By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Elder Abuse & Financial Exploitation Attorney
A Guardianship action is filed when a person is incapacitated and cannot make decisions on their own and requires somebody else to come in and make those personal, medical and/or financial decisions for him or her. A guardianship proceeding is a court action to declare a person incapacitated (not mentally sound) and then have another person appointed as the legal guardian of that person. Sometimes (certainly not always), the process can be time consuming and costly depending on the contentious nature of the proceeding. The law also disfavors the use of forced guardianships and prefers that the person declared incapacitated to have as much decision-making power as reasonably practicle.
So what if a loved one needs help and some sort of limited protective oversight over his or her finances to prevent them from being wasted, yet still allows for the autonomy of the loved one to use his or her finances in the way he or she chooses? A statute that is seldom used when considering a guardianship, but is a perfect alternative in this type of situation, is a “protective arrangement”. The court is empowered to appoint a protective arrangement for a minor, incapacitated person, or alleged incapacitated person if there is property owned by him or her that could be exploited, wasted or dissipated, or if funds are needed for the care and support of the person. If this finding is made, the court can set up a protective arrangement to ensure either the property is not wasted by the person, or requires that accounts be set up with money to care for that person.
The court can order a variety of protective arrangements as long as it is in the best interest of the person. So for example, the court can require the parties to set up a joint account and require the approval of both account holders to approve a transaction. Requiring a house to be sold, or restraining the person from mortgaging his/her property, can be ordered by the court. The court can also order the person at issue to obtain life care and even set up a trust through which property can be held. Even directing a person to execute a prenuptial agreement prior to getting married is quite possibly within the Court’s discretion as long as the above considerations are made.
The difference between a guardianship for an estate and a protective arrangement is that a guardian has full (or almost) complete control of his or her assets. In a protective arrangement a person generally understands what is going on around them, but needs some oversight from another to protect some or all of the assets that the person has. The arrangement is less restrictive than a guardianship, and covers only designated circumstances should they apply. As with anything, consideration must always be made before deciding what the best plan of action is for your friend or loved one.