Guardians and conservators are people who are appointed by a court to assist another person with their personal and financial needs. The traditional division of responsibilities between guardians and conservators is:
- Guardians - A guardian is appointed by a court to assist with another person's care. A person who is disabled due to age, illness, disease, or a similar problem may not be able to make fully informed decisions about their own personal and medical care. Depending upon the extent of the disability, a guardian may assist the person or make decisions on behalf of the person on such issues as housing, medical care, and obtaining the necessities of life.
- Conservators - A conservator is a person who is appointed by a court to assist with another person's financial affairs. Courts may appoint conservators to assist with or manage the financial affairs of persons who have been determined to be fully or partially unable to manage their own finances.
Some states use different language to describe the positions of guardian and conservator. For example, in some states a conservator might be described as a guardian of the estate. In some jurisdictions, a guardian may be referred to as a conservator of the person.
This article focuses on the position of conservatorship as it relates to the management of a disabled person's financial affairs. For information on guardianship powers relating to the management of a disabled person's medical and personal needs, please read our article on guardianship.
Why Are Guardianships and Conservatorships Separate
The goal of a court in appointing a guardian or conservator is to provide a disabled person with the necessary assistance to live as independently as possible under the person's circumstances. Many people who remain able to live independently and manage their personal affairs may require assistance with their finances due to failing health or disability.
In such a situation a petition may be made only for the appointment of a conservator, in order to ensure the proper management of the person's finances. It would be inappropriate for a court to grant a third party authority to manage the personal affairs of person who remain competent to manage their own affairs.
The most common means of avoiding the need for a conservator is through the execution of a durable power of attorney, a document that authorizes a designated person to manage your financial affairs in the event that you become disabled. When that has not been done, or to resolve a dispute concerning the choice or actions of the designated person, it may be necessary for a concerned party to petition a court for the appointment of a conservator.
Upon reviewing a petition for a conservatorship, a court is likely to appoint a conservator based upon the following factors:
Disability - The person for whom conservatorship has been requested has physical, mental, or developmental disabilities that prevent the person from managing their own financial affairs;
No Alternative Arrangement - There is no person who has been legally authorized to manage the disabled person's finances, or that person is found to be unable, unwilling or inappropriate to manage the disabled person's finances; and
No Alternative Option - Other forms of assistance that might be available to help the disabled person manage their own financal affairs will not adequately protect the person.
Although the precise procedure for appointment of a conservator will vary to some degree from state to state, the process of appointment will likely be as follows:
Filing a Petition - The person who is seeking the appointment of a conservator will file a petition with the court in the jurisdiction in which the allegedly incapacitated person resides. In most states the petition will be filed in a probate court, or surrogate's court. When the petitioner is a relative, most often that person will request appointment as conservator.
The person who files a petition is often a relative of the allegedly incapacitated person. Petitions are also often filed by the administrator of a long-term care facility, nursing home, medical facility, or another interested person who wants to ensure proper management of the allegedly disabled person's financial affairs.
The petition is normally accompanied by supporting documentation, such as affidavits from doctors who have examined the allegedly incapacitated person and attest to the need for a conservator, or other sworn statements that document the person's incapacity.
Investigation of the Petition - Prior to a hearing on a petition for a conservatorship, the court will arrange for the evaluation of the allegedly incapacitated person including, when possible, a report of the person's wishes in relation to the petition. Investigation is normally performed by a guardian ad litem, a person appointed by the court to meet with the allegedly incapacitated person and to report back to the court on behalf of that person. A guardian ad litem will typically:
- Meet with the allegedly incapacitated person;
- Inform the allegedly incapacitated person of their legal rights;
- If possible, discuss the petition with the allegedly incapacitated person; and
- Report back to the court with information about the allegedly incapacitated person's situation, mental capacity, ability to make informed financial decisions, medical prognosis, and wishes in relation to the petition.
The guardian ad litem may also meet with the allegedly incapacitated persons's medical care providers, family members and other caregivers, in order to provide a complete report to the court.
Depending upon state law, the court may appoint a doctor or other professional to examine the allegedly incapacitated person and to make findings about the person's competence.
Consent - If the allegedly disabled person consents to the appointment of a conservator, and the court agrees that the legal requirements for appointment have been met, the court will appoint a conservator.
Disputed Proceedings - If the allegedly incapacitated person contests the petition, the court will schedule a trial. The petitioner must prove at the hearing through sworn testimony and evidence that the legal standard for appointment of a conservatorship has been met. The allegedly incapacited person has the right to appear at the hearing, the right to be represented by counsel, and may be eligible for a court-appointed lawyer if unable to afford counsel.
