When individuals cannot manage their finances, courts can appoint guardians. Financial guardianship is for those who need help handling money.
Financial guardianship may also be called guardianship of the estate or conservatorship depending on the jurisdiction.
In cases where individuals need help with personal and financial decisions, the court can order guardianship of the person and estate. The guardian makes both personal and financial decisions for the protected person.
What Financial Guardianship Entails
Financial guardianship gives the guardian the authority to oversee the protected person’s finances and access money to pay bills. In many cases, the terms of the arrangement require the guardian to seek court approval before making financial actions on behalf of the ward, such as spending money and selling assets.
The ward’s money goes into a blocked account. The guardian can only access such an account with a court order, according to the Family Law Self-Help Center.
When Do Courts Order Financial Guardianship of an Adult?
Courts appoint financial guardians when people demonstrate that they cannot handle their finances on their own.
- Individuals who frequently forget to pay bills might need help with finances. For instance, a person might need help remembering to pay bills and handling money.
- Those who are vulnerable to financial exploitation might also need guardians. For example, suppose a person makes significant payments to an online scammer. In that case, a loved one might petition the court to become the person’s guardian to protect them.
- Individuals with diseases and disabilities that prevent them from understanding money may also need the help of a trusted person. For instance, dementia can cause people to have executive functioning difficulties that impact their ability to handle money.
Courts will order financial guardianship when a person has significant assets but needs help managing them. Individuals with limited income and assets might not need financial guardians.
Alternatives to Financial Guardianship
While providing protection and support, guardianship limits autonomy. Many states require courts to explore less restrictive alternatives to guardianship before appointing a guardian. Those facing challenges with financial decisions should, along with their loved ones, first consider other options.
Financial Power of Attorney
Guardianship is appropriate when a person is impaired and cannot make their own decisions. Suppose an individual still can make decisions and understand the consequences of their choices. In that case, the person can execute a power of attorney for property. This gives a trusted individual the ability to handle their assets.
Compared to financial guardianship, an economic power of attorney can protect individuals’ rights while allowing someone to step in and help with monetary decisions. Under financial guardianship, it is more difficult for the protected person to change the arrangement if disagreements with the guardian arise. The person subject to the arrangement must petition the court to terminate it.
Revoking a power of attorney is, by comparison, straightforward. As long as the individual who made a power of attorney retains capacity, they can withdraw their power of attorney at any time for any reason. They can also appoint a new agent without judicial oversight.
Supported Decision Making
Another option for those with money difficulties is supported decision-making. Under a supportive decision-making arrangement, a person can have a trusted individual or multiple people help with financial decisions.
Supportive decision-making is less restrictive than guardianship, as individuals get help with decisions while retaining autonomy. Unlike a ward in a guardianship, the individual keeps the final decision-making power.
Those wondering whether they need someone to help with finances should contact us today.
Additional Reading on Legal Guardianship
- The Ins and Outs of Guardianship and Conservatorship
- Britney Spears Case Puts Renewed Focus on Guardianships and Less Restrictive Alternatives
- How Do I File for a Guardianship?
- New Yorker Article Highlights Abuses in the Guardianship System
This article is for informational purposes only and shall not be construed as legal advice. No attorney-client relationship between the reader and Brennan & Rogers, PLLC, or its attorneys is intended. This article should not be used as a substitute for legal advice. Laws may vary from state to state, and the educational materials found in this article may not apply in all jurisdictions. Brennan & Rogers, PLLC | 279 York Street, York, ME 03909 | 207-361-4680 | email@example.com