When individuals cannot manage their finances, courts can appoint guardians. Financial guardianship is for those who need help handling money.
Depending on the jurisdiction, financial guardianship may also be called guardianship of the estate or conservatorship.
In cases where individuals need help with personal and financial decisions, the court can order guardianship of the person and estate. The guardian makes both personal and financial decisions for the protected person.
Financial guardianship gives the guardian the authority to oversee the protected person’s finances and access money to pay bills. In many cases, the terms of the arrangement require the guardian to seek court approval before making financial actions on behalf of the ward, such as spending money and selling assets.
The ward’s money goes into a blocked account. The guardian can only access such an account with a court order, according to the Family Law Self Help Center.
Courts appoint financial guardians when people demonstrate that they cannot handle their finances on their own.
When a person has significant assets but needs help managing them, courts will order financial guardianship. Individuals with limited income and assets might not need financial guardians.
While providing protection and support, guardianship limits autonomy. Many states require courts to explore less restrictive alternatives to guardianship before appointing a guardian. Those facing challenges with financial decisions should, along with their loved ones, first consider other options.
Guardianship is appropriate when a person is impaired and cannot make their own decisions. Suppose an individual still can make decisions and understand the consequences of their choices. In that case, the person can execute a power of attorney for property. This gives a trusted individual the ability to handle their assets.
Compared to financial guardianship, an economic power of attorney can protect individuals’ rights while allowing someone to step in and help with monetary decisions. Under financial guardianship, it is more difficult for the protected person to change the arrangement if disagreements with the guardian arise. The person subject to the arrangement must petition the court to terminate it.
Revoking a power of attorney is, by comparison, straightforward. As long as the individual who made a power of attorney retains capacity, they can withdraw their power of attorney at any time for any reason. They can also appoint a new agent without judicial oversight.
Another option for those with money difficulties is supported decision-making. Under a supportive decision-making arrangement, a person can have a trusted individual or multiple people help with financial decisions.
Supportive decision-making is less restrictive than guardianship, as individuals get help with decisions while retaining autonomy. Unlike a ward in a guardianship, the individual keeps the final decision-making power.
Those wondering whether they need someone to help with finances should speak with an elder law attorney. Find a qualified professional in your area.