FAQ's

The following discussion is intended to provide some helpful, basic background as to SOME of the legal and tax issues involved in areas practiced by the firm. It does not constitute legal advice, and you should not rely upon it as such. Rather, you should seek individual advice, due to the complex nature of the laws in this area and the individual nature of each person's situation. However, we hope you find this helpful as some background and explanation.

Why do I need a Will?

A Will is a document which determines how assets will be distributed at your death. Without a Will state law determines how assets will be distributed at your death. (See "What is Intestacy?")

A Will also determines who will act as your "Personal Representative", also referred to as an executor. The Personal Representative is the person in charge of your estate, who notifies creditors, pays your bills and debts, collects assets, and distributes them as set forth under your Will.

For parents of minor children, one of the most important reasons to have a Will is to nominate who you wish to act as the guardian of your children in the event of your death.

What is Intestacy?

Intestacy is what happens when you die without a valid Will. The proceedings are generally similar to probate, except that state law, not your own wishes, determine who will act on your behalf, and who will receive your property.

What is a Living Will?

A Living Will is a medical document expressing your wishes as to medical treatment in situations when you can not make your own decisions. For instance, most Living Wills typically provide that if you are in an irreversible and terminally unconscious state you do not want your life artificially prolonged. A Living Will is also usually combined, or accompanied with, a Medical Power of Attorney, giving the person you name the right to act on your behalf in implementing your wishes on these issues.

What is a Power of Attorney?

A Power of Attorney is a grant of authority to another individual to act on your behalf. A General Power of Attorney gives another person, such as your spouse, child, or a trusted friend, the power to act on your behalf for almost all financial matters. For instance, if you were incapacitated, this would give someone else the power to pay your bills, deposit your checks, etc. If an individual does not have a Living Trust, a General Power of Attorney would be the main means of managing assets in the event of incapacity, absent the need for a court appointed Conservator. If an individual does have a Living Trust, that would be the main vehicle for managing assets in the event of incapacity, but a General Power is still usable to transfer assets to the trust, if necessary, and handle matters outside the purview of the Trustee, such as dealing with the IRS.

What is a Trust and Why would I need one?

In the most general terms, a Trust is an arrangement with a Trustee (which can be one or more individuals or corporations) holding assets for the benefit of one or more beneficiaries, managing, controlling, and distributing those assets under the powers, discretions, and specific terms of the document establishing the arrangement.

There are many advantages which can be obtained through the use of Trusts, some or all of which may be relevant to your situation. Trusts can protect the assets of beneficiaries, reduce estate taxes, simplify administration, and protect privacy.

As you will see from the further questions, there are a great variety of Trusts. Trusts can be revocable and established during your lifetime ("Living Trusts"); trusts can be established under your Will at your death ( "Testamentary Trusts"); and there are trusts which are established during your lifetime, principally for tax purposes, which you do not have any power to change ("Irrevocable Trusts"). There can be a variety of specialized trusts created in most of these manners, such as a Credit Shelter Trust, Marital Trust, or Generation Skipping Trust.

What is a Living Trust?

A "Living Trust", or "Revocable Trust" is a trust which you establish during your lifetime (unlike a Testamentary Trust, which is provided for in your Will). Unlike an Irrevocable Trust, however, you retain complete control over a Living Trust during your lifetime, with the power to utilize assets or change the document however you wish.

A Living Trust represents the primary estate planning document for many individuals. A Trust Agreement is signed to create this arrangement, which can be used to manage one's assets for your benefit, then for the benefit of your spouse and children.

What are the Advantages of a Living Trust?

A Living Trust offers two primary advantages from a Will, because either method can be used to create Credit Shelter, Marital, and Generation Skipping Trusts. The first advantage is that since the Living Trust is established during your lifetime, it allows for management of your assets in the event of incapacity. Most individuals name themselves as the initial Trustees of their own trusts, but also name in the Trust Agreement who they wish to act as Trustee when they cannot act. In the event of incapacity, this successor Trustee would manage the assets in the trust as provided in the document, typically making payments and managing assets for your benefit and maintenance. This can avoid the need for a court proceeding to appoint a Conservator to fill this same role.

The other advantage of a Living Trust is that, assuming enough of your assets are transferred into the Trust prior to death, it avoids probate. Probate is the court proceeding to file a Will and appoint a Personal Representative. The Probate procedure has certain deadlines and time periods to wait before completing an estate, and incurs additional legal costs. Additionally, any Will filed in probate becomes a matter of public, record, while a Living Trust does not.

