Jenny Rozelle, Host of Legal Tea
Cautionary Tales - Guardianship Blunders - Episode 54
Hey there, Legal Tea Listeners –This is your host, Jenny Rozelle! Today’s episode of Legal Tea is a cautionary tale, where we talk about a real-life case with real-life clients with real facts – they’re things me or my office have worked on. Though, of course, names are altered for confidentiality purposes. For today’s episode, we’re going to be talking about guardianships – and specifically, where I’ve seen Guardians slip up and do something wrong. Thankfully, I’ve not worked on any cases where Guardians have directly went against my advice and recommendation, but they’ve done something that they thought was “okay” but it turns out, it was really … not okay. Hopefully, talking about some of these things will bring awareness to guardianships, what they are, how they work, and what the Guardian should (and should not) do as they serve.
Let’s lay a little groundwork first on guardianships – what they are, terms of art that are thrown around, etc. – before we dive into the stories.
So, how do guardianships fit into my little estate world? First, we help clients gain guardianship over children who may have special needs – and with turning 18, the child becomes, legally speaking, an adult. So sometimes, kiddos who are about to turn 18, the parents (or whoever may be the proposed legal guardian) want to maintain being the child’s decision-maker … and a guardianship is the legal procedure to make that happen. Second, we help clients gain guardianship over aging adults, who may be experiencing significant cognitive impairment – think, advanced dementia, Alzheimers, etc. – where the person, due to their cognitive impairment, need further assistance with decision-making. Oftentimes, we see this become a thing IF the person does NOT have a Power of Attorney in place -or- perhaps their Power of Attorney is not “strong” enough and the person trying to help with decisions is hitting roadblocks.
Beyond that, there are two, let’s call them types, of guardianship – the Guardian can be the Guardian of the “person” and secondly, can be the Guardian of the “estate.” Guardian of the “person” means you have the authority to make decisions about the “person” – so think like health care decisions, where the person should reside, attend school, etc. Now, Guardian of the “estate” means you have the authority to make decisions about the persons “financial affairs” – for this, think applying for governmental benefits, accessing bank and financial accounts, working with financial professionals and tax professionals, etc.
Lastly, before we get into some stories (it IS cautionary tales after all!), I often explain to clients that a guardianship is something that really never goes away, but it has to be maintained though too. What do I mean by this? Okay, well here in Indiana, once a guardianship is established, it’s not set-in-stone, forever sort of thing – we have to do routine reports to the Court to provide updates about the person, their finances, their whereabouts, and ultimately we request that the guardianship remain intact for reasons A,B, and C for another couple years.
Most counties here in Indiana require us to do these reports ever 2 years – though, it’s a county-by-county and state-by-state issue. They really only ever get terminated in three situations: 1) if the guardianship was intended to be TEMPORARY; 2) if, for some reason, the guardianship just isn’t needed anymore, but the individual is still alive; or 3) the individual has passed away. Though, we also are required to notify and/or ask the Court to do some things “outside” these routine reports – like, if we want to sell any of the individual’s property, do estate planning, move the individual, etc. They do all these things because it’s the classic “bad egg” scenario – one “bad egg” ruined it for everyone. They do it to keep an eye on things; to make sure the Guardian is “behaving” and doing the appropriate things; etc. So, while it feels like the Court is being nosy, they’re involved in all these things because the “bad eggs” that did bad things.
Okay, let’s jump to a few stories on where Guardians have done things that were less than ideal…
Selling Guardianship Property
We helped three children become Co-Guardians of their mother. (Side note: I’m not usually a big fan of Co-anything (unless its like a child’s parents for example), so the fact that they convinced me of it, is somewhat of a miracle. In their defense, they have been Co-Guardians now for a handful of years and it’s worked out just fine! I don’t mind getting proven wrong when it’s in the client’s favor!) Anyway, Mom had a house, a car, and some financial accounts that, as a product of the guardianship process, we had to disclose to the Court as part of the guardianship proceeding. Well, Mom resided in an assisted living community that was not cheap. So, we knew it was in the cards to likely have to sell the house – but in the initial stages of the guardianship, it was not necessary. Fast forward some time, the office gets a call that they sold the house and want to know if it needs to go in the guardianship bank account or what. I stopped in my tracks. To my teammate, I said, “What did you just say they told you?!”
