Marsha’s father, John, suffered a head injury, a couple of years ago. Since then John has run up large credit card bills shopping online. After Marsha had negotiated payoffs of these bills, she discovered her father was behind in his mortgage payments. John is able to live alone and take care of himself physically. What can Marsha do short of a guardianship to protect her father from depleting his assets?
Marsha should consider applying to the probate court in the county where John resides for establishment of a management trust. Texas Estates Code §1301.051 provides that a person interested in the welfare of an alleged incapacitated person who does not have a guardian can make such an application.
Upon application, the court will hold a hearing and determine if the person for whom the trust is sought is incapacitated and if the creation of a trust is in the incapacitated person’s best interest. The court is required to appoint an attorney ad litem, who will represent the interests of the incapacitated person.
The court will appoint a financial institution as the trustee, unless the court finds it is in the best interest of the incapacitated person and, if the trust principal is more than $150,000.00, that the applicant has not been able to find a financial institution in the geographic area willing to serve as trustee. In that case, the court can appoint: (1) an individual, which might include a private professional guardian; (2) a nonprofit corporation to serve as guardian; or (3) a guardianship program.
An individual appointed as trustee of the management trust must post a bond with the county clerk in an amount equal to the value of the trust principal and projected annual income. The bond must meet the requirements that the court determines necessary.
Generally, the trustee may distribute principal and income for the health, education, maintenance or support of the incapacitated person. The incapacitated person is the sole beneficiary of the trust, unless the court determines that modification of the terms of the trust are necessary for the incapacitated person to qualify for public benefits, state or federal, or for some other reason that the court determines is in the best interest of the incapacitated person.
Sandra W. Reed is an attorney with Katten & Benson, an Elder Law firm in Fort Worth. She lives in beautiful Somervell County, near Chalk Mountain.