What is a Testamentary Trust?

A Testamentary Trust is a Trust arrangement which is provided for in your Will, which does not become effective until your death. The Will will usually be subject to probate, and all the Trust provisions therein become a matter of public record that anyone can examine. It also does not provide for any management of assets during your lifetime. Other than these limitations, a Testamentary Trust can provide for the same benefits available to Trusts created under a Living Trust agreement.

What is involved in Funding a Living Trust?

After creating a Living Trust, the next step is to fund it. This means transferring title of assets to the Trust.

For instance, after creating a Living Trust for a couple with a home, a brokerage account, and a life insurance policy, we would prepare a deed to transfer the home into the Living Trust, and assist the clients to transfer the brokerage account and the life insurance into the name of the Living Trust. This is usually necessary to avoid probate. The time and effort necessary to fund a Living Trust thus can vary greatly depending on the nature and extent of your assets.

What is a Credit Shelter or Bypass Trust?

A Credit Shelter or Bypass Trust, also referred to as a "Decedent's Trust", or "Trust B" (you will hear the term A-B Trust to describe this arrangement), is a means of using a Trust arrangement for a married couple to reduce estate taxes upon the surviving spouse's death, by establishing this separate trust at the first spouse's death.

As described below, there is currently an estate tax imposed on each individual dying owning more than a specified amount of assets. For 2002, this amount is $1,000,000. When a married couple knows or anticipates that their combined assets may exceed this amount on the survivor's death, establishing a Credit Shelter Trust should be considered.

To show a very simple illustration of the idea, let's assume a married couple has $1,900,000 in total assets, all of which is community property, so they essentially own it in equal shares. For the first example, the couple has simple Wills leaving all assets to the surviving spouse, and then to their children. The wife dies in 2002, and upon her death, her share of the community property, $950,000, is left outright to her husband, so he now owns the entire $1,900,000 outright. There is no tax due on the first death, because any amount left to a spouse (as long as they are a U.S. citizen) qualifies for a marital deduction. The husband dies in 2003, and the entire estate is taxable, incurring total estate taxes of $390,000.

For the second example, let us assume the same scenario, except that the couple created a Credit Shelter Trust arrangement in a Living Trust Agreement. On the first spouse's death, her assets, $950,000, are transferred into a separate Credit Shelter Trust. The husband is the trustee of the trust, and can distribute income or principal to himself as necessary. He also has the power to change how it is distributed at his death. However, it is technically a separate entity with certain restrictions. Upon his death, his own assets are taxed in his estate, but at $950,000 they are covered by his exemption amount for the year 2002. The Credit Shelter Trust is not taxed at his death, because of its arrangement. Therefore, there are no estate taxes at his death in this scenario, and we have saved $390,000 in estate taxes.

The 2001 tax law provides for gradual reduction of estate taxes, as discussed above, so the exact amount saved can vary, and in certain situations may not reduce estate taxes for certain clients dying in later years. However, because we still currently have an estate tax, Credit Shelter Trust planning can still be very important and effective.

As with most aspects of most of the trusts discussed herein, the exact terms of the Credit Shelter Trust are up to the person establishing the Trust, but this example demonstrates the surviving spouse can be given great flexibility and control, and still save a substantial amount of estate taxes.

What is a Marital Trust or a QTIP?

A Marital Trust or a QTIP ("Qualified Terminable Interest Property") Trust is a Trust arrangement which qualifies for the Estate Tax Marital Deduction, but rather than distributing assets outright to a surviving spouse, it holds the assets in a trust providing the spouse with at least the income for his or her lifetime, and which can benefit no other person during the spouse's lifetime. However, at the spouse's death, the trust is distributed as the first spouse to die set forth.

There is a deduction from the estate tax for all assets passing to a spouse. These assets can pass outright, or in certain specifically limited trust arrangements. The Marital QTIP Trust is the most popular arrangement, and requires all income be paid to the surviving spouse, but allows the original transferor to set forth in the agreement how it is distributed when the spouse dies.

