When an adult cannot manage his or her own affairs for financial or personal matters, a guardian may be necessary. The guardianship process can be a safe and healthy way to ensure a loved one or friend is properly taken care of, though it can, at times, be limiting for the adult placed in another’s care. Those that wish to avoid guardianship and the red tape it can come with can look to estate planning and proper preparation through the use of powers of attorney for financial and health care matters as a way to secure themselves against guardianship proceedings. Before diving into the details of guardianship, you can find out more about the North Carolina Statutes for Incompetency and Guardianship by clicking here.
How is Guardianship Defined in North Carolina?
In simplest terms, guardianship in North Carolina is defined by the North Carolina Judicial Branch as “a legal relationship in which a person is appointed by the court to make decisions and act on behalf of a person who does not have adequate capacity to make such decisions involving the management of personal affairs, property, or both.”
The exact role of a guardian can encompass any number of responsibilities, and can fluctuate based on the need of the adult that requires guardianship (also known as the ward). In North Carolina, all guardianship responsibilities revolve around the guardian being a decision maker and advocate for the ward. The guardian must also try his or her best to include the ward in as many decisions that will affect them as possible.
Incompetency Definitions in North Carolina
When it comes down to deciding whether an adult requires guardianship or not, the state of North Carolina relies on the idea of competency to help determine the best course of action.
According to North Carolina’s state mandates, in order to be considered incompetent and thusly require guardianship, an individual must be one “who lacks sufficient capacity to manage [his or her] own affairs or to make or communicate important decisions concerning [his or her] person, family, or property whether the lack of capacity is due to mental illness, mental retardation, epilepsy, cerebral palsy, autism, inebriety, senility, disease, injury, or similar cause or condition.”
Guardianship is a serious undertaking, so the definition of competency for the adult in question can’t be taken lightly. A person cannot be declared incompetent simply because he or she makes irresponsible or bad decisions, as everyone has the right to make foolish decisions without being considered incompetent. Instead, it must be shown that the person lacks the capacity to make sound decisions. For example, an adult may not be declared incompetent simply because he or she wastes money on odd purchases or hands out money to strangers. That is a choice. But if that adult lacks the capacity to recognize that he has no money left to live on because of his or her actions, that could be grounds for incompetency. Note too, that merely having a developmental disability or mental illness does not, by itself, render an adult incompetent. He or she must also lack capacity.
Starting a North Carolina Guardianship
In North Carolina, anyone interested in the proposed ward’s well-being can start a guardianship proceeding. The person starting the process is called the “petitioner” and the proposed ward is called the “respondent.” To begin, the petitioner must file a petition with the Clerk of Court requesting adjudication of incompetence. The petition should include facts showing that the respondent is incompetent and an estimate of the respondent’s assets and a list of the respondent’s next of kin.
The Clerk will then appoint a local lawyer to serve as “guardian ad litem” to represent the respondent and to report to the Clerk. If the respondent retains his or her own counsel, the Clerk may but is not required to discharge the guardian ad litem.
After a lawyer has been retained, there will be a hearing on the petition. Prior to the hearing, the Clerk may request a multidisciplinary evaluation be processed. This evaluation will be used as a reference during proceedings. If the respondent is in imminent or foreseeable risk of harm to person or finances, an interim guardian may be dispatched to attend to their needs. This person assumes all legal guardianship responsibilities until a permanent guardian is decided by the court.
At the hearing, both sides will present evidence in front of the Clerk. If the Clerk decides that the respondent is competent, then the proceeding will end with no further action. If the Clerk decides that the respondent is incompetent, then it is his or her job to appoint a guardian. The Clerk has broad discretion about who to appoint, and it should be noted that guardianship is not always appointed to the petitioner.
North Carolina law does allow a person to request the Clerk’s appointment of a particular person as guardian, should a guardianship be needed. This is done through the Durable Power of Attorney for finances (to name a requested Guardian of the Estate), and through a Health Care Power of Attorney (to name a requested Guardian of the Person). Stll, the Clerk can decide to appoint someone else if he or she determines it’s within the best interests of the ward. The guardian can be any competent adult or agency. This means guardianship can be assigned to anyone from the ward’s spouse, friend, or neighbor to a nonprofit agency or public corporation. In North Carolina, guardianship is always assigned based on the ward’s best interests.
Reporting Requirements for a North Carolina Guardianship
The guardian must comply with North Carolina law, consistently acting within the best interests of the ward and getting proper court approval when needed for decisions. Courts hold guardians accountable for reporting how money is invested and spent by the ward, and guardians are personally liable for their actions.
A Guardian of the Estate (and a General Guardian) will file an initial inventory of the ward’s property and investments. Then he or she will invest the ward’s funds, and file annual, detailed reports with the Court. A bond is also required. This continues every year for the rest of the ward’s lifetime, unless the ward’s condition improves to the point where guardianship is no longer needed.
Alternatives to Guardianship
Avoiding a guardianship can be a powerful motivating factor for estate planning, because guardianship usually implies a loss of freedom and dignity for the ward, along with a tremendous amount of red tape and extra constraints. Some alternatives to guardianship include the following:
Power of Attorney. A power of attorney names someone else (called an attorney-in-fact or agent) to make decisions when the person signing the document (who is called the “principal”) cannot make those decisions for his or her own self. The power of attorney could be for financial decisions (called a Durable Power of Attorney) or for medical decisions (called a Health Care Power of Attorney). Usually the power of attorney for finances is immediately effective, but the principal does not intend for the Agent to use it until the principal becomes incapacitated.
Representative Payee. The Social Security Administration does not recognize powers of attorney, but it is possible to have a person appointed as representative payee instead.
Revocable trust. A person’s assets can be held in a revocable (or “living”) trust created while the person is competent. The trust creator (called a “Grantor” or “Settlor”), would include instructions in the written trust document about how the assets in trust could be used if the Grantor were to become incompetent through a stroke, illness or accident. In this case, the trust document would name a “Successor Trustee” to take over management of the trust upon the Grantor’s incapacity or death.
Here at the Elderlaw Firm, we’ve specialized in helping North Carolina’s families successfully avoid and navigate guardianship proceedings for years. Together, we can help provide you and your loved ones with the peace of mind you need to make decisions that will last a lifetime!