Inability to Respond - If the allegedly incapacitated person is unable to respond to the petition, the court will hold a hearing at which witnesses will provide sworn testimony and evidence in support of the petition. At the conclusion of the hearing, if the evidence submitted is sufficient, the court will appoint a conservator.
Appointment of a Conservator - If the court appoints a conservator, the court will issue legal documents to the conservator, authorizing the conservator to act on behalf of the legally incapacitated person. The documents issued by the courts are often called letters of authority.
Depending upon the court's findings, a court may deny a conservatorship, may appoint a conservatorship with broad authority to manage the disabled person's assets, or may appoint a conservator with limited powers consistent with the disabled person's capacity to manage aspects of his or her own financial affairs.
A conservator will normally be compensated for performing duties for the disabled person's estate, subject to court oversight. Fees for a conservator are normally charged on an hourly basis, and are paid from the assets of the disabled person.
Unless the requirement is waived by the court, a conservator is normally required to post a bond. Bond waivers are common in most jurisdictions.
Upon appointment, a conservator's first duty is to take an inventory of the disabled person's assets, and to report those assets to the court.
As a conservator will normally pay bills and expend money on behalf of the incapacitated person, the conservator will normally be required to open a special checking account that reflects the conservatorship, such as an account in the name of "Jane Smith, as Conservator for the Estate of John Doe." It is important to make sure that the account will fully comply with the requirements of the court, as the court may require documentation that is not provided by a bank for a normal account (such as the return of physical checks after they have been processed by the bank).
The conservator must account for all expenditures made on behalf of the disabled person. Normally, the conservator will be required to file with the court an annual accounting, but may be required by the court to provide more frequent accountings.
Where the incapacitated person has assets that must be maintained by the conservator, the conservator may obtain authority from the court to manage the assets. For example,
If the incapacitated person owns a home, but is not likely to ever be able to return to the home, it may be appropriate to seek permission to sell the home;
If the incapacitated person is likely to eventually return home, but not for an extended period of time, it may be appropriate to seek a tenant for the home to help offset the expenses of maintaining the home and other expenses of the estate;
If the incapacitated person has a vehicle, it may make sense to sell the vehicle rather than paying for its registration and insurance even as it sits parked in a garage for a period of years.
If the incapacitated person is capable of participating in the making of financial decisions, the conservator is normally expected to allow the incapacitated person to participate in decision-making to the extent that the person is able.
Court supervision of a conservator is necessary to ensure that a disabled person's assets are properly managed, and are not misused, misappropriated or wasted, and that bills are being paid. The conservator is given general authority over the disabled person's assets, but subject to restrictions:
Participation by the Disabled Person - To the extent possible, the disabled person will be allowed to participate in decision-making;
Annual Reporting - The conservator will be required to provide annual reports accounting for the disabled person's assets and expenditures made on behalf of the estate;
Periodic Review - The court will hold regular hearings for the review of the conservatorship. Depending upon the nature of the proceeding, it may be necessary for the conservator or other witnesses to appear and provide evidence; and
Approval of Major Transactions - Certain activity, such as the sale of the disabled person's home, may require special approval from the court.
A conservatorship may be terminated by the court that appointed the conservator. A conservatorship is normally terminated only if the legally incapacitated person recovers from the incapacity to the degree that a conservator is no longer required. Conservatorship also ends upon the death of the protected person.
If the court finds that there is a continuing need for a conservatorship, the court may replace the conservator based upon:
Resignation – The court-appointed conservator may resign, in which case the court will appoint a successor;
The Protected Person's Wishes – The incapacitated person may object to the conservator and, following review by the court, the court may deem the objections sufficient to warrant replacing the conservator;
Third Party Objections - A third party may petition for the replacement of a conservator, and the court will review the petition to determine if there is a legal and factual basis to replace the previously appointed conservator, for example due to financial mismanagement or misconduct; or
Neglect of Duties or Misconduct – The court may find cause to remove a conservator based upon its examination of the conservator's actions or inactions, including the content of reports and accountings submitted by the conservator or the failure to submit required reports.
The best way to avoid the need for a conservator is through estate planning. A good estate plan will include a durable power of attorney, through which you may designate a trusted individual to manage your personal and financial affairs in the event that you become disabled. In most cases, a durable power of attorney will allow the person of your choice to manage your financial affairs without the need of a conservatorship or the burdens of court supervision.
You may also benefit from creating a living trust, and designating a trustee who will take over management of the trust and its assets in the event of your incapacity. The trustee will only have authority over assets held by the trust, and thus a living trust alone is not a substitute for a durable power of attorney. However, the trustee will be able to manage trust assets independently of a conservator, consistent with the terms you set forth in your trust.