· What is meant by “living probate’?
It is possible that, prior to your death, you may become mentally disabled due to disease, stroke, or accident.
Legally referred to as a conservatorship or guardianship, a living probate is a legal proceeding in the probate court which is designed to protect a mentally disabled person who is unable to manage his or her financial affairs. It is the duty of the probate court to protect the disabled person’s assets, creditors, and personal rights and to appoint someone to manage and assume the mentally disabled person’s financial affairs.
There are disadvantages to a living probate:
IT CREATES EXPENSES Inasmuch as it is a court proceeding, a living probate often requires the services of an attorney who will prepare the necessary court documents and make court appearances. The court may require the filing of inventories and accountings, along with periodic reports, which may necessitate the hiring of an accountant. The conservator or guardian may be required to post a bond in order to qualify for service before the court. He or she may be also required to make periodic reports to the court during the period of disability and will often utilize the services of attorneys and accountants, as well as other professionals, throughout that entire period. All these factors are very expensive to the estate.
YOU LOSE CONTROL The court will determine how your assets are to be spent for your benefit.
YOU LOSE PRIVACY Just like a death probate, a living probate is a public proceeding which may result in a substantial invasion of privacy and loss of personal dignity.
· Why can’t I avoid a living probate by giving a general durable power of attorney to a trusted family member?
Unfortunately, general powers of attorney are not always honored by banks, title companies, brokerage firms, and other financial institutions. These institutions have been increasingly fearful of the potential liability inherent in honoring such powers of attorney. Some have established their own specific requirements regarding powers of attorney. The requirements vary from one institution to another, but in general the older a power of attorney is, the less likely it is that an institution will accept it.
Also, the power of attorney, by nature, is a general one and usually gives the designated agent full power and control to do anything with the disabled party’s assets. Without caring instructions on how the agent is to apply the funds, this general power can sometimes be abused.
Finally, even if you execute a power of attorney, there is no guarantee that you will not be taken before the probate court by a third party who seeks to have you declared incompetent and himself or herself appointed as your financial guardian. In such a case, your power of attorney would become useless. All too frequently, the general power of attorney causes more problems than it corrects.
Read More HERE