conservatorship is likely your only option for assisting a parent with his or her finances.
Financial Power of Attorney
If your parent has previously executed a financial power of attorney appointing you or another family member as an agent in fact for financial matters, then you may be able to avoid the conservatorship process. Similarly, if your parent has sufficient capacity to appoint an agent to make financial decisions for him or her through a power of attorney, your family may avoid the need for a conservatorship.
A power of attorney is a document whereby you appoint another individual (called an “agent”) to make financial or heath care decisions for you or transact business on your behalf in the event you are unable to do so for yourself. A power of attorney can be an immediate grant of authority or only used in the event of incapacity or disability. Unless the powers are specifically limited in any way, an agent appointed under a general financial power of attorney can make all types of financial decisions and transact all business on your behalf. These general powers include authority for check writing and banking, real and personal property, taxes, stocks and bonds, business transactions, insurance, legal claims and all other general financial matters.
A power of attorney can be a useful tool for financial management and simplify the process for assisting a parent with his or her finances. They also let a parent choose the individual that they want to assist with their finances without the need for a public court process.
Duties of an Agent
If you are appointed to act on behalf of one of your parents, whether through a power of attorney or conservatorship, you have a fiduciary duty to act in the best interest of that parent. This means that you have a legal duty to act solely in the best interests of your parent. You must manage and protect his or her property in an impartial manner. If you fail properly manage and account for your parent’s assets you may be subject to liability.
Organization is Essential
The best way to assist an aging parent with his or her finances, while protecting your parent’s best interests is through organization. Start by creating an inventory of your parent’s financial assets, accounts and ongoing expenses. Use the inventory to create a monthly budget. Once you have a clear idea of the budget and ongoing expenses then utilize options such as automatic payments for utilities and other regular expenses. Once you have determined a budget and set up payment systems, keep updated records of these payments.
Discuss with Your Siblings and Other Family Members
Discussing a parent’s financial matters may cause disagreements between siblings, but it is important that you keep your family involved from the beginning. It is critical that you discuss these issues together before you take any specific action on behalf of a parent . This allows you to address any potential objections and make sure everyone is on the same page. If you don’t inform or involve your family from the start you may be prone to potential challenges, or even legal action at a later date.
Seek Advice
Before you begin to assist an aging parent with his or her financial matters seek legal advice to make sure you are proceeding properly. If you have any question about your parent’s capacity to make decisions make sure you involve your family, health care providers and legal counsel in the process. By seeking the proper advice and involving key advisers and family members from the beginning you may be able to avoid disputes and will be assured that you are taking the right steps to protect your parent.
With questions about assisting your parents with their financial matters, Montana powers of attorney, conservatorships in Montana, or general estate planning questions contact Kelly O’Brien at Measure, Sampsel, Sullivan & O’Brien, P.C. at (406) 752-6373/ www.measurelaw.com
A Power of Attorney- What is it and Why Might You Need One?
What is a Power of Attorney?
A power of attorney is a document whereby you appoint another individual (called an “agent”) to make financial or heath care decisions for you or transact business on your behalf in the event you are unable to do so for yourself. A power of attorney is typically used in the event of incapacity or disability. However, a power of attorney can also be used simply for convenience in limited circumstances, such as signing legal documents when you are out of the country. A power of attorney can be a useful estate planning tool for individuals of all ages, but it can be especially helpful to have in place as you age. If you wait to execute a power of attorney until your physical or mental condition may be declining, it may be too late.
Types of Powers of Attorney
Power of Attorney for Financial Decisions
A power of attorney for financial decisions allows you to appoint an agent to make financial decisions on your behalf in the event that you are unable to make these decisions yourself due to incapacity or disability. A financial power of attorney can provide immediate powers to your agent. In the alternative, you may execute a financial power of attorney that is not effective until you are determined to be legally incapacitated. Typically the determination of incapacity is made by a licensed physician in your state of residence.
Unless the powers are specifically limited in any way, an agent appointed under a general financial power of attorney can make all types of financial decisions and transact all business on your behalf. These general powers include authority for check writing and banking, real and personal property, taxes, stocks and bonds, business transactions, insurance, legal claims and all other general financial matters. These general powers can be expanded upon to include the powers to make gifts, execute wills or trusts, or change beneficiary designations. The powers can also be specifically limited to include only a particular authority, such as authority to sign real estate documents. All of the specific duties, responsibilities and authorities of a power of attorney in Montana are set out in the Montana Uniform Power of Attorney Act.
Power of Attorney for Heath Care Decisions
A power of attorney for healthcare decisions allows you to appoint an agent to make medical and health care decisions on your behalf in the event you are unable to make these decisions yourself. This includes decisions regarding all types of medical consents and life support issues, as well as decisions regarding medications and health care facilities.
