I never would have guessed that Britney Spears would be the name and face that makes the case for having your estate plan in order, but that’s the current reality.
The 39-year-old entertainer has been under a conservatorship since 2008. That means she was deemed unable to care for herself and not qualified to make decisions on her behalf.
Others, primarily her father, have had legal authority over her personal decisions and her estate since then. The situation generated a lot of media attention recently when Spears petitioned a court to release her from the conservatorship or remove her father as one of the fiduciaries.
Conservatorship (some states refer to it as guardianship) usually is an involuntary process. Someone asks a state court to declare that a person can’t properly care for himself or her- self or handle financial matters. If the court agrees, one or more fiduciaries is appointed to handle matters and make decisions for the individual.
Usually this happens when a state agency, such as adult protective services, conducts an investigation and concludes the action is appropriate. But that’s not always the case. In Spears’ case, her father said he was alarmed by Britney’s behavior and petitioned a court to appoint him as conservator of her affairs.
In more extreme cases, a professional guardian will search for vulnerable adults and petition a court to be appointed their guardian. The guardian then charges fees against the assets of the individual. In a few instances, people seek- ing to be guardians pay employees at senior care facilities to identify vulnerable individuals who appear to have little or no contact with relatives.
You can read examples of the more abusive cases on the website of the National Association to Stop Guardian Abuse (NASGA) at www. stopguardianabuse.org. Spears alleges that her father and others have profited off her career and greatly restricted her personal actions. She also alleges that she’s been required to take unnecessary or inappropriate medications and been subject to inappropriate medical treatment.
Under conservatorship, Spears was unable to hire an attorney to help her, though the court recently granted her approval to hire an attorney. Her income and assets were used to pay the attorneys who argued she needed to remain under conservatorship.
Spears also couldn’t select her medical providers or make decisions about her care. To prevent yourself from falling into such a situation, you need three documents that are carefully prepared and up to date.
The first is the medical power of attorney or advanced medical directive. In this document, you appoint one or more people to receive information from your medical providers and make medical decisions when you aren’t able to do so. You might need to prepare multiple documents if you spend time in different states, because each state has its own standards for a legally enforceable document.
The second document is the financial power of attorney. If Spears had such a document appointing her own agent or agents, it’s unlikely her father would have been appointed conservator. One or more people of Spears’ choosing would have been in charge. Also, a power of attorney is much less restrictive than a conservator- ship. You can alter or withdraw a power of attorney, as long as you are legally competent. The third document is a living trust.
The trust can control most of your assets. You can be the initial trustee and either appoint the successor trustees or set the process under which the successors are appointed. Without these three documents in an estate plan, the course of events can be negative.
One frequent occurrence is that no one is in charge of an older person’s finances or medical care. The person’s health deteriorates along with his or her finances. The home often is neglected, and the person is ripe for fraud and abuse. An alternative scenario is that one or more family members or friends has to ask a court to appoint a conservator or guardian.
As demonstrated in Spears’ case, someone you wouldn’t want to manage your affairs might very likely be appointed. Of course, none of the documents generates the desired results if you don’t carefully choose the agents and trustees who would act on your behalf. Many people choose a family member or friend without giving it a lot of thought or discussing it with the person. Sometimes in those cases the person appointed isn’t up to the job.
In other cases, the wrong people are selected and take advantage of the person. That results in the cases of relatives or friends committing elder abuse or fraud. The person is neglected while the relatives or friends siphon assets. A recent case that hasn’t received as much attention involves a grand- son of Walt Disney, Bradford Lund. Lund’s father put a 110-acre ranch in Wyoming and other assets in a trust for Lund and his sister.
Professional trustees were appointed. The trustees concluded Lund was mentally incompetent and, for 15 years, have refused to make lump sum distributions every five years as instructed in the trust agreement. The withheld distributions now total more than $60 million. In addition, the trustees plan to sell the ranch, which Lund wants retained so he can continue to use it. The trustees say they will receive a 2% fee on the sale, in addition to their regular trustee fees.
Lund has been involved in litigation with the trustees, and the trustees are allowed to use trust assets to pay their legal fees.
The Spears and Lund cases are example of why, in addition to having the right documents, you need to select carefully the people appointed under the documents. As the late insurance and estate planning advisor Joe Gandolfo used to say, “Money changes people.”