Seven Factors to Consider Prior to Commencing a Guardianship Proceeding Under Article 81 of the MHL

There are numerous valid reasons for commencing a Guardianship Proceeding pursuant to Article 81 of the Mental Hygiene Law, some of which are significantly less apparent than others. Generally, the most obvious reasons result from the need to be able to make personal (health/medical) and financial decisions for someone who is unable to make the decisions, and has not executed a sufficiently broad Durable General Power of Attorney and a Health Care Proxy. The less apparent are those that result from intra family rivalries and squabbles, where one family member is sufficiently concerned with possible fraud, financial abuse and manipulations by another. These often fall into what can be referred to as the "protect my inheritance Guardianship Proceeding".

Irrespective of the underlying reasons for considering the commencement of an Article 81 Guardianship, there are, in my opinion, seven significant factors that must be considered prior to commencing and filing the Proceeding:

(1) Determine whether it is an absolute necessity to commence a Guardianship Proceeding because there are no other alternatives. The first inquiry in determining the necessity of the Proceeding is whether the Alleged Incapacitated Person (AIP) has executed a valid Durable General Power of Attorney (POA), Health Care Proxy (HCP), Living Will and HIPAA form. The existence of the aforestated advance directives may obviate the need for a Guardianship Proceeding if they are sufficiently broad enough to deal with the issues present in the particular case at hand. For example, in many instances a valid POA has been executed, but, the POA is not sufficiently broad to address the AIP's financial needs. There may be an immediate need for broad gifting powers for Medicaid and or estate planning purposes where the POA only permits gifting to the named agent and others in amounts limited to the personal exclusion amount ($13,000.00 per person, per year). If the POA does not specifically permit broader gifting, then commencing the Guardianship may be necessary. This commonly occurs when, for Medicaid eligibility purposes, it is necessary that all assets held in the name of one spouse be transferred to the other in order that Medicaid can be obtained for the ill spouse. The well spouse (community spouse) can then execute a spousal refusal for Medicaid eligibility purposes.

(2) Review how title to the AIP's assets is held. Does the Alleged Incapacitated Person have assets in joint title with others? If so, can these assets be accessed by the joint title holder if the Alleged Incapacitated Person is not able to make decisions as to his or her financial affairs? For example, although a husband and wife may have joint title to an investment account, the financial institution may not permit a transfer of said account from one spouse to the other without the existence of a POA that permits said transfer, because a joint investment on account may require the signature of both account holders . This problem generally does not occur with joint bank accounts, as both title holders have access to the funds in said joint accounts upon the signature of either of them.

(3) If the petitioner in a Guardianship Proceeding is seeking Guardianship over the assets held jointly by the Alleged Incapacitated Person with a third party or in trust for a third party (not the Alleged Incapacitated Person's spouse), it will be necessary that the Petitioner ascertain whether the joint account is a true joint account entitled to the presumptions of joint ownership and survivorship rights pursuant to §675 of the Banking Law, or whether the account is a "for convenience only" account wherein the joint title holder has no ownership interest or survivorship rights. (See §678 of the Banking Law). If the Petitioner determines that there exist true joint accounts or "in trust for" accounts, and that he or she will be seeking Guardianship powers over said accounts, it will be necessary that the Guardian give notice of the Guardianship proceeding to the joint account holder and specifically request that the joint account and "in trust for account" be retitled in a manner that allows the account to retain its joint and or "in trust for" nature. (See §81.08 of the MHL).

(4) Has the Alleged Incapacitated Person executed a Last Will and Testament or an Inter Vivos Trust? If a Last Will or Inter Vivos Trust are in existence, it will be important to determine whether or not any proposed transfer or disposition of the AIP's assets sought in the Guardianship Proceeding is consistent or inconsistent with the AIP's wishes expressed therein. If a beneficiary(ies) under an existing Last Will or Trust is affected by a proposed transfer, he or she will be entitled to notice of the Proceeding and a right to be heard. (See §81.07 and 81.21 of the Mental Hygiene Law).

(5) Prior to filing a Guardianship Proceeding it is important to determine whether the powers the Guardians will seek will be of an "unlimited" or "definite" duration. Obviously, a critical factor as to the duration of the Guardianship will be whether there is a likelihood that the AIP will be able to handle his or her financial affairs at a later date. Additionally, it will be necessary to determine whether there are any specific or special powers over the person or property that the Guardian requires that are not enumerated as part of the standard powers provided for §81.21 and 81.22 of the Mental Hygiene Law. For example, perhaps the Guardian needs the power to relocate the AIP to another state or wishes to make gifts or transfers of the AIP's property. Such powers are not enumerated in other Mental Hygiene Law.
Under certain circumstances, the Petitioner may want the Guardianship to be a "special", "limited" or a "single transaction" Guardianship. For example, the Alleged Incapacitated Person may have executed a Health Care Proxy, but, he or she did not execute a POA. The Guardianship could be limited to a Guardianship of the property but not of person. Additionally, if in a particular case the plan is to transfer all of the AIP's assets to his or her spouse for Medicaid eligibility purposes, limiting the term of the Guardianship to a term that will end once all of the assets are transferred may be worthy of consideration. (See §81.16 and 81.23 of the MHL).

(6) Does there exist the possibility that the Guardianship will be contested? The possibility that the Guardianship will be contested will have a significant and important impact on whether or not to commence the Proceeding. It is always a difficult decision to commence a Guardianship for one's father or mother, but, the decision is made significantly more difficult when the Petitioner knows or believes that mom or dad will contest it. Voluntarily placing oneself into a litigious proceeding with a parent or a loved one may have significant consequences depending on the level of mental capacity of the AIP. It is not outside the realm of possibility that the AIP, either during the pendency or after the Guardian has been appointed, will execute a new Last Will and Testament which excludes the Petitioner(s) as a beneficiary. A finding of incapacity and the appointment of a Guardian does not in and of itself eliminate the possibility of the execution of a valid Last Will & Testament.

(7) Is the appointment of a Temporary Guardian advisable? In cases where there exists a significant possibility for either personal or financial harm to the AIP because he or she is unable to handle his or her affairs, it may be advisable to request that the Petitioner(s) or a third party be appointed a Temporary Guardian pending the final determination of the Court. This is often utilized when there is a an immediate need to marshal the AIP's assets to prevent waste, dissipation or fraud, or where there is an immediate need for someone to handle the Alleged Incapacitated Person's personal and financial affairs. (See §81.23 of the MHL) Additionally, where there is concern about the AIP being the victim of elder abuse, fraud or manipulation, it may be advisable to request that the Court issue a temporary restraining order preventing a third party from having contact with the AIP as well as restraining any access to the AIP's bank accounts and assets. (See §81.23 of the MHL)

In conclusion, although the aforestated factors are not the only factors that one should consider prior to commencing a Guardianship, in my experience they are often the most important.