III. AVOIDING GUARDIANSHIP OF THE ESTATE
13. Durable Power of Attorney - §481, Probate Code –
The most recent incarnation of the Power of Attorney is
found in §481 of the Probate Code. Known as the
Texas Durable Power of Attorney Act, it provides for all
acts done by the attorney in fact (agent) to have the
same effect, inure to the benefit of, and bind the
principal and the principal’s successors in interest as if
the principal were not disabled.
The statutory form allows the grant of broad authority.
If the Proposed Ward still has enough capacity to grant
the power, this is virtually a “no-brainer”.
Will the Bank accept it? It is really a good idea to
check with your banker, stockbroker and other people
who are gatekeepers with respect to your assets. If
they are not prepared to accept those special
provisions, you probably want to go a different
14. Inter Vivos (“Living”) Trusts - §§111-115, Property
Code – Like any tool in the toolbox, a revocable inter
vivos trusts has its particular applications. It is an
excellent and highly flexible tool when drafted by a
knowledgeable, competent estate planning lawyer,
working with a full understanding of the client's needs,
objectives, and circumstances, and when coordinated
with other appropriate estate planning tools and
techniques. The trustee can be given much more
freedom that a guardian would enjoy, especially in
such areas as investments and distributions.
Scam Trusts IRS - The See IRS Pamphlet 2193 for the
attempts of the IRS to educate the public about trust
scams. It gives consumers some simple ways to help
decide if the trust they are contemplating is "too good
to be true."
15. §142 Trusts / Testamentary Trusts - §142,
Property Code Where no guardianship exists and a
"next friend" suit has been brought, §142 trusts (as
well as testamentary trusts) have long been used to
avoid guardianships. The principal disadvantage is
demonstrated by the burgeoning rate of breach of
fiduciary duty lawsuits being brought in our probate
and district courts. Most of these trusts fail to
provide for any accountability on the part of the
Probate management trusts (see infra) while initially
more expensive, have proven to be excellent
management vehicles for moderate-sized estates
16. Special Needs / Medicaid Qualification Trusts 42
USC 1396p (1)(d)(4)(B)(i) & (ii) Such a trust allows a
patient/ward/injured party to qualify for Medicaid in a
nursing home where available income is otherwise too
high for qualification. Personal injury attorneys are
only recently appreciating the utility of these trusts in
preserving assets for the permanently disabled client
who will remain institutionalized. Many issues, such as
priorities between heirs and reimbursement of
Medicaid payments/liens remain. May be created,
upon motion and order by the Guardian of the Person
under Probate Code §767(5) or the Guardian of the
Estate under Probate Code §774(a)(8).
CAVEAT: 1)Only available for persons under 65. 2)
Also consider the potential exposure for the P.I.
attorney or attorney ad litem in a P.I. case who fails to
consider the appropriate use of the supplemental
needs trust, resulting in a much smaller net benefit for
the disabled client.
Here is some excellent
information on alternatives to
guardianship. This is to aid
you in the process and
educate you in your choice of
attorney. It is not specific
legal advice and will not, by
itself, constitute an attorney /
Special thanks to Judge King
in the first Tarrant County
Probate Court, on whose
material this is largely based.
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