While the appointment of an agent for health care decisions under a power of attorney might include broad powers to make health and personal care decisions, these appointments most often are not effective until you are disabled or incapacitated to the point that you are unable to make or communicate your health care decisions. A power of attorney for health care will typically require the agent to follow your desires as you specifically set out in the power of attorney document itself, or as known to your agent. Typically your agent is required to attempt to discuss the proposed health care decision with you to determine your desires if you are able to communicate in any manner.
What Happens Without a Power of Attorney?
Guardianships & Conservatorships in Montana
If you were to become incapacitated without a power of attorney in place, either suddenly as a result of an accident or due to a long-term disability or mental incapacity, a family member would need to seek appointment as your guardian and conservator through a court order. A guardian is an individual appointed by a court with a duty to manage personal and health care decisions for an incapacitated individual. A conservator is an individual appointed by a court with a duty to make financial decisions and manage finances for an incapacitated individual.
The appointment of a guardian or conservator in Montana requires the filing of a petition with district court. The petition is filed by the individual seeking appointment as the guardian and/or conservator. The petition must state the need for appointment, the specific interest of the petitioner, and set out certain factual allegations regarding the physical and mental state of the alleged incapacitated person. If a conservatorship is sought, then the petition must also include a general statement of property owned by the alleged incapacitated person. A hearing in district court is required to determine the issue of incapacity, as well as to determine the appropriate individual to act as guardian and/or conservator. Notice of the hearing and petition must be served on all interested parties.
In addition, the petitioner must request appointment of a physician, visitor and a separate attorney for the alleged incapacitated person. The physician appointed by the court must examine the alleged incapacitated person and submit a report in writing to the court to explain the mental and physical state of the alleged incapacitated person and whether or not a guardianship and/or conservatorship is appropriate. The court appointed visitor must visit and interview the alleged incapacitated person at their home or residence, as well as interview the petitioner, and submit a report in writing to the court. The attorney is required to represent the alleged incapacitated person to ensure that the guardianship and conservatorship is in his or her best interests.
The process of seeking appointment as guardian and conservator can be time consuming and expensive. Moreover, since it is subject to the court process, it is public, and held in open court. This process can often be confusing and overwhelming for an incapacitated individual.
However, one of the most significant drawbacks of guardianships and conservatorships is that the individual that is appointed by the court may not be the individual that you would have chosen to manage your financial affairs or personal care decisions. By appointing an agent to make financial and health care decisions for you through a power of attorney, you can avoid the need for a guardianship or conservatorship through the court system. A power of attorney allows you to appoint the individual of your choosing to conduct your personal and financial affairs.
Choosing an Agent to Appoint under a Power of Attorney
Choosing an agent to conduct your financial affairs or make your health care decisions requires careful consideration. Your agent has a fiduciary duty to manage your affairs in a manner that serves your best interests according to Montana law. Obviously you want to choose someone that you trust with your utmost personal decisions. The decision of who to appoint also requires consideration of the nature and value of your assets and the relationships between your family members.
Typically, a married individual will nominate his or her spouse as the agent for both the financial and health care power of attorney. However, for a single individual or widow(er) it can often be difficult to determine who to appoint as an alternate agent.
Many people choose to appoint either one or all of their children as alternate agents. If your finances are fairly simple and you have a relatively small family with solid relationships, then appointing one or all of your children may be a good option. Your children are familiar with your assets and intentions, but there is potential for conflict between siblings or misuse by one of your children that oversteps his or her authority or acts in a manner that is counter to your best interests.
Instead, you may decide to appoint a relative or close friend that is not one of your children and not a beneficiary of your estate. Appointing a relative or a close friend can be beneficial because they are familiar with your family dynamics and your assets and intentions. However, relatives and friends may lack experience managing financial assets and may not be immune to family disputes.
As an alternative to your children, relatives, or close friends you may choose to appoint a professional fiduciary. While I do not recommend appointing a professional fiduciary to make personal and health care decisions, the appointment of a professional fiduciary for financial decisions through a financial power of attorney can help to reduce family conflict and can provide neutral management.
Ultimately the choice of who to appoint as your agent under a financial or health care power of attorney is personal. The decision depends on your particular financial assets, health care needs and family dynamics. It is important to consider the factors mentioned above and choose an individual or institution that is responsible, has an ability to work with your family, and is willing to seek the advice of professionals such as physicians, health care providers, estate planning attorneys, financial planners, and CPAs.
Seek Advice
A power of attorney can be a useful tool for estate and incapacity planning. A power of attorney allows you to choose an individual to manage your financial matters and make health and personal care decisions on your behalf, instead of subjecting you and your family to a public court process. Discuss your thoughts and concerns about choosing and appointing an agent with an estate planning attorney and your family members to ensure you make right choice for you and your family.
