Incompetency and Guardianship
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.

North Carolina's General Statutes define "Incompetent adult" to means an adult or emancipated minor who lacks sufficient capacity to manage the adult's own affairs or to make or communicate important decisions concerning the adult's person, family, or property whether the lack of capacity is due to mental illness, mental retardation, epilepsy, cerebral palsy, autism, inebriety, senility, disease, injury, or similar cause or condition.

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 the decisions as we would make them. The inquiry is on the proposed ward's capacity to manage their own affairs.

If it is believed that a 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.

A 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 petition must set forth, to the extent known: information about the alleged incompetent, his or her next-of-kin, and the petitioner; a general statement of the alleged incompentent's assets and liabilities with an estimate of the value of any property, including any compensation, insurance, pension, or allowance to which he or she is entitled; and a statement of the facts tending to show that the respondent is incompetent and the reason or reasons why the adjudication of incompetence is 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 and petition on the alleged incompetent, 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, upon request by him, his counsel, or his guardian ad litem, to trial by jury. Without such a 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. Medical evidence is a real issue in a contested case, particularly with the new HIPAA regulations involving privacy of medical information.

If the finder of fact, whether the clerk or a jury, finds by clear, cogent, and convincing evidence that the respondent is incompetent, the clerk shall enter an order adjudicating the respondent incompetent. In the event of an adjudication of incompetence, the clerk appoints 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 a "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." The Guardian of the Estate is supervised by the Court and must be bonded, file an inventory and accountings with the Court, and must obtain Court approval for major decisions.

A Guardian of the Estate or General Guardian must provide an initial inventory to the court after being appointed. In regular intervals after that, a guardian has the responsibility of keeping the court up-to-date on the ward's personal and financial well being. In order to provide an accurate accounting, the guardian must keep thorough records of all transactions made on behalf of the ward. Generally, a periodic accounting will be required. When a ward dies, a final accounting must be made to the court.

Guardianships are monitored by the court. The Guardian's periodic reports are reviewed 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. If there is someone else to serve as guardian, the concerned party can initiate a petition to terminate the guardianship or to have a substitute guardian appointed.

Guardians of the Estate or General Guardians are required to post a bond. The amount of the bond depends upon the size of the ward's estate. If a guardian misappropriates money from a ward's estate, the bonding company will reimburse the estate to the extent of the bond. Action may also be taken directly against the guardian. The court can remove the guardian if there is good reason to do so.

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 in which 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.