The basic concept of the Marital QTIP is to provide for a spouse while protecting the original transferor's assets. For instance, a husband who had been married previously might establish such a trust under his Living Trust Agreement for his new wife. The trust could be set up with a bank or other corporate trustee, paying the wife all income during her lifetime, and any other amounts for which the husband gives the Trustee discretion. Upon the wife's death, however, the trust would pass to the husband's children from his prior marriage, so that he could be assured that his wife was provided for, but that his children were protected as well.

There are some other technical reasons to create a Marital Trust, one of which is to allow maximum use of Generation Skipping Transfer Tax Exemption, if Generation Skipping Trusts are to be created.

What is Continuing Trust?

A continuing Trust for a beneficiary represents any situation where you wish to delay outright distribution of an asset. For instance, if you have minor children, then you may wish to provide that if something happened to you, they will not receive their inheritance outright until age 25 or 30, and that until that time it will be held in a trust for their benefit, with the Trustee paying any necessary or appropriate expenses, but not allowing the children to waste or dissipate the money.

Sometimes parents have concerns about specific children and their patterns of behavior, such as drug use or a wasteful nature, and wish to benefit the children without allowing them free access to do whatever they want with the money. Similarly, parents or grandparents may have concerns about minor children and the effect a substantial inheritance can have on their work ethic and motivation. Alternately, you may wish to limit certain amounts set aside for children, grandchildren, or other beneficiaries to specific purposes, such as education.

Continuing Trusts can be set up under your Living Trust Agreement, and often use a third party Trustee, such as a trusted family friend, or corporate Trustee, to act as Trustee for the beneficiaries. You can establish these trusts however you see fit, with whatever provisions you feel are appropriate. These range from a simple trust provision to delay outright distribution to a minor until he or she reaches age 25, or they might be a trust for grandchildren established only to pay for their education. On the other hand, you could have very elaborate incentive trusts, whereby children or grandchildren only receive distributions to the extent they are working productively for themselves or society, and/or to the extent they are not abusing drugs or alcohol. These Trusts can terminate at specific points, or they can continue for the beneficiaries' lifetimes.

What is a Generation Skipping Trust?

A Generation Skipping Trust is a Continuing Trust established for a child or other beneficiary which is intended to last for the beneficiary's lifetime. Such a Trust would typically be established under an individual's or couple's Living Trust agreement.

It should be noted that there is some confusing terminology as to Generation Skipping Trusts, or GST's. The "Skipping" does not mean that the child for whom the trust is held does not benefit from the Trust. It is possible to give a child almost complete control and benefit from such a trust, but rather, the Skipping refers to the fact that the Trust will not be subject to estate tax at the child's death.

As discussed above, there are various reasons for establishing a Continuing Trust, which could include a trust lasting the beneficiary's entire lifetime, to protect the beneficiary from himself or herself, and to reserve assets for specific use. However, even where parents feel completely comfortable with their children receiving their inheritance outright, the Generation Skipping Trust offers advantages to the children and their descendants.

For instance, a Generation Skipping Trust could be established for the benefit of a couple's child, rather than outright distribution. The child could act as her own Trustee, manage the trust assets, and distribute to herself whatever assets she felt was necessary. At her death, the assets could be distributed as she set forth in her Will. Effectively, she has almost as much control as she would have had she received the assets outright.

The advantages are that these assets would not be taxed in the child's estate at her death, because of the trust arrangement. The basic rationale is similar to that of a Credit Shelter Trust.

This savings can be very significant. For instance, let's assume a similar estate taxation system is still with us in the future, and that a child would have her own taxable estate at her death based on her own assets. If we had established a Generation Skipping Trust for her benefit at her parents' deaths, funded with $2,000,000, and this trust, after accounting for any distributions the child makes from the trust, grew at 5%, then in thirty years, the Trust would be worth approximately $9,000,000. The fact that this is in a Generation Skipping Trust rather than owned outright by the child would result in estate tax savings between $4,000,000 and $5,000,000. As noted, there is a planned one-year of repeal for estate taxes in 2010, which could be extended in the future, so the exact nature of the savings is uncertain, but it represents the best chance of reducing taxes given that uncertainty.

The arrangement also aids in keeping the child's inheritance separate from her husband, so that it will not be commingled, and possibly subject to division in the event of divorce. It may also offer protection from creditors.

The flexibility of such an arrangement is such that if a child does very well on her own, establishing this separate trust can save a great deal of estate taxes, as indicated above, and yet if a child has greater need of the assets, he or she can use as much as needed during lifetime.