Estate Planning for Parents of Young Children
While parents of young children may be somewhat young as well, and do not consider themselves as having a large enough “estate” to require an estate plan, parents of minor children often have the largest concerns. Even a bit of simple estate planning will allow parents of young children to have some control over the care of their children in the event of untimely death, and the peace of mind that their children will be provided for in the proper manner.
The basic estate planning considerations for parents of minor children include:
-Who will take care of your children?
-Who is responsible for managing assets for your children?
-How to financially provide for your children?
Choosing a Guardian for Minor Children
Undoubtedly the biggest concern of parents of young children is who will take care of their children once they are gone. Determining the best individual(s) to act as a guardian for minor children can be difficult. However, for parents of young children, guardianship is the estate planning decision with the most potential impact. Consequently, every parent of minor children should consider who would raise their children if they were unable to do so
If you do not appoint a guardian for your children, in the event of death of both parents, the court will appoint a guardian for your children. The court is required to follow state law with regard to the priority of appointment of a guardian, rather than the specific individual(s) of your choosing. Most people would prefer to decide the guardian of their children themselves, rather than leave it to the court and state law to dictate this important decision. Therefore, it is important to take some time to consider a guardian for your children.
I recommend starting the decision making process with a list of good potential candidates for the role of guardian. This list may include brothers, sisters, aunts, uncles, grandparents or even family friends, basically anyone you can think of that may act as a guardian.
Then, consider the most important factors for you in raising your children. Factors to consider include: philosophies about child rearing; relationship with your children; age and stamina; geographic location; social, political, religious and moral values; financial responsibility; lifestyle and availability and interest in acting as a guardian for your children.
Once you have considered these factors, prioritize the factors that are the most important to you and determine which of the potential guardians possess the most similar qualities.
Open discussion with your family members, including your spouse, children and potential guardians is a key component in this process. Also, understand that circumstances may change as children get older, so it is a good idea to revisit the appointment of a guardian periodically to determine if it still remains a good fit.
After you have determined who would raise your children upon the death of both parents, then it is important to consider who is responsible for managing your estate and assets for the benefit of your children.
Choosing a Trustee for Minor Children
Who to appoint to manage assets for your children requires careful consideration of the nature and value of your assets, as well as your plan of distribution and the relationships between your family members.
Family Members or Friends
You may decide that a relative or close friend, or even your chosen guardian, is the appropriate individual to manage assets for your children. Appointing a family member such as one of your siblings or a close friend can be beneficial because they are familiar with your family dynamics, as well as your assets and your intentions. However, family members or friends often lack experience managing estate assets, financial investments, and methods for ongoing accounting of these assets.
Professional Fiduciary or Trustee
As an alternative to your family members or close friends, you may choose to appoint an institutional trustee such as your bank’s trust department, or professional fiduciary, to manage and invest your assets for the benefit of your children. One key advantage of a professional or institutional fiduciary is that they are not subject to the same family pressures and can provide neutral management. A professional fiduciary also has critical professional knowledge in working with wills and trusts, and managing and investing estate assets. However, a bank or trust company will charge a fee for its services, and are not necessarily familiar with your family dynamics. On the other hand, the impersonal aspect may be an advantage when it comes to providing neutral administration, especially with arguing family members.
Ultimately, you want to choose an individual or institution that is responsible, has the ability to follow with large amounts of estate paperwork, an ability to work with all of your beneficiaries, and is willing to seek the advice of qualified professionals.
In addition to choosing a guardian and trustee, also consider how your assets will be managed and distributed to your children; both the mechanism of distribution and the ages or events in which your children will receive a distribution.
Planning the Distribution of your Estate
In planning how and when your estate will be distributed to your children, the first decision is what specific mechanism you will use to manage and distribute your estate. You may decide that a simple will nominating a guardian and leaving all of your assets to your children outright, in equal shares is sufficient, or you may determine that a trust is more appropriate.
Outright Distribution
If you decide to make outright distributions to your children, you must consider the Montana Uniform Transfers to Minors Act (UTMA). Under to the Montana Uniform Transfers to Minors Act (UTMA), the assets are transferred to a custodian who holds and administers the property for the benefit of a minor. UTMA custodianship can be beneficial because any type of property can be transferred and the custodian does not have to post bond, or file accountings unless mandated by the court.
However, under a UTMA custodianship property must be distributed completely at either age twenty-one or age eighteen years, depending on the circumstances. Many parents do not necessarily feel comfortable with their child receiving full control of assets at age eighteen or twenty-one and may want to consider other options.
Outright distributions not only require consideration of the Uniform Transfer to Minors Act, but it provides for less over the distribution of your estate. With that in mind, you may determine that you do not want to leave your estate to your children outright. When providing distributions of your estate for your children, it often makes more sense to create a trust to manage the assets for your children, rather than provide for an outright distribution.
