| How to Avoid Conservatorship in the Event of Disability |
PLANNING CAN HELP AVOID CONSERVATORSHIP
Because California is a Community Property State, each spouse is considered the one-half owner of all property. In the event one spouse becomes incapacitated, the other spouse will be unable to sell or borrow against community property, without intervention by the Superior Court through a Conservatorship. A Conservatorship is administered much like the Guardianship for a minor child. The Court assumes control over all assets of the disabled person and supervises their use for the benefit of the spouse. This can be both humiliating and a hardship for a spouse or other close relative to have the court overseeing the finances of the family member's care.
Usually a conservatorship can be avoided entirely, if an individual executes a Durable Power of Attorney before they become disabled. A Durable Power of Attorney for Property Management allows the person of your choice to make financial decisions for you should you become incapacitated, without the Court's intervention.
AVOID POTENTIAL PROBLEMS WITH A POWER OF ATTORNEY
As I said above, a Durable Power of Attorney for Property Management is an essential part of any estate plan. However, there are certain things to be sure of before signing one.
1. Is the Power of Attorney "Durable?" That does not mean well made! What it does mean will it continue on in the event of the disability of the principal (the person signing the document)? Without the specific word Durable in the document, upon disability, the power granted will expire and will have defeated the reason for having it in the first place.
2. When does the Power of Attorney take effect? If it is immediate, it means the person you grant the power to can immediately sell, or give away your property! You want to make sure the Power of Attorney only becomes effective upon "two physicians licensed in the State of California stating that the principal cannot properly care for his person or property."
3. The Durable Power of Attorney should have a limitation that prevents the "Attorney in Fact" (the person receiving the power) cannot make changes to the principal's estate planning documents or make gifts of the principals property to themselves or others.
4. The document should also have a provision for Capacity Regained, where two physicians can certify that the principal has recovered and now is capable of caring for their person and property and therefore the Power of Attorney is no long in effect.
By making sure these provisions are in any Power of Attorney for Property Management, it will ensure the document can only be used as it was intended.
EVERY TRUST SHOULD INCLUDE POWERS OF ATTORNEY
A well-written living trust includes provisions integrating the effect of a Durable Power of Attorney for Property Management with the Living Trust in order to provide a high level of flexibility and ease of management in case of disability.
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