There is a Generation Skipping Transfer Tax, GSTT, essentially designed to limit the amount of this benefit, and each individual currently has a $1,100,000 exemption from the GSTT, and that is generally the amount that can be used to establish Generation Skipping Trusts from any one person. This amount, as noted below, will increase based on inflation through 2003, and thereafter be the same as the estate tax exemption.

What is an Irrevocable Trust?

An Irrevocable Trust is normally referring to a Trust established during your lifetime, principally for estate tax purposes, which you give up all or almost all control over. Because of the nature of the estate tax, one of the ways to reduce it is to make certain gifts during lifetime which will exclude assets from taxation at death, but to do so, you must not only give up the assets but most rights to direct or control them. Typically, an Irrevocable Trust represents an advanced estate planning technique to consider when estate taxes still appear to be an issue after establishing a Credit Shelter arrangement. Technically, after the transferor dies, many of the other arrangements discussed above, such as a Credit Shelter Trust, Marital Trust, or Generation Skipping Trust, also become Irrevocable Trusts at that time.

Common Irrevocable Trusts include an Irrevocable Life Insurance Trust (ILIT), a Qualified Personal Residence Trust (QPRT), and a Charitable Remainder Trust (CRT).

What is an Irrevocable Life Insurance Trust or ILIT?

An Irrevocable Life Insurance Trust is a separate Irrevocable Trust established to hold life insurance in such fashion that it will not be subject to estate taxation on the death of the insured. When an individual faces a taxable estate, transferring any substantial policies into such a trust can save a great deal of estate taxes. Additionally, if an individual's estate is comprised of non-liquid assets, establishing such a trust and purchasing life insurance provides a means of paying the estate taxes without forcing sale of the illiquid assets.

What is the estate and gift tax?

The estate and gift tax is a system of taxing the transfer of assets from an individual, whether during lifetime or at death. Each individual has an amount called an "exemption" that he or she may transfer during lifetime or at death which will not be subject to the estate tax, and this amount is currently $1,000,000.

In future years, the amount which an individual can transfer during a lifetime will be less than the amount which can be transferred in death. In 2010, there will be a repeal of the estate tax, but that will only last one year under current law. Under current law, the applicable exemption amounts, and top tax rates, are as follows:

There are various exceptions to this tax, such as for amounts passing to charities, to a spouse, lifetime gifts of $11,000 or less to any one person, or amounts paid during lifetime directly to a medical caregiver or educational institution.

The estate tax is imposed on all assets owned by an individual at the time of his or her death, and include not only those assets owned outright, but those held in almost any form of ownership in which the individual has any control, interest, or benefit.

Given the changes in estate taxation over the next ten-year period, especially when factoring the probability of changes to the listed structure, planning to reduce estate taxes can be somewhat complex, but it is still an important way to ensure your family and chosen beneficiaries receive their inheritance in a tax-efficient manner.

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What is a guardianship?

Introduction. Guardianship is a type of court proceeding. Technically, there are two types of fiduciaries involved in a guardianship proceeding: a guardian is the fiduciary who makes decisions about physical care and custody for another individual, and a conservator is the fiduciary who makes decisions about financial matters for another individual. The guardian or conservator can be the same person, or they can be different people. Arizona law refers to guardianship and/or conservatorship proceedings collectively as “protective proceedings,” as they are designed to protect a person who cannot protect himself or herself. Protective proceedings include matters involving incapacitated or vulnerable adults, but they also can include minor children; this outline is intended as an overview of the proceedings as they apply to adults, and while the proceedings for minors are often very similar, there are many important differences which are beyond the scope of this article.

Why guardianship? There are many reasons why a protective proceeding might be necessary or advisable. These proceedings can often be avoided by executing the proper estate planning documents, such as powers of attorney and/or a revocable living trust, however sometimes even proper estate planning is not enough to prevent the need for a protective proceeding. Further, someone who has lost capacity cannot sign valid estate planning documents. In our experience, protective proceedings are usually prompted by one of two circumstances: (1) someone has failed to execute the proper estate planning documents (e.g., powers of attorney), and is now at risk; or, (2) someone suffers from a mental illness or disorder and is still able to function and communicate, but nevertheless their condition prevents them from acting in their own best interests. In scenario (2), the Petitioner’s objective might be to impose prudent decision-making upon the allegedly protected person, though this scenario can seem imposing and particularly susceptible to tension and difficulties. The laws of protective proceedings were written to ensure due process of law is given to the person who is allegedly in need of protection, and that person’s individual rights are seriously considered by the court.

