Conservatorship: What It Is and How It Works

Estate Planning

Aug 1

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You’ll often see conservatorships pop up in news headlines—whether Britney Spears or Beach Boys co-founder Brian Wilson—but the truth is these affect many everyday Americans as well, with approximately 1.3 million adult guardianship and conservatorship cases currently active in the U.S.

If you yourself are considering a conservatorship or simply want to learn more about the process, this post has you covered: discussing everything from what a conservatorship is and different types to the pros and cons of a conservatorship and potential alternatives. Let’s dive in!

Establishing a conservatorship

This process, which typically unfolds via a series of legal proceedings that vary somewhat based on the specific jurisdiction, often begins when a concerned party (e.g., a family member or social services agency) petitions the court to appoint a conservator for the individual in question; the petitioner must provide compelling evidence (medical evaluations, testimony, documentation of the potential conservatee's incapacity, etc.) to support its case. The potential conservatee, meanwhile, is given the opportunity to address the decision maker and has a right to present his/her case in the event of a disagreement over the need for a conservatorship.

Upon receiving the petition, the court will conduct a thorough assessment that weighs the evidence presented and considers the conservatee's best interests. If the court deems conservatorship necessary and appropriate, it will issue a formal order appointing a conservator who will assume the responsibility of making decisions on behalf of the conservatee (with the scope of authority based on the specific type of conservatorship established).

Why such a complex process?

While going through the courts is often tedious, the process exists for a reason. Conservatorships, by nature, involve those more susceptible to exploitation. While most people seeking a conservatorship of course do so to protect a loved one, bad actors looking to inappropriately leverage a financial opportunity also sadly exist out there. The goal of court proceedings, therefore, is to both ensure a conservatorship is necessary and that the conservator is an individual who will make decisions in the best interest of his/her ward.

Exploring conservatorship types

There are four main types of conservatorships: financial, physical, general, and limited. Each offers unique benefits and is appropriate in different situations. Let’s explore each one in more detail…

Financial conservatorship

Just as the name implies, the conservator has authority over the conservatee’s finances in a financial conservatorship. Responsibilities may include managing bank accounts, investments, real estate, and other financial resources to ensure the conservatee's financial security and stability—perhaps if someone regularly forgets to pay his/her bills or is vulnerable to financial exploitation, for example, due to something like dementia (a disease that causes executive functioning difficulties that impact one’s ability to manage finances).

Physical conservatorship

A physical conservatorship gives the conservator the power to make decisions about the conservatee's health and personal welfare, such as with respect to where the conservatee lives, whether he/she should move to an assisted living facility, medical decisions, and other day-to-day activities crucial to the conservatee's quality of life.

General conservatorship

A general conservatorship gives the conservator authority over the conservatee’s financial and physical needs. If the court grants a physical conservatorship, it typically also grants a financial conservatorship as someone incapable of managing his/her own personal welfare is rarely capable of managing finances as well. A general conservatorship is therefore more common overall than a purely physical one.

Limited conservatorship

Tailored specifically for adults with developmental disabilities, limited conservatorship seeks to strike a delicate balance between autonomy and protection. Rather than appointing a full conservator, the court in this case grants specific powers to the conservator while empowering the conservatee to retain decision-making authority in areas where he/she is capable.

Keep in mind conservatorships also have different durations:

· Short-term: often lasting no more than 90 days and typically applicable when someone is unexpectedly incapacitated

· Temporary: for a limited amount of time and often when someone needs immediate help, such as to fill in gaps between permanent conservators (e.g., if a permanent conservator is removed by a judge or passes away)

· Permanent: typically remains in place until the conservatee passes away or successfully proves in court that he/she no longer needs assistance

In case you’re wondering, 26-year-old