ASSET PROTECTION PLANNING IN GUARDIANSHIP CASES

by Marianne Johnston, Esquire

            We advise our clients on how they may protect their assets from the costs of long-term care.  But what if an individual has been found incapacitated and has a court-appointed guardian?  “Concepts of equal protection and inherent fairness dictate that an incompetent person should be given the same opportunity to use techniques for Medicaid Planning and Estate Planning as other more fortunate.”[1]  That is a quote from a New Jersey Superior court case decided over a quarter century ago.  Yet, many guardians are hesitant to request court permission to protect their ward’s assets.  They should not be.

            A guardian is a fiduciary and thus must act in the best interests of the ward.  Courts, however, have recognized acting in the ward’s best interests includes the ward’s desire to benefit “the natural objects of their bounty” – which usually means their family members.  To determine whether a requested asset transfer is in the best interests of the ward, a New Jersey court will evaluate four factors:

• is the mental and physical condition of the ward such that his or her restoration to competency is possible;
• whether the transfer would negatively impact the ward’s health or quality of care;
• whether the transfer would benefit the natural objects of the ward’s bounty; and
• whether there is any evidence that the ward would not permit the transfer if he or she had capacity.

            Remember that in addition to protecting assets during the ward’s lifetime, a guardian taking action now can prevent the State from placing a lien on the ward’s property as part of Medicaid’s estate recovery efforts.  We encourage guardians to contact the Begley Law Group for an analysis of whether asset protection planning would be appropriate for their ward.

[1] In Re Labis, 314 N.J. Super. 140 (App. Div. 1998).