The Petitioner. Protective proceedings can be initiated by a broad variety of different people who are interested in the welfare of the person at risk. The person initiating the proceeding does so by filing a petition with the court, and therefore they are referred to as the Petitioner. Upon the filing of a petition for guardianship, three professionals are appointed by the court: an attorney, a physician, and an investigator. To successfully petition the court for appointment of a guardian or conservator can often be a very difficult process, and we recommend that the Petitioner consult with an attorney. In Pima County, the Clerk of Court will charge the Petitioner a filing fee of $146.00. If the Petitioner is appointed, additional documents entitled Letters of Appointment should be issued, and certified copies of the Letters cost $18.00 each. These costs do not include the Petitioner’s attorney’s fee, the fee of the court-appointed attorney, and/or the fee for the court-appointed investigator, all of which are discussed in more detail below. The Petitioner’s attorney is responsible for drafting all of the pleadings necessary to accomplish the appointment, and for representing the Petitioner through the appointment and possibly beyond. In our experience, in an “average” case, the Petitioner’s attorney will charge approximately $1,500.00 to establish the guardianship and/or conservatorship appointments. If the appointment needs to be made on an emergency basis, on average, an additional $1,000.00 might be charged. Some attorneys require initial deposits (a.k.a. “retainers”) before representing clients as Petitioners, and others do not. Most Pima County attorneys bill for these services on an hourly basis, and the customary hourly rates vary from approximately $175.00 - $275.00 per hour.

What is the standard for determining whether someone meets the definition of being in need of a guardian or conservator? Pursuant to Arizona law (Arizona Revised Statutes “A.R.S.” § 14-5304), the Petitioner carries the burden of proof to show by clear and convincing evidence that the person alleged to be in need of a guardian meets the statutory definition of an incapacitated person, and that the appointment is necessary to provide for the demonstrated needs of the person. “Incapacitated person” is defined by A.R.S. § 14-5101 to include: “...any person who is impaired by reason of mental illness, mental deficiency, mental disorder, physical illness or disability..., or other cause, except minority…” “to the extent that he lacks sufficient understanding or capacity to make or communicate responsible decisions regarding his person.” “Mental disorder” is defined by A.R.S. § 36-501(26) as a “substantial disorder of the person’s emotional processes, thought, cognition or memory.” Other than “mental disorder,” the categories of impairments of an “incapacitated person” set forth A.R.S. § 14-5101 are not defined by statute. Pursuant to A.R.S. § 14-5401, to appoint a Conservator the Court must make two findings: (1) the person is unable to manage the person’s estate and affairs effectively for reasons such as mental illness, mental deficiency, mental disorder, physical illness or disability, chronic use of drugs, chronic intoxication, confinement, detention by a foreign power of disappearance, and (2) the person has property which will be wasted or dissipated unless proper management is provided, or that funds are needed for the support, care and welfare of the person or those entitled to be supported by the person and that protection is necessary or desirable to obtain or provide funds.

The Appointee. The Petitioner does not necessarily need to request his or her own appointment as the guardian or conservator (collectively referred to as the “fiduciary”): the Petitioner might nominate someone else to serve. For example, the Pima County Public Fiduciary and the Arizona Department of Veterans’ Services are two public agencies which act as fiduciaries. Private professionals are also available, namely “private fiduciaries,” and these individuals act as guardian or conservator on a professional basis. A Petitioner anticipating family conflicts (e.g., disputes arising among siblings of the younger generation), might be wise to nominate a private fiduciary, as this has the benefit of avoiding court battles over which sibling is better suited to serve. Of course, the Petitioner could also request his or her own appointment, or could nominate some other family member to serve. However, in many conservatorship cases a fiduciary bond is required, and if so, the appointee must be “bondable”: i.e., good credit history, positive net worth, good character, no criminal record, et al. The appointee must also be someone trustworthy, as they are taking on responsibility for the life and affairs of another person, and Arizona law severely penalizes fiduciaries who fail to perform these very serious duties. Compliance with a fiduciary’s duties may be difficult, and even a fiduciary with good intentions can carelessly run afoul of the law. The appointee, even if a professional private fiduciary who handles a large volume of these cases, is strongly encouraged to consult with counsel.

