In situations where there is no effective Power of Attorney, an alternative means of securing control over assets and finances, and over the living arrangements and health care of an incompetent adult is a legal process called an incompetency proceeding.
An “Incompetent adult” is defined as an adult or emancipated minor who lacks sufficient capacity to manage their own affairs or to make or communicate important decisions. It is important to understand that a person is not “incompetent” just because they will not do what we want them to do or make decisions as we would make them. The inquiry is on the proposed ward’s capacity to manage their own affairs.
If is believed that person lacks such capacity, any interested person or agency may file a petition with the Clerk of Superior Court to have another person declared incompetent so that a legal guardian may be appointed to make decisions for them. Such Petition for Adjudication of Incompetence must be filed with the Superior Court in the county in which the alleged incompetent resides or is present. The petitions must set forth: information about the alleged incompetent, his or her next-of-kin, and the petitioner; a general statement of the alleged incompetent’s assets and liabilities with an estimate of the value of any property; and a statement of facts tending to show the reason or reasons why the adjudication of incompetence is being sought.
The petition must be served personally on the alleged incompetent by the Sheriff, and a “guardian ad litem,” a guardian for the purpose of the proceeding, is appointed to evaluate and represent the alleged incompetent’s interests. A court hearing is to be held not less than 10 days nor more than 30 days after service of the notice, unless the Clerk extends the time for good cause or for preparation of what is called a “multidisciplinary evaluation,” which as its name implies, is an examination of the alleged incompetent by medical and psychological professionals.
The respondent has a right to request a trial by jury. Without such request, the hearing is held before the Clerk of Superior Court, who acts in North Carolina as our judge of probate. The Rules of Evidence apply to incompetency proceedings and are more strictly applied in the event the case is contested.
If the finder of fact, whether the Clerk or a jury, finds by clear and convincing evidence that the respondent is incompetent, the Clerk shall enter an order adjudicating the respondent incompetent. The Clerk will then appoint a guardian, often after a further hearing to identify an appropriate person or agency to serve as such.
In North Carolina, we have two types of guardian: Guardian of the Person, who is responsible for decision-making in the areas of living arrangements and health care issues, and Guardian of the Estate (often called “Conservator” in other states), who is responsible for assuming control over and managing the assets and income of the incompetent for their benefit. The two roles may be combined, in the Court’s discretion, into what is called a General Guardian.
A Guardian of the Estate or General Guardian must be bonded and provide an initial inventory to the court after being appointed. This 90 day inventory reports all assets and income received by the Guardian on behalf of the ward. Annually a financial report of all receipts and disbursements along with check copies and receipts for disbursements is required to be given to the court. In order to provide an accurate accounting, the guardian must keep thorough records of all transactions. When a ward dies, a final account must be given to the court.
These annual accounts are reviewed and approved before being placed in the guardianship file. Guardianship files are public records, which means that any person can look at the file to get information about the guardianship. A person who discovers mismanagement by the guardian can intervene by bringing the mismanagement to the court’s attention.
Appointment of a Guardian in a parent’s Will is not effective for an adult child, even a disabled adult child, without Court appointment following an incompetency proceeding. A nomination in your General Power of Attorney or Health Care Power of Attorney of your own Guardian in the event it is later determined that one is required for you will be honored by the Court, except for good cause shown to the Court or disqualification.
An Incompetency Proceeding is a contested and often contentious legal proceeding. It serves to take away all of the independence and rights of the alleged incompetent and to appoint others to make decisions for him or her. That means it is inherently an emotionally-charged proceeding, and may lead to a rupture of family relationships. It is also expensive, as any court proceeding tends to be, and more so if it is contested and a full hearing must be held. There are, however, situations where the imposition of a guardianship is necessary to look after the best interests of the incompetent – to protect their health, safety, finances and general welfare.