Tyler recently reminded me of a key institution design problem: There is an entire category of American adults being denied almost all of their basic legal rights: to hold a job, choose a residence, determine their health care, enter into contracts and even decide what to do with their own body. These are adults under legal guardianship — a court-imposed process, in Ohio as elsewhere, “by which a person is relieved of the right to make personal life decisions and another is appointed to make those decisions on that person’s behalf.” (
The problem isn't the final asset mix; the problem is that the act of selling off the original set of assets would subject the proceeds to capital-gains taxes. The only way around this would be a change in Federal and state tax law to allow such an exchange to take place tax-free. If such a measure were proposed in Congress, I suspect that we'd hear a great deal about special tax breaks for millionaires and the pressing needs of society's most vulnerable members, and we'd wind up with a ceiling on the amount exempt from taxes, so that wards with significant assets would continue to lose heavily.
There's a rather large problem with Hanson's proposal for asset preservation: "Just require the ward’s liquid assets to be sold at auction in trade for some mix of index funds and very low risk assets like Treasury bonds."
Such a sale would produce a large capital gain for an elderly ward who'd acquired a substantial body of assets over the course of a long life. For capital gains of more than about $440,000, the marginal Federal tax rate would be 20%, plus the ACA's investment-income tax of 3.8%, plus the ward's state's maximum tax bracket.
All told, the taxes resulting from such a sale could easily reduce the value of the ward's assets by 30%. This is a poor way to begin an asset-preservation program...
It might make moire sense, but it is not correct. The standard is specific and immediate harm, so the parentheticals would not be sufficient to justify hospitalization against the subject's will. This is part of the de-institutionalization that swept through the law in the '60s and '70s. I'm frankly not sure of its relevance to the topic of guardianship.
Managing investments is not the primary purpose of a conservator, so fund load isn't really a relevant metric. Conservators have to manage,track and coordinate all the spending and expenses of their ward, meet the regulatory & court reporting requirements to show they are fulfiling a fiduciary standard. In my case they have done things like make all the logisitcal arrangements to move my sister, appear on her behalf in court, represented her interests in the adjudication of our father's estate, etc. The cost can vary a great deal depending on what services the ward may need and how time-intensive they are.
Is there sufficient difference between a legally appointed guardian and a person with a durable power of attorney to justify not extending your proposals to the latter?
I'm the guardian for my sister, who suffers from an early-onset dementia called FTD.
I'm not sure about other states, but here in Colorado we have two separate roles - Guardianship and Conservatorship. The latter has authority on all financial matters (essentially acting as a fiduciary for the ward) while the guardian has authority on everything else.
When we went to court to make this happen, our family specifically chose to have me as guardian and a professional firm to act as conservator. Personally, I think it should be, in most cases, a requirement to have the guardian and conservator be separate people/entities for all the reasons cited here.
In my case it's worked out extremely well, but a professional fiduciary is not inexpensive. Fortunately my sister has enough income and assets to meet her needs and pay the conservator.
I read that as the criteria being conservative in order to protect autonomy, e.g. previous suicide attempts as not "current urge to kill oneself" or "unfocused homicidal thoughts" as not specific enough.
Yes, I'm aware of how such taxes work.
The problem isn't the final asset mix; the problem is that the act of selling off the original set of assets would subject the proceeds to capital-gains taxes. The only way around this would be a change in Federal and state tax law to allow such an exchange to take place tax-free. If such a measure were proposed in Congress, I suspect that we'd hear a great deal about special tax breaks for millionaires and the pressing needs of society's most vulnerable members, and we'd wind up with a ceiling on the amount exempt from taxes, so that wards with significant assets would continue to lose heavily.
I did say "Perhaps adjust asset mix for tax advantage"
There's a rather large problem with Hanson's proposal for asset preservation: "Just require the ward’s liquid assets to be sold at auction in trade for some mix of index funds and very low risk assets like Treasury bonds."
Such a sale would produce a large capital gain for an elderly ward who'd acquired a substantial body of assets over the course of a long life. For capital gains of more than about $440,000, the marginal Federal tax rate would be 20%, plus the ACA's investment-income tax of 3.8%, plus the ward's state's maximum tax bracket.
All told, the taxes resulting from such a sale could easily reduce the value of the ward's assets by 30%. This is a poor way to begin an asset-preservation program...
It might make moire sense, but it is not correct. The standard is specific and immediate harm, so the parentheticals would not be sufficient to justify hospitalization against the subject's will. This is part of the de-institutionalization that swept through the law in the '60s and '70s. I'm frankly not sure of its relevance to the topic of guardianship.
Managing investments is not the primary purpose of a conservator, so fund load isn't really a relevant metric. Conservators have to manage,track and coordinate all the spending and expenses of their ward, meet the regulatory & court reporting requirements to show they are fulfiling a fiduciary standard. In my case they have done things like make all the logisitcal arrangements to move my sister, appear on her behalf in court, represented her interests in the adjudication of our father's estate, etc. The cost can vary a great deal depending on what services the ward may need and how time-intensive they are.
No, I'm using the term "guardian" in a general sense, not in a specific legal sense.
Is there sufficient difference between a legally appointed guardian and a person with a durable power of attorney to justify not extending your proposals to the latter?
If you are paying the conservator much more than the load on an index fund, you are likely paying too much.
I'm the guardian for my sister, who suffers from an early-onset dementia called FTD.
I'm not sure about other states, but here in Colorado we have two separate roles - Guardianship and Conservatorship. The latter has authority on all financial matters (essentially acting as a fiduciary for the ward) while the guardian has authority on everything else.
When we went to court to make this happen, our family specifically chose to have me as guardian and a professional firm to act as conservator. Personally, I think it should be, in most cases, a requirement to have the guardian and conservator be separate people/entities for all the reasons cited here.
In my case it's worked out extremely well, but a professional fiduciary is not inexpensive. Fortunately my sister has enough income and assets to meet her needs and pay the conservator.
I read that as the criteria being conservative in order to protect autonomy, e.g. previous suicide attempts as not "current urge to kill oneself" or "unfocused homicidal thoughts" as not specific enough.
Thats a quote from someone else, but yes your version makes more sense
Should "yes" and "no" be switched in (4) and (5)?