Estate Planning: The Capacity To Make Financial Decisions

Published in the Manchester Union Leader in February 2011

Q: I am a financial planner, and I suspect an elderly client may no longer have the capacity to make sound financial decisions. She has shared with me that she does not trust her family with her financial decisions. How can I protect her interests?

A: First, make sure the client has estate planning in place, including a durable power of attorney (DPOA). A DPOA allows the client to designate an individual to handle her financial affairs when she can no longer do so. Even a client who is declining may have the capacity to execute estate planning documents. If she does not have estate planning in place, have her see a doctor to confirm her capacity. If she does have capacity, have her see an estate planning attorney promptly.

Second, a conservatorship may be a way to protect your client's assets if she is vulnerable but still has the ability to understand her circumstances. This is an option to consider when it is questionable whether the client could execute a DPOA. The probate court requires that the individual voluntarily choose her conservator. A petition must be filed, and a hearing will be held in order to make the appointment valid.

Finally, when a client has deteriorated but does not have a DPOA, or when you have concerns about giving the person named in the DPOA the authority to handle the finances, a guardianship may be necessary. Any...