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You may not have heard or seen the word "conservatorship" until a New York Times documentary recently shed light on the 13-year, court-sanctioned conservatorship of 39-year-old pop star Britney Spears. This conservatorship handed control of Spears' finances, career and well-being to her father, and remains in place today (with the addition of a trust that serves as co-conservator).
So, what is a conservatorship? Generally speaking, a conservatorship refers to the appointment by a judge of a responsible person or organization to manage the finances of an adult who can't manage them on their own. Typically, a judge approves a conservatorship when an adult is incapable of making financial decisions due to injury, illness or disability.
How Does a Conservatorship Work?
A judge can establish a conservatorship after a relative, friend or public official requests the appointment of someone to manage the financial or personal affairs of an adult who's no longer able to do so. A conservatorship request must spell out why the adult is unable to handle their finances or personal care.
The judge assigns an investigator to interview the adult (known as the conservatee) who would fall under the conservatorship. Based on the interview, the investigator determines whether the person is actually incapicated and whether a conservator should be named, then shares their opinion with the court.
Once the judge receives the investigator's report, they schedule a hearing on the conservatorship request. Relatives and others with an interest in the case will be notified of the hearing and may be called to testify. Unless the potential conservatee is medically prohibited from doing so, they must appear at the hearing.
With the request, investigator's report, court testimony and court evidence in hand, the judge decides whether a conservatorship is needed and what powers the conservator should be given. If the conservatorship is approved, a court-designated monitor regularly checks in with the conservator and conservatee.
While they may sound similar, conservatorship and guardianship don't have the same definition. In many states, a conservator controls a person's financial affairs, while a guardian manages day-to-day non-monetary matters. Other states define a conservator as someone who cares for an incapicated adult, whereas a guardian looks after a child. A guardian and conservator can be the same person or different people.
Responsibilities of a Conservator
A court-appointed conservator holds broad powers over an adult's financial and personal matters. Responsibilities of a conservator may include:
- Protecting the conservatee's assets.
- Reporting to the court and the conservatee about how the assets are being managed.
- Creating the conservatee's budget.
- Collecting their income.
- Paying their bills.
- Investing their money.
- Choosing where they will live.
- Arranging for health care, personal care and other day-to-day needs of the conservatee.
- Obtaining court approval for certain decisions about health care and living arrangements.
A conservator is a fiduciary, meaning they must always act in the best interest of the conservatee. A judge can penalize a conservator who isn't properly carrying out their fiduciary duties. A conservator who fails to act in the best interest of the conservatee, such as spending conservatorship money for unauthorized purposes, may be removed from that role or be held liable for financial harm. If relatives or other interested parties believe a conservator isn't upholding their fiduciary responsibilities, they could sue the conservator.
As a conversator, you're not allowed to:
- Pay yourself or an attorney without court permission. If approved by the court, a family member who acts as a conservator can receive an hourly fee for work done on behalf of the conservatorship. Likewise, a professional conservator can be paid from money in the conservatee's estate.
- Combine the conservatee's assets with their own assets.
- Borrow money from the conservatorship.
- Lend money from the conservatorship to another person.
- Make risky investments with the conservatorship's money.
Types of Conservatorships
Not all conservatorships are the same. Here are the different types of conservatorships.
- General conservatorship: A general conservatorship covers an adult who can't take care of their finances or themselves. Oftentimes, this kind of conservatorship applies to elderly people, such as those with Alzheimer's disease. It also may include people affected by conditions like stroke, coma and mental illness.
- Limited conservatorship: Through this arrangement, similar to a general conservatorship, a conservator oversees the finances and care of an adult with developmental disabilities.
- Financial conservatorship: Under a financial conservatorship, a judge appoints a person or entity to oversee financial matters for someone who's determined to be incapicated.
- Physical conservatorship: A physical conservatorship enables someone to make health care decisions on behalf of a conservatee, and take care of needs such as food, clothing and housing.
- Permanent conservatorship: A permanent conservatorship typically protects a person who has experienced a severe decline in physical or mental capabilities. Normally, the conservatee in this situation suffers from permanently impaired mental functions due to conditions like Alzheimer's disease and dementia.
- Temporary conservatorship: A temporary conservatorship aims to protect people in jeopardy of doing harm to themselves or others. It allows a conservator to assume control of a person's health care and financial decisions on a short-term basis.
- Individual conservatorship: Under an individual conservatorship, one person or a group of people takes care of a conservatee's needs.
- Organizational conservatorship: This type of conservatorship is common in the business world, enabling a group or company to keep another group or company out of financial trouble.
How to Establish a Conservatorship
To start the process of setting up a conservatorship, someone concerned about the welfare of a potential conservatee must file a petition with the court. This typically happens when a loved one lacks the ability to make their own decisions.
A judge then weighs evidence, such as court testimony, to determine whether the person in question is incapacitated and therefore needs a conservator to watch after their finances and other matters.
Alternatives to Conservatorship
A conservatorship isn't the only route available for protecting someone who needs help handling their finances and other personal affairs. Alternatives to conservatorship may include:
- Power of attorney: A power of attorney is a legal document that lets you designate someone to handle your finances or health care if you're unable to do so. Unlike a conservatorship, power of attorney must be assigned before someone becomes incapacitated.
- Trust: A living trust is a legal arrangement that allows somebody you name as a trustee to control your assets, including bank accounts.
- Advance care directive: This legal document lets you select the kind of health care you want if you become seriously ill and choose who will make these decisions on your behalf.
- Daily money management program: A number of social service agencies offer programs to assist people with basic financial tasks such as depositing money into bank accounts and paying bills.
- Joint bank account: You can open a joint bank account with a trusted person who can deposit or withdraw money, or can write checks for you if you're unable to easily handle financial matters.
Freezing the Credit of Vulnerable People
If you're a conservator or guardian or you hold power of attorney, you can freeze the credit file of that person to help safeguard their finances. A freeze can prevent credit or loans from being approved for a person covered by a conservatorship, guardianship or power of attorney. This is just one way you can shield a vulnerable person from financial harm.