Court-appointed attorney. In Pima County proceedings, the court-appointed attorney is selected randomly from a list of private practice attorneys who have all placed their names on a list maintained by the superior court. The court-appointed attorney ordinarily is not paid for by the county or any other public resource: payment of the attorney is discussed below. The court-appointed attorney’s role is to represent the interests of the person who is allegedly in need of protection. If his or her client objects to the appointment of a guardian or conservator, it is the role of the court-appointed attorney to file an objection, and to represent his or her client’s interests through a trial. If his or her client does not object, the attorney does not need to file a report with the court, but is required to attend the hearing for appointment of the guardian and/or conservator. It is difficult to advise a Petitioner as to how much the court-appointed attorney will charge, as the court-appointed attorneys are permitted to bill at their customary hourly rates, and so long as their fee is “reasonable,” their fee will be approved by the court. In practice, depending on the identity of the court-appointed attorney and the complexity of the case, the court-appointed attorney’s fees may be anywhere from $500.00-$2,500.00, but they could be more in an unusually complex case. In our experience, the average court-appointed attorney’s fee averages about $1,200.

Court-appointed investigator. In Pima County proceedings, the court-appointed investigator is also selected randomly from a list of private practice investigators who have also placed their names on a list maintained by the superior court. Like the attorney, the court-appointed investigator ordinarily is not paid for by the county or any other public resource. The investigator’s role is to interview all of the people who might have an interest in the proceedings, to review any pertinent medical information, and ultimately to write a report and file it with the court. The report will outline the basic facts of the situation, highlight any relevant family dynamics, and ultimately make a recommendation to the court as to why the orders requested by the Petitioner are appropriate or inappropriate. The investigator usually comes from a background of private investigations, social work, nursing, or some other ancillary field which might provide intelligent insights into the inner workings of protective proceedings. The investigator’s fee is impossible to accurately predict for the same reasons noted above for the court-appointed attorney, but in our experience, the “average” fee generally ranges from $700 to $800.

Court-appointed physician. In Pima County guardianship proceedings, a medical report is required to be filed with the court. The report must conform to a specific format. Ordinarily, the Petitioner will request the appointment of a specific physician or other medical examiner. For example, the Petitioner may know the name of the protected person’s primary care physician, and might ask the Court to appoint that physician. The report of physician is vital, as it forms the evidence that the court will rely upon to determine whether the subject meets the statutory definition of someone who is in need of a guardian or conservator.

The Hearing Date. Upon the filing of the Petition, the Petitioner is given a date and time on which his or her Petition will be heard by the court. Almost all hearings in Pima County are set at 9:00 or 9:30AM. Depending on the court commissioners’ calendars, the hearing date is ordinarily set about 4-6 weeks from the filing of the Petition, but never earlier than 21 days (unless emergency circumstances exist, as described below). It is not necessary in every case for the allegedly incapacitated person to appear at the hearing, though often he or she is entitled to do so. The court-appointed attorney is generally responsible for informing the appropriate persons if his or her client would like to appear at the hearing, and often transportation arrangements must then be made.

Notice and Service. Upon receipt of the filed petition and the Notice of Hearing, the Petitioner is responsible for mailing notice to interested parties, as well as ordering a process server to personally serve the pleadings upon the person allegedly in need of protection. The service of process can often be a very traumatic experience, especially when the protected person understands that the documents look very important, but dementia or some other cognitive impairment limits the person’s ability to understand the content. If you are the Petitioner and you are arranging service of process, you may wish to take any necessary precautions to prevent misunderstandings or trauma when the person is served. Service of process by a professional process server commonly costs $50-$100.

The Pre-Hearing Process. After notice is issued and service of process is made, but before the hearing date, the attorney, investigator, and physician all will be in the process of completing their tasks. The attorney and investigator may be calling or visiting the protected person and his or her family members. If the protected person or some other interested party intends to object to the Petition, they should do so at least five days before the hearing date.

