The first of a two-part article examining issues of guardianship and the proper - and improper - uses of such a power, a significant issue in the US and elsewhere amid concerns about trends such as cognitive decline.

This is the second part of a two-part white paper examining the issues raised by guardianship as they apply in US law. Such an area is clearly significant in the estate planning and legal structuring field, and we hope readers find the views informative. They come from Steven W. Perlstein, Adriana Riviere-Badell, Josh Sheptow, Robin Rathmell and James Corbett QC, at Kobre & Kim. To see the first instalment, go here.

As is always the case with bylined content from guest contributors, the editors of this news service don’t necessarily endorse all views and invite responses. Those who want to enter the debate should email tom.burroughes@wealthbriefing.com

Minimizing the risks — Steps you can take

Below are a number of steps you can take to maximize the likelihood that a loved one who you choose, rather than a court-appointed stranger, will serve as your guardian in the event you become incapacitated. (11)

Designate a pre-need guardian

Florida, as with most states, permits the designation of a preneed guardian, or an adult who you wish to serve as your guardian in the event you are declared incapacitated. In Florida, the document in which you designate a preneed guardian must be signed in the presence of two witnesses and filed with the clerk of courts. That said, a court is not required to appoint your designated preneed guardian (DPG) in the event that you are declared incapacitated.

Florida law provides only that designating a preneed guardian creates a “rebuttable presumption” in favor of the DPG. The presumption in favor of the DPG can be overcome - and the court may appoint a guardian of its choosing - if it is shown (typically by another friend or family member who is at odds with the DPG) that appointing the DPG would be “contrary to the best interests of the ward.” (12)

This presents two significant problems. First, the person challenging the DPG may succeed by showing that, for whatever reason, the DPG is unfit. For example, they may show that your DPG lacks the necessary financial expertise or the time and resources necessary to manage your affairs. Second, even if the challenge to your choice of DPG does not succeed, it could impose substantial burdens on that person. These include legal costs, as well as time and energy spent defending their appointment. For example, the DPG may be asked to turn over all of his or her correspondence with you, however private, to the person mounting the challenge, as part of the court’s discovery procedures. (13)

In addition to challenging the appointment of the DPG on the grounds that it is contrary to your best interest, the appointment may also be challenged on the grounds that you were incapacitated at the time you designated a preneed guardian. (14) Relatedly, someone might allege that, although you were not incapacitated, you were not at full cognitive strength when you designated a DPG, and you were improperly influenced or manipulated into appointing a specific person as your DPG (typically by the DPG himself or those in league with him or her). If a court finds either of these allegations to be true - that you were incapacitated or unduly influenced - your designation will be invalid and the court will appoint a guardian of its choosing.

In view of these concerns, it is important not only to designate a preneed guardian, but to take steps that will minimize the likelihood of a successful challenge to the appointment of your DPG. We set forth some central steps below.

Secure a same-day evaluation by a neurologist

One crucial step you can take to minimize the likelihood of a successful challenge to the appointment of your DPG on the grounds that you were incapacitated or unduly influenced when you made the designation is to arrange to be examined by a neurologist on the same day you intend to execute the document designating a preneed guardian. Ask that the neurologist certify that you have full cognitive capacity or, if not, that he or she is confident that you are acting of your own volition and are not manipulated by someone else. If possible, you should complete the designation as soon as the examination is over, with the neurologist serving as a witness.

Set aside funds for defending your choice of guardian

Another essential step is to work with an experienced trust and estates lawyer to set aside funds to be used by the DPG in the event that his or her appointment is challenged. In addition to easing the burden on your DPG, if a potential challenger is made aware of these funds, it may deter him or her from raising the challenge in the first plac

Include an arbitration clause in your designation of a preneed guardian

The document that identifies your DPG should specify that any litigation challenging his or her appointment should be resolved by binding arbitration, not by the courts. Arbitration is typically less costly, faster and does not allow for the same level of burdensome discovery that is permitted in a court case. An arbitrator will also be able to invest more time in carefully resolving the dispute, as compared to routinely overworked probate judges. (15)

In 2007, the Florida Legislature passed a law that requires courts to enforce arbitration clauses that are written into wills and trusts. (16) While we are not aware of any cases that directly address whether an arbitration clause will be enforced when written into a preneed guardian designation, it is certainly worth consulting with your lawyer about taking this potentially significant precaution.

Consult an asset-protection lawyer

You should consult a lawyer well-versed in the creation of trusts and other asset protection strategies to ensure that some segment of your assets cannot be reached by an abusive guardian, in the event that the court appoints someone other than your DPG. The most important step you can take to ensure that your wishes are respected if you become incapacitated is to discuss the prospect of incapacity and guardianship with a lawyer who is experienced in these matters - and do so early. Designating a preneed guardian, as with any estate-related document, is more likely to be enforced the earlier it is prepared, when it is least likely to be attacked on the grounds that you were already incapacitated or suffering from undue influence.

Footnotes

11, See 43 Fla. Stat. § 744.3045 (2013) 
12,  See 43 Fla. Stat. § 744.312(1) (2012)
13, Killinger v. Guardianship of Grable, 983 So.2d 30, 31 (Fla. 5th Dist. Ct. App. 2008)
14, Koshenina v. Buvens, 130 So.3d 276, 281 (Fla. 1st Dist. Ct. App. 2014)
15, See, e.g. FY 2013-14 Florida Probate Court Statistical Reference Guide: http://www.flprobatelitigation.com/files/2015/05/reference-guide-1314-chp6.pdf, noting that hundreds of guardianship actions are filed in each county annually.
16,  See 42 Fla. Stat. § 731.401 (2013)