A woman learns she has a half-brother with no heirs who left her and a sister with a $3 million estate to be divided equally. The sister is a paranoid schizophrenic with a long history of not taking medication and was recently hospitalized after an incident involving the police.
A thoughtful article from Market Watch examines the issues being faced by the well-sister: “’She’s a danger to herself’: Our late brother left us $3 million, but my sister is in hospital with schizophrenia. Should I take control of her finances?”
Since both sisters are residents of Florida and the estate is going through probate, they are advised to retain an experienced estate planning attorney who focuses on setting up trusts for people with disabilities. One option is to have a Special Needs Trust created to plan for the sister’s care in the short and long term.
If the schizophrenic sister agrees to give the well-sister Power of Attorney, the well-sister could manage her sister’s finances. In some states, there is a Psychiatric Power of Attorney, similar to an Advanced Healthcare Directive or Medical Power of Attorney. However, the sister can only permit these documents to be created and executed when she is of sound mind and can make these decisions.
A Durable Power of Attorney gives one person authority to make financial and medical decisions for another. These documents can only be executed when the person has legal capacity. This is another reason why everyone should have these documents as part of their estate plan: We never know when they may be needed.
Another option is to put the sister’s funds in a trust to distribute funds regularly, which could prevent her from burning through the money in a short time. This is especially important if others might take advantage of her when she is suffering an acute episode of schizophrenia.
A conservatorship or guardianship may be necessary if the sister continues being hospitalized and is unwilling to grant her sister Power of Attorney. This is difficult when mental illness is the reason for incapacity, requiring more witnesses and documentation of the individual’s incapacity.
As many as approximately one in five adults suffer from mental illness at some point in their lives. Schizophrenia is a complicated mental disorder with psychotic symptoms, including hallucinations, delusions, paranoia and thought disorders. The unpredictability of the disease makes it more challenging than other mental illnesses.
An experienced estate planning attorney who understands how to structure inheritances when an heir suffers from mental illness will be an essential ally in this situation.
To learn more about estate planning in the East Valley, Gilbert, Mesa and Queen Creek, schedule your free consultation with Attorney Jake Carlson by using one of the links above.
Reference: Market Watch (July 29, 2024) “’She’s a danger to herself’: Our late brother left us $3 million, but my sister is in hospital with schizophrenia. Should I take control of her finances?”
