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PERSONAL FINANCE

Conservatorship FAQ
 

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A conservatorship is a legal arrangement in which an adult has the court-ordered authority and responsibility to manage another adult's financial affairs. Many states use the terms " conservator" and " guardian" interchangeably, or use other terms such as " custodian" or " curator." The adult who needs help is called the " conservatee."

When is a conservatorship necessary?

A conservatorship is permitted only when someone is so incapacitated that he cannot manage his own financial affairs. Generally, conservatorships are established for people who are in comas, suffer from advanced stages of Alzheimer's disease or have other serious illnesses or injuries. Conservatorships are rarely needed for people who have made--or can knowingly sign--financial documents, such as a durable power of attorney for finances.

What are the advantages of a conservatorship?

Conservatorships are subject to court supervision which provides a powerful safeguard for an incapacitated adult's property. To prevent a conservator from mismanaging the property of the person she is helping (the conservatee), most courts require the conservator to provide periodic reports and accountings that give details about the conservatee's assets and how the conservatee's money was spent. Many courts also require the conservator to seek permission before making major decisions about the conservatee's property, such as whether to sell his real estate.

What are the down sides to a conservatorship?

Conservatorships are time-consuming and expensive; they often require court hearings and the ongoing assistance of a lawyer. The paperwork can also be a hassle because, as mentioned above, the conservator must keep detailed records and file court papers on a regular basis.

In addition, a conservator must usually post a bond (a kind of insurance policy that protects the conservatee's estate from mishandling). The bond premiums are paid by the conservatee's estate--and are an unnecessary expense if the conservator is competent and trustworthy.

Occasionally, however, a conservator will mismanage a conservatee's assets. Common abuses range from reckless handling of the conservatee's assets to outright theft. Although each state has rules and procedures designed to prevent mishandling of assets, few have the resources to keep an eye on conservators and follow through if they spot trouble. Many cases of incompetence or abuse go unnoticed.

Finally, a conservatorship can be emotionally trying for the conservatee. All court proceedings and documents are public record, which can be embarrassing for someone who values independence and privacy.

How are conservators compensated for their services?

The conservatee's estate must reimburse the conservator for necessary expenses and pay for the conservator's services--if these payments are " reasonable" in the eyes of a court. Generally, payments are made to professional or public conservators, but a family member who has been appointed conservator may also seek compensation by making a request to the court.

Are there ways to block a conservatorship?

Before a court approves a conservatorship, notice must be given to the proposed conservatee and his close family members. Anyone--including the proposed conservatee, family members and friends--may object to the conservatorship in general, or to the specific choice of conservator. The person who wants to block the conservatorship must file papers with the court, inform all interested parties (the proposed conservatee, family members and possibly close friends) and attend a legal hearing. The final decision is up to a judge.

The best way to avoid a conservatorship is to prepare a durable power of attorney for finances before a health crisis occurs. That way, someone you've hand-picked will be able to step in and make decisions for you if necessary.

How does a judge choose a conservator?

When a conservatorship petition is filed in court, a judge must decide whom to appoint. Often, just one person is interested in taking on the role of conservator--but sometimes several family members or friends vie for the task. If no one is suitable is available to serve as conservator, the judge may appoint a public or other professional conservator.

When appointing a conservator, a judge follows certain preferences established by state law: Most states give preference to the conservatee's spouse, adult children, adult siblings or other blood relatives. But a judge has some flexibility; he may use his discretion to pick the person he thinks is best for the job. Without strong evidence of what the conservatee would have wanted, however, it is unlikely that a nonrelative would be appointed over a relative. Because of this, conservatorship proceedings may cause great heartache if an estranged relative is chosen as conservator over the conservatee's partner or close friend.

Who financially supports someone under a conservatorship?

If the conservatee has the means, money for his support will come from his own assets. But a conservator should seek all financial benefits and coverage for which the conservatee may qualify. These benefits may include Social Security, medical insurance, Veterans Administration benefits, pension and retirement benefits, disability benefits, public assistance and Supplemental Security Income. When needed, close family members (including the conservator) often contribute their own money to help support a conservatee.

When does a conservatorship end?

A conservator must care for the conservatee's finances until the court issues an order relieving her from responsibility. This ordinarily happens when:

  • the conservatee dies
  • the conservatorship estate is used up
  • the conservatee regains the ability to handle her own finances, or
  • the conservator becomes unable or unwilling to handle the responsibilities. In this situation, the conservatorship itself does not end, but someone else takes over the conservator's duties.

Copyright 1999 Nolo.com, Inc.

Last updated: Oct 21, 1999




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