Someone is taking advantage of my elderly relative. What can I do?
First, in Texas you have a legal duty to report abuse or neglect to the Texas Department of Protective and Regulatory Services (Adult Protective Services) by calling the toll-free number: 1-800-252-5400. You can get more information about elder abuse and reporting requirements from TDPRS’s web site. Depending on the circumstances, there are other steps you can take to protect the elderly person.
Should I ask for a guardianship?
If you suspect that your elderly relative is legally incapacitated and unable to care for himself or herself, a guardianship may be appropriate. You may also send an “information letter” to the judge of the probate court in the county where your relative lives, informing the judge that the elderly person may be in need of a guardianship. There are less restrictive alternatives to guardianship that may be appropriate to consider.
What if my relative needs help managing her money?
Your relative may have access to some assistance, depending on where she lives. Texas has 23 local money management programs that receive state funding for providing bill paying and other money management services for qualified elders, and some counties have private non-profit organizations that provide similar services. Your relative may also want to consider designating you or some other person as agent on a power of attorney, or even creating a trust.
Alternatives to Guardianship
I was told I need a guardianship for my loved one. Are there any alternatives?
A guardianship may be the only way to care for the person or property of a minor or an incapacitated person, but often there are less costly, less burdensome alternatives. Determining the best solution depends on the circumstances.
What is a guardianship?
A guardianship is a court-supervised administration for a minor or for an incapacitated person. A person — called the guardian — is appointed by a court to care for the person and/or property of the minor or incapacitated person — called the ward. There are two types of guardians and guardianships. A guardian appointed to take care of the physical well-being of a ward is called a guardian of the person, while a guardian appointed to take care of the ward’s property is called a guardian of the estate. In some cases, only one type of guardian is appointed for a particular ward. In many cases, both a guardian of the person and a guardian of the estate is appointed for a ward. (Often, but not always, they are the same person.)
Do I have to be appointed guardian for my minor child?
In most cases, parents are considered to be the natural guardians of the person of their minor children, so no court procedure is required to appoint a guardian of the person. Even though a parent may be the natural guardian of the person of their minor child, they are not natural guardian of the estate — a court proceeding is always required to become guardian of the estate. If the child has property or income, in some cases provisions of the Family Code may permit guardianship of the estate to be avoided. For example, parents have certain rights to the income of their minor child, and a managing conservator has certain rights regarding the child’s property. In many cases, however, a guardian of the estate will be required if the minor has property.
I want to leave property to or for the benefit of a minor or incapacitated person when I die. Can I do so in a way which avoids guardianship?
Yes. A well-drafted will or trust will create a trust for a person who is a minor or who is incapacitated. The trustee can be someone you trust to administer the property for the benefit of the minor or incapacitated person. In most cases, the trustee is authorized to use the money to pay for the person’s health, education, maintenance and support. (Sometimes it is prudent to use a special needs trust to help assure the availability of Medicaid or other government benefits.) When the minor reaches an appropriate age (most people pick an age beyond 18, since the child may not be ready to manage property as an 18-year-old), the trust can terminate and the property can be distributed to the child.
Uncle Benny left something to my minor child without creating a trust. Is there some way to get it into a trust now?
Yes. Even if property is left to a minor outside of a trust, a guardianship management trust (sometimes called an 867 trust because they are set up under Section 867 of the Probate Code) can be established. Court approval is required, and these trusts are less flexible and more expensive to establish than a trust in a will. In most cases the trustee must be a bank or trust company. Also, the age of trust termination is set by the court and has to be 18, 25 or some age in between. Guardianship-style accountings are required each year, and there are restrictions on the compensation a trustee can receive. For these reasons, banks and trust companies are sometimes reluctant to take small trusts. If no bank or trust company will take an 867 trust, the court may appoint an individual, but the individual must post a bond, which may be difficult to obtain.
How big must an 867 trust be for a bank or trust company to be interested in handling it?
Because of accounting requirements and restrictions on fees, banks and trust companies are reluctant to take on 867 trusts below a certain size. The minimum size varies from bank to bank and somewhat depends on the nature of the assets in the trust. In some cases, banks and trust companies have declined to accept trusts with assets of less than $400,000. Other banks and trust companies will accept certain trusts under $100,000. It may be necessary to shop around to learn which banks and trust companies — if any — are interested.
My son was injured in an automobile accident and I expect that he will receive a big insurance settlement. Does this money have to go into a guardianship?
Yes. There are several non-guardianship alternatives if the property is being received pursuant to a judgment, including annuities and a special type of trust usually called a 14 2 trust because it is set up under Chapter 142 of the Texas Property Code. A 142 trust is similar to an 867 trust. The trustee generally must be a bank or trust company, and the trust can last until the minor reaches age 25. A big advantage of 142 trusts over 867 trusts is that there is no annual accounting requirement and trustee compensation is less restrictive. For these reasons, banks and trust companies often are willing to take smaller 142 trusts.
My doctor said that I may become incapacitated. Is there anything I can do to avoid a guardianship?
Yes. You can sign disability planning documents such as powers of attorney to designate agents to make decisions for you in the event you become incapacitated. Many of these documents are on forms which have been adopted by the Texas legislature for use by Texans. (See the forms section of this website for these statutory forms.) These documents allow you to designate agents to make both property decisions and medical decisions for you. Designating an agent can be tricky and dangerous, however. Lawyers and judges hear stories of persons who were taken advantage of by their agents. For these reasons, you should seek a lawyer’s advice before signing a power of attorney or other disability planning document. One alternative to using a power of attorney for property is to create a trust benefiting yourself and naming the person you trust to be trustee. Trusts often have more structure and safeguards than powers of attorney. However, even with trusts the beneficiary is vulnerable to trustee abuse. The main reason guardianships are expensive is that there are safeguards in place to protect the ward. Trusts and powers of attorney are less expensive alternatives largely because the safeguards are missing, so persons using them must place a great deal of trust and confidence in the agent or trustee named.
My spouse is dead, and I worry about who will take care of my kids and their property when I die. What can I do?
A well-drafted will or trust will contain a trust to hold your children’s property until they are sufficiently old to handle it themselves. You can designate a guardian of the person and estate for your minor children (and, in some cases, for your adult disabled child) either in your will or in a form meeting specific statutory requirements.
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