She confirmed what I thought I heard. So, long story short, they sold the house without asking for Court approval which is a huge no-no. That afternoon, I gave one of the Guardians a call (the one I normally talked to) and explained that “as we discussed, I’d have to ask the Court about selling the house BEFORE they did it.” She just totally forgot. I shared that I’d prepare a document to be filed with the Court to explain what happened and that I hope they don’t call a hearing. In all honestly, they probably should have called a hearing to give the Guardians a little bit of a lecture, but maybe the Judge knew I already did that – so she, the Judge, did not call one. I bet they don’t do that again! (Actually, they didn’t – they sold Mom’s car somewhat recently and they called my office before they did so. Ha)
Co-Mingling Personal Funds in/out of Guardianship Account
We helped a father and a mother become Guardians of their special needs son. He was going to be 18 years old soon, so the parents knew to maintain making decisions on his behalf, they’d have to seek legal guardianship. They were awarded guardianship, yay! Here in Indiana, if you become the Guardian of the Estate and the person’s estate exceeds a specific amount, you have to prepare and submit an accounting to the Court when you file the routine reports. In the accounting, you have to show every penny that has come into the guardianship account and every penny that has come out. Their son had received an inheritance from his grandparent, so he actually had money to his name – hence, we had to prepare accountings in the future for his guardianship.
Fast forward some time, the report and accounting are coming due, so we reach out to the client to get statements for the guardianship account. We’re knee deep in preparing the accounting and we see a $4000 withdrawal. We couldn’t figure out “what” it was, so we called the client and asked. Basically, they were doing mobile banking and thought they were transferred $4000 out of their personal savings account, but instead selected their son’s guardianship account. So, the $4000 came out and they didn’t notice what they had done until I called their attention to it. Immediately, they put the $4000 “back” into the guardianship account hoping to show the Court it was just an oopsies.
Well, unlike my last story, this Judge was a little more by-the-book and called a hearing. I knew it was going to be about that, so I prepped my client – basically telling them to apologize, be remorseful, and definitely don’t be defensive. We go to the hearing, the Judge gives them an ear full, and we go on with life. Was it fun? Definitely not. Did it cost the client more because they had to pull me in to clean up? Yep. Will they do it again? Eh, hopefully not – but I bet they’re a little slower with their fingers when they’re doing mobile banking now!
Big Changes – Moving, New Assets, New Source of Income
What’s the saying – change is the only constant in life? So true. Well, changes in guardianship world have to be reported to the Court and sometimes, we have to ask about them in advance. I’ll start with new assets and income – those are usually pretty easy because we just send a report to the Court saying, “Hey, Joe Bob has a guardian; Joe Bob has a new asset … or Joe Bob is receiving an additional source of income …” and that’s that. It’s not really even a Petition or Motion – like we’re not asking the Court to do anything; instead, we’re just notifying them. Though, we have to be certain that any new assets get reflected on accountings, if that becomes an issue!
Moving, though, comes with a unique set of challenges. Moving within the state is pretty easy. You just have to “ask” to move them – and sometimes, they’ll want the case transferred to be under the county where the person is moving to. Say, the individual currently lives in Hamilton County, Indiana and the guardianship is under Hamilton County, but is moving to Marion County; sometimes, they’ll request we transfer the case to Marion County. Transferring to another state is a whole different ball game. It’s a much bigger process – we have to ask our Court to allow it; if they say yes, you have to establish the guardianship in the new state, and once it’s established, terminate the guardianship in the old state. It’s a lot of work, for sure.
I have stories for all of these – new assets that were not disclosed to us (then we have to ask for forgiveness); guardians that moved the individual to another county (without notifying the current Court); guardians that moved to a totally different state (without consent from the current Court). Most cause me and my office to work more – which means more fees.
The thing about guardianships that I tell all clients is that ANYTHING that happens to the individual, just call my office and let us know BEFORE you, as Guardian, do anything. We actually send out a little checklist when we go to do the routine reports to the Court of “Has this happened, has this happened, has this happened…” so it’s a cross-check for them and for us. The last thing ANY of us want to be doing is tucking our tails in to go in front of a Judge – I promise it’s not fun for you and it’s not fun for me either. I’d much prefer to stay out of the Courthouse!
Alrighty … let’s wrap up this episode. Next week, we are back to the current events/current trends topic – where we talk about something I’ve seen or run across, maybe on the news or social media, that I think would be interesting on here. We’re going to be talking about “how to pass on your passwords when you die” which is a topic that is very, very timely as we become more and more reliant on online platforms – online banking, electronic statements, social media, emailing, etc. So yeah, tune in for that next Tuesday, Legal Tea Listeners! Until then, be well and talk soon!