When an adult becomes mentally incapacitated and can no longer manage their own affairs, a family member, friend, or public guardianship agency may need to step in and provide assistance. If the incapacitated adult (referred to as the protected person or ward) has an estate plan with a durable power of attorney, then the designated agent should have the necessary legal authority to take over the protected person’s finances.
Depending on the provisions in the power of attorney contract, the agent may also have the legal authority to make important healthcare decisions and determine the protected person’s living situation. If the protected person didn’t have a power of attorney, or if the power of attorney offers limited authority, then the caretaker will need to be formally appointed as the protected person’s conservator.
Generally speaking, conservatorships are established by the courts for adults who are in a coma, suffer from advanced dementia or Alzheimer’s disease, or have other serious injuries or illnesses that result in mental incapacitation. A conservatorship can also be established for a minor, but for the purpose of this discussion we’ll focus on conservatorships for incapacitated adults.
When a court appoints someone to serve as a protected person’s conservator, the judge will outline the conservator’s powers and authority based on the protected person’s needs. Though many incapacitated adults need help with all aspects of their care and financial management, it’s not uncommon to see a case where the protected person can’t handle the complexity of financial decisions but has no trouble consulting with their doctors for medical treatment. In short, incapacitation isn’t always complete. As such, conservatorships are designed to be customizable so that the judge can tailor each case to the protected person’s unique needs.
Depending on the situation, the court will appoint a conservator to one or both of the following capacities:
- Conservator of the estate – the conservator will have control over the incapacitated adult’s financial matters. Common responsibilities include managing investments, buying and selling property, paying bills, and collecting income (investment income, pension, salary, social security, disability insurance, etc.).
- Conservator of the person – the conservator will have control over the incapacitated adult’s healthcare and living situation. Common responsibilities include accessing the adult’s medical records, consulting with doctors, deciding on healthcare treatment options, approving surgery, approving living arrangements, and monitoring care.
Whether the conservator has power of the estate, the person, or both, the conservator has a duty of care to put the needs of the incapacitated adult first. All conservatorships are supervised by the court, and the conservator will be required to submit a regular accounting of their activities to the court. From time to time, the conservator may be required to appear in court for a first-hand report of their activities (especially if someone has filed a complaint against the conservator).
If the conservator has control over the protected person’s financial affairs, the conservator will also have a fiduciary duty to prudently manage the adult’s finances. At a minimum, the conservator is required to exercise the same due diligence and standard of care that an average investor would use to handle their own personal finances. Conservators who fail to fulfill their fiduciary duty may be held personally liable for financial damages incurred by the estate as a result if his or her negligence. Considering that, it’s no surprise that many conservators choose to hire or consult with an investment advisor to ensure the estate’s assets are properly managed.
How to be appointed as a conservator
Becoming a court-appointed conservator can be a challenging legal process, and it’s always recommended to enlist an attorney’s assistance to guide you through the proceedings. Even if there are no objections to the proposed conservatorship, it’s helpful to have an experienced attorney to speed things along, expedite the process, and ensure no mistakes are made that could jeopardize the conservatorship.
Once you’ve hired an attorney to represent you, here’s what you can expect during the conservatorship process:
- Petitioning for conservatorship – your attorney will file a petition for conservatorship with the court in the county where the protected person lives.
- Serving the notice of hearing – most states require that interested parties to the conservatorship proceedings receive at least 30 days advance notice of the hearing. After submitting the petition for conservatorship, you’ll need to deliver a notice of hearing to the interested parties (i.e. family members) by mail or personal delivery, and you’ll need to file proof of service with the court.
- Appointing a lawyer for the protected person – taking away an adult’s freedom to make important decisions for themselves isn’t a light matter. To protect the rights of the protected person, he or she has the right to an attorney. If the protected person can’t afford an attorney, then the court will appoint a public attorney to represent them.
- Certification of incapacitation – you’ll need to have a physician or psychologist evaluate the protected person and issue a certificate of incapacitation to verify the extent of his or her mental capabilities.
- Assigning a court visitor – in some cases, the court will assign an investigator to meet with the protected person and perform a non-biased evaluation of their mental status.
- Mediating objections (if necessary) – if an interested party objects to your appointment as the conservator, the court may require you to attempt to reach a resolution through mediation outside of the court.
- Conservatorship hearing – at the hearing, you’ll have the opportunity to present evidence that the conservatorship is necessary, and that you are the best-qualified candidate to serve as the protected person’s conservator. Interested parties have the right to present their case to the court, and the protected person’s attorney will present his or her case as well. The judge will consider the evidence and testimony, determine who is best qualified to serve as conservator, and define the confines of the conservatorship. Though most conservatorship cases only require one hearing, the judge can schedule a follow-up hearing if further due diligence is required.
- Order and letter of conservatorship – if the court is satisfied that there’s a basis for appointing the conservator, the judge will enter an order to appoint the conservator and issue a letter of conservatorship to confirm the court order. The letter demonstrates the conservator’s legal authority to act on behalf of the protected person and can be presented to third parties (i.e. banks, insurance companies) to access the protected person’s assets.