An amazing article on the front page of today’s New York Times reports that nursing homes in New York are increasingly seeking guardianship over certain residents simply to gain control of their finances. The author, Nina Bernstein, acknowledges that in some instances, a nursing home might seek guardianship because there is no relative capable of helping the patient. But in many cases, nursing homes are simply using the guardianship process as a collection tool!
Even if a family member wins the guardianship fight, that family member may have to pay thousands of dollars (or even tens of thousands of dollars) in legal fees. So at a minimum, a nursing home can use the guardianship process as leverage to get a contested bill paid. A number of judges in New York seem to be going along with these guardianship petitions.
There are several asset protection lessons here. First, having your estate planning documents in order – – including a health care power of attorney and a financial power of attorney – – is important from an asset protection as well as a personal standpoint. Second, this is a reminder about how far creditors might go in trying to collect debts. So getting an asset protection plan in place before you have any creditor issues could save you (and your family) a lot of money. It also could save family members a lot of needless anxiety.