Introduction. The failure to plan for your estate and the succession of your business while you are healthy and mentally competent can lead to drastic and expensive measures, as shown by the recent high profile Texas case of In re Guardianship of Thrash, 04-19-00104-CV, 2019 WL 6499225 (Tex. App.—San Antonio Dec. 4, 2019, pet. denied). In this case, the Probate Court found that a successful business owner of an automotive repair shop, had become incapacitated due to dementia, Alzheimer’s and other factors. As a result the Court appointed the niece of the business owner to serve as the guardian over the business owner’s estate and a third party to serve as the guardian of the business owner’s person to manage issues such as his medical care. The Probate Court’s decision was affirmed on appeal.

Background. The background information in this appellate decision states as follows:

Thrash is a millionaire and owner of a successful automotive repair shop. He started dating Laura around 2009, and by 2012, she moved into the apartment above his shop with him. Over time, friends and family members grew concerned that Laura was isolating Thrash from them and spending large amounts of his money. In 2016, Thrash and Laura—as well as two of Laura’s adult children, Jose and Michelle—moved into a home Thrash bought for approximately $750,000 in cash. According to several long-time friends, Thrash’s purchase of the home was highly unusual because Thrash was known as a fiscally conservative person. They grew suspicious of Laura, who did not allow Thrash to have his own phone, forcing all social and business calls to go to her cell phone.

In re Guardianship of Thrash, supra, at p. 1.

In 2017 The Texas Health and Human Services Commission filed for a guardianship over Thrash, apparently after receiving an anonymous report that Laura, Thrash’s girlfriend, was mishandling Thrash’s assets. The application for guardianship alleged that 72 year old Thrash suffered from Alzheimer’ and diabetes, and was under Laura’s influence. It further alleged that Thrash recently changed his will to list Laura and her family as beneficiaries, gave Laura power of attorney over his finances and assets, and changed his business plan to name Laura as successor-owner of his automotive repair shop. A hearing was held on the application and the court found that Thrash was incapacitated and appointed an attorney to serve as temporary guardian of Thrash’s person and estate.

In November 2017, Thrash’s great-niece, Tonya Barina, filed an application to be appointed as Thrash’s permanent guardian. Laura contested it. On November 15, 2018, the Probate Court signed an order appointing Laura as guardian of Thrash’s person and Barina as guardian of Thrash’s estate.

On January 29, 2019, the Probate Court granted Barina’s motion for new trial, resulting in the court continuing to appoint Barina as the Guardian of Thrash’s estate but replacing Laura with a third party to serve as the Guardian of Thrash’s person. Laura appealed.

The San Antonio Court of Appeals reviewed the record and found that there was sufficient evidence to support the Probate Court’s decision. The medical evidence included that Thrash suffered from Parkinson’s disease, hypertension, dementia, Alzheimer’s disease and was unable to make responsible decisions for himself. The evidence also included that Thrash’s spending habits and use of money significantly changed in 2016. He purchased a home for $750,000, put Laura and her family members on Thrash’s business payroll, and loaned money Laura. The appellate court also found that there was evidence that Laura isolated Thrash from his friends and family.

In regard to the legal requirements that must be met to appoint a guardian, the court stated:

The Legislature has determined that a court shall appoint a guardian for a person other than a minor according to the circumstances and considering the best interests of the ward. Tex. Est. Code Ann. § 1104.101. Before appointing a guardian, the court must find by clear and convincing evidence that: (1) the ward is an incapacitated person; (2) it is in the best interest of the ward to have the court appoint a guardian; (3) the rights of the ward or the ward’s property will be protected by the appointment of a guardian; and (4) alternatives to guardianship and supports and services available have been considered and determined to be infeasible. Id. § 1101.101(a)(1). An “incapacitated person” is defined, in relevant part, as “an adult who, because of a physical or mental condition, is substantially unable to: (A) provide food, clothing, or shelter for himself or herself; (B) to care for the person’s own physical health; or (C) manage the person’s own financial affairs.” Id. § 1002.017(2). A determination of incapacity of an adult proposed ward must be evidenced by recurring acts or occurrences within the preceding six-month period, and not by isolated instances of negligence or bad judgment. Id. § 1101.102.

In re Guardianship of Thrash, supra, at p. 5.

Appellate court’s conclusion. The San Antonio Court of Appeals found that, under the legal requirements that must be met to appoint a guardian, the record supported  the Probate Court’s decision finding that Thrash was legally incapacitated and appointing guardians over Thrash’s person and estate.

Lessons learned. Mr. Thrash was only 72 years old when he was found to be mentally incapacitated by dementia, Alzheimer’s and other factors. It is unfortunate that he had failed to plan, while he was still mentally healthy, for his estate, his business and himself in the event of his incapacity or disability. Typically, this can be addressed through estate planning tools like powers of attorney and a will or trust, combined with proper corporate planning. This allows for us to control our own destiny while we are still legally able to do so, rather than eventually having our destiny determined by a court through a costly guardianship.