The Hearing. If there are no objections and the Petition appears appropriate to the court, the Petitioner should expect to appear at the hearing, and to be sworn in for testimony. If no complications arise, the Petition will often be granted summarily, usually within 15-30 minutes of arriving at the courthouse. If an objection has been filed, the hearing will not go forward, and the commissioner will assign the matter to the presiding probate judge to be set for a trial. If the petition is granted and the order is signed, the Petitioner is responsible for taking the appropriate documents to the Clerk of Court, who will file the signed order and issue Letters of Guardian and/or Conservator. It is the Letters of appointment which manifest the fiduciary’s authority to act.

Emergency Proceedings. If, due to an emergency, the protected person cannot wait for 4-6 weeks to have a hearing, it is possible for the Petitioner to approach the court on an emergency basis, and often a hearing can be arranged within 3-5 days. The Petitioner must obtain the appropriate medical report, and must demonstrate the nature of the emergency to the court. If the court appoints a fiduciary at an emergency hearing, the fiduciary’s authority will only be for a temporary period of time. The emergency hearing does not avoid the need for the standard hearing for appointment: in addition to filing a Petition for emergency appointment, the Petitioner must also file the standard Petition for permanent appointments, and both Petitions will be considered at separate hearings. Therefore, an emergency proceeding often doubles the amount of work to be done by the Petitioner and his or her attorney.

Post-Appointment. Every guardian and/or conservator is responsible for complying with a number of different reporting and other administrative requirements. These rules are too vast to list comprehensively in this article, but include the following: (1) every guardian must file an annual report of guardian in the approved format, and mail it to the protected person and all other persons who are entitled to it by law; (2) the conservator must file an inventory of the protected person’s assets within ninety days of appointment; and (3) in many cases, the conservator must file a detailed accounting with the court each year. These rules, particularly the conservatorship accounting, are very complex, and the court does monitor the fiduciary’s compliance. A non-compliant fiduciary can face significant penalties and sanctions, including but not limited to civil lawsuits and issuance of fiduciary arrest warrants.

Who pays for all of this? Protective proceedings can be intense and time consuming. It is possible that the entire proceeding might cost the protected person several thousands of dollars, even ten thousand or more in difficult cases, which is why we regularly advise our clients to execute powers of attorney while they still have capacity to do so. If the Petitioner’s petition is successful, the Petitioner’s legal fees and costs may be claimed from the protected person’s conservatorship estate. However, often, before filing the petition, the Petitioner’s attorney will require the Petitioner to personally obligate him or herself to pay the fees, whether or not the Petitioner is ultimately able to be reimbursed. The court-appointed attorney and investigator are paid from the conservatorship estate, unless the protected person is totally indigent, in which case the attorney and investigator are paid at a reduced rate by the county. If the Petitioner’s petition is denied, the Petitioner is responsible for paying not only his or her attorney, but depending on the circumstances may also be ordered to pay the other fees as well. If our firm is called upon to represent a Petitioner, we will often request an initial deposit of $1,500-$2,500, depending on the foreseeable complexities of the case.

Who should not Petition? Please feel free to consult with our law firm if you believe that you need representation in connection with a protective proceeding. However, please consider appointment only if you are willing and able to act appropriately, fairly, impartially, with accountability, and without selfishness. The following are examples of common but improper motivations to petition: desire to protect one’s future inheritance; desire to control a loved one in a domineering or heavy-handed fashion; desire to exclude family members from the life of a loved one in an unfair or impartial manner; desire to attain control of finances in order to make self-interested transactions; or any other motivation which does not dignify and protect the protected person. We are willing to give free consultations in these cases, though we also reserve the right to refuse representation at our discretion.

Whom do we represent? Arizona law provides that the attorney for the guardian and/or conservator owes a duty not only to the client, but also owes a derivative duty of fairness and impartiality to all interested persons. For this reason, your interactions with us in this type of case might seem different from your interactions with other attorneys in your own private matters. This is because we are advising you to faithfully carry-out your duties, and if you are not performing, or if you are performing poorly or unfairly, we may insist that you correct your course of action, and we may even decline and/or terminate representation.

Attorneys’ duties to report. As an exception to the standard principles of attorney-client confidentiality, if we receive information that gives us reasonable basis to conclude that someone (even our client) has committed abuse, neglect, or exploitation of a vulnerable adult, we are required by law to report the incident(s) to the police or to Adult Protective Services. The concepts of abuse, neglect, or exploitation may be broad beyond a client’s understanding or appreciation.

Conclusion. Our firm frequently represents clients in protective proceedings, and we are willing to give complimentary consultations. We hope this overview has been helpful.