When a person becomes incapacitated due to illness or injury, their property and assets must still be managed in an appropriate manner. Ideally, it is best for the individual property owner to plan ahead for this possibility, as there are several different options that can be elected in determining who will be responsible for managing their affairs.
If no advanced plans are made, it is still possible for family members to take action to manage the property. However, more legal complications arise when there is no advance planning.
Planning for Incapacity
When you have planned in advance for the possibility of becoming incapacitated, there are different methods of designating who would be responsible for the management of property. These options include:
- A Durable Power of Attorney: This option is very common and a simple way of determining who should be in control of your assets and who should manage property in the event of incapacity. An attorney should draft the power of attorney for you.
- A Living Trust: If you opt to create a living trust, you will transfer the ownership of your property to that trust. You can name yourself as the trustee, in charge of managing affairs as long as you are able to do so. You will also name a successor trustee, who takes over automatically to manage the trust if you become unable to do so. The trust can continue to exist after your death and you can designate a beneficiary to receive the trust assets. This method provides you with many legal protections but can be more complicated to set up and expensive to manage than a durable power of attorney.
- Joint Ownership: Property that is owned jointly with others can be managed by each owner. Owning property jointly can be a convenient method of allowing someone else to control the property as there are no additional legal steps that need to be taken other than the joint designation on the asset. However, there are disadvantages to this method as well. For example, the co-owner can generally access the property immediately, and you may not have the same abilities to direct the co-owner to use the property for your benefit. Further, there may be tax consequences associated with naming any non-spouse as a joint property owner. Should you predecease the other owner; you will also lose the ability to determine who inherits your property under most joint ownership structures, since the property will pass to the co-owner by law. Finally, titling property jointly with one or more persons can cause ineligibility for Medicaid benefits! Depending on the type of asset you are titling, it could be a “transfer of assets” under the Medicaid rules, and trigger a period of ineligibility for Medicaid benefits for up to five years. Do not ever change the title on any asset from your name only to joint ownership without getting advice in advance from a qualified elder law attorney as to what effect that could have on future Medicaid benefits, and on your estate plan as a whole.
An experienced attorney can assist you in determining which option makes the most sense for your situation. Your attorney can also help you to explore solutions such as going to court to be named as guardian in order to take control of the property of someone who has not planned ahead for incapacity.
- Voluntary Guardianship: In Florida, a person who still has sufficient mental capacity to make legal decisions can appoint a guardian for themselves. The guardian will manage their property under the supervision of the probate court. Anytime a court is involved, it is more expensive than a durable power of attorney but a voluntary guardianship provides more protection from risk of misuse of the assets by the agent. You must be represented by an attorney to file a voluntary guardianship.
category: Guardianship & Incapacity