Trusts
A trust is a written agreement wherein a separate entity, the trust, holds title of property and assets and manages those assets on behalf of an individual. A trust is created by a grantor (also known as the “trustor” or “settlor”) and the assets of the trust are managed by a trustee for the benefit of the beneficiary. In general, the most commonly used trusts for children are testamentary trusts or revocable living trusts.
Testamentary Trust through a Will
A testamentary trust is a trust that is set out in a Last Will and Testament. A testamentary trust is only effective upon the death of the grantor through the probate of his or her Last Will and Testament. While testamentary trusts can be a simple and affordable mechanism, a probate of the estate is required before the trust can be funded and your children can receive any distribution from the estate. Not only does this delay the distribution of the assets because the assets must first go through the probate process, but the probate process requires additional fees and expenses, which will reduce the amount of assets available for distribution to your children.
Revocable Living Trust
A Revocable Living Trust is a type of trust that is immediately effective upon creation, but can be amended or terminated at any point by the grantor during his or her lifetime. A Revocable Living Trust offers much more flexibility in the distribution of assets than outright distributions or testamentary trusts.
Revocable Living Trusts do not have to go through the probate process, which permits distributions to begin immediately, in a private manner without the additional costs and fees associated with probate. Moreover, a Revocable Living Trust allows you to control exactly when and how your children receive assets. For example, you may direct that the trustee distribute 1/3 of the trust assets when a child reaches twenty-one; 1/3 when the child reaches thirty; and 1/3 at age thirty-five.
While Revocable Living Trusts can be beneficial estate planning tools, they are not necessarily advantageous for everyone. Revocable Living Trusts typically cost significantly more to create and administer than an estate plan with only a will. Moreover, Revocable Living Trusts require re-titling of assets in the name of the trust, and additional administration by the grantor. Therefore, it is essential to review you assets, family situation, and personal preferences with an estate planning attorney before deciding to create a Revocable Living Trust to benefit your children.
Consider Your Specific Circumstances
While these are the general issues to consider when providing for your young children in your estate, it is important to also consider your specific circumstances. If you have children from a prior marriage, or children with special needs, then you will need to take some additional steps in planning for their future.
If you have young children, even some basic estate planning will provide you with control over the care of your children and the peace of mind that your children will be provided for, both personally and financially, in the manner you see fit.
If you have questions or would like additional information regarding estate planning for minor children contact Kelly O’Brien, Measure, Sampsel, Sullivan & O’Brien, P.C. at (406) 752-6373/ www.measurelaw.com
How to Choose the Right Guardian for Your Minor Children
Choosing a Guardian for Minor Children- Advice from a Montana Estate Planning Attorney
For many people their largest concern in estate planning is providing for their children. Everyone who has a child under the age of eighteen should consider who would raise their children if there were unable to do so. However, determining who would act as a guardian for minor children is perhaps the most difficult decision in estate planning, and the one with the most potential impact. That is why it is critical to take some extra time to make this decision.
Perhaps the best place to start by making a list of good potential candidates for the role of guardian. Initially this list may include brothers, sisters, aunts, uncles, grandparents or even family friends, basically anyone you can think of that may act as a guardian.
Then consider the factors that are most important to you in deciding on a guardian. Some considerations may include:
-Do they have similar philosophies about child rearing?
-What are their religious beliefs or do they possess the ability to follow your desires for your children’s religious upbringing?
-Do they possess the ability to follow your instructions about education, activities and child rearing, in general?
-What is their age, stamina, and maturity level?
-What is their relationship with your children and do they have a genuine interest in your children’s well being?
-What is their level of stability and integrity?
-Are they physically capable of caring for your children?
-What is their current job situation and do they have time available to care for your children?
-Are they willing and interested in acting as a guardian for your children?
-Do they have children of their own and are their children compatible with your children?
-Do they live in the same geographic area as you?
-What are their social, political and moral values?
-Are they financially responsible?
-Do you children enjoy their company?
-Is their overall lifestyle compatible with yours?
Once you have considered these factors, I recommend prioritizing the factors that are the most important to you and your spouse (or other co-parent as the case may be). Understand that you and your spouse may have conflicting ideas about the most important attributes, however the discussion is important to have within this process. Once you have decided on a few key factors you can compare these to your list of candidates and determine who would best fit based on your priorities.
Open discussion with your family members, including your spouse, children and potential guardians is a key component in this process. While the discussion may be difficult at times, keep in mind that this is one of the most important life decisions you will have to make, so discussion is important.
If you have additional questions about choosing a guardian for your minor children, or if you would like additional assistance from a Montana estate planning attorney in nominating a guardian for your minor children or other estate planning techniques to provide for your children, call me at (406) 752-6373.