Incapacitated individuals that have not properly executed Durable Powers of Attorney and Medical Powers of Attorney prior to becoming incapacitated often need to have a Guardian appointed to manage their affairs.  Texas law allows a Court to appoint a guardian of the person (to make personal decisions such as medical and residential decisions), a guardian of the estate (to manage business, property and financial accounts), or both.  Guardianship transfers the persons own rights to a person whom the Court deems to be qualified to handle the affairs of the incapacitated person.  One of the limitations of the power of the Court to appoint a guardian, however, is that the Court may only appoint a guardian if there is clear and convincing evidence that there is no less restrictive alternative that would avoid the need for a guardian.  One of the many less restrictive alternatives to a guardianship that permits the management of money and property is known as a "Management Trust".  Today's blog will summarize this legal procedure to properly manage the estate of an incapacitated person and avoid the necessity of a guardianship.

Any person interested in the welfare of an alleged incapacated person may petition the Court for a management trust.  The Court then appoints an attorney ad litem to represent the interests of the alleged incapacitated person.  If the evidence shows the Judge that the person is in fact incapacitated and that creation of a management trust is in the incapacitated person's best interest, the Court may order the creation of a trust.  The Court order will direct any person or entity that is holding property owned by the incapacitated person to deliver the property to the court appointed trustee.  The trustee is commonly a financial institution that has trust powers under Texas law.  Alternatively, the Court may appoint an individual if appointment of the individual is in the best interest of the incapacitated person and, if the property is valued in excess of $150,000, no financial institution is available to serve as trustee.  If an individual is appointed, the Court will require the trustee to post a bond in an amount equal to or in excess of the value of the estate.  

Once the trustee is apppointed and the property has been delivered, the trustee has the authority and duty to disburse funds from the trust as the trustee deems necessary for the health, education, maintenance and support of the incapacitated person.  The trustee will also invest trust assets responsibly to grow in value over time.  The trustee is entitled to charge reasonable fees from the trust.  

If you have an incapacitated family member who has financial assets in need of management, you should consider the benefits of establishing a management trust.  The attorneys of Christiansen Law Firm have significant experience with management trusts.  For additional information about this important management tool, please contact the offices of Christiansen Law Firm in Houston or San Antonio.