Comprehensive estate plan serves many functions

A comprehensive estate plan serves many apparent functions like ensuring that one’s wishes are followed, minimizing associated costs, and simplifying the process of estate administration upon death. But it can also ensure that elderly parents are protected during periods of vulnerability.

One of the main concerns an adult child may have is someone taking advantage of their elderly parent, especially when that child lives far away and cannot visit often or assist the parent with daily tasks. The concern is that another person, with less than pure intentions, may step in and take advantage of the elderly person’s trust and vulnerability to benefit themself.

If an elderly person is not mentally competent to manage their own financial matters, then certain legal steps can be taken to assist and protect them. If money is being managed irresponsibly, for example investing unreasonably or spending money on expensive gifts for strangers, then either a successor trustee can take over the management of the financial affairs or a guardianship can be established by the court.

If an elderly person has a trust, and that person’s assets are in trust, the trust is typically set up with the creator of the trust (grantor) as its trustee. The trust should contain provisions addressing the incapacity of the grantor and trustee. A trustee who is aware of his or her own declining mental capacity can choose to resign as trustee and allow the named successor trustee to take over the management of the trust.

If the elderly trustee is unwilling or unable to resign, the trust should typically contain provisions for the removal of the trustee upon medical evidence of incapacity or the determination by court. This is the least desired outcome as the legal proceeding can be unpleasant, lengthy, and expensive. Additionally, the financial resources might be frozen while the dispute continues.

Once the successor trustee steps in, they need to notify any financial institutions that the elderly person is no longer trustee and has been replaced.

If an elderly person does not have a trust, or if not all the assets are in trust and it is too late to transfer them into trust, then the only way to assist and protect the elderly person is by exercising a power of attorney or becoming a guardian appointed by the court.

For a power of attorney to be an effective tool in managing an elderly person’s assets and protecting them from abuse, the elderly person must either relinquish all control to an agent or be declared incompetent for the agent to fully control their financial affairs.

As a last resort, a person who wishes to protect an elderly person from financial abuse can request that the court appoint them as guardian. The guardianship process can be complicated, even if no one objects to it. If the elderly person objects, the procedure becomes lengthy, expensive, and very unpleasant. There are also certain requirements a potential guardian must meet. Additionally, a guardian must report to the court periodically regarding the status of the person and the estate.

Pursuing the means necessary to assist a vulnerable elderly person can be costly. If an attorney has been retained by the trustee of the trust, the attorney’s fees, if considered reasonable by the court, are typically paid from the trust’s estate. If an attorney is hired by an adult child trying to take control away from an aging parent and if that parent prevails, the court will likely order the adult child to pay their own attorney’s fees.

Natalia Vander Laan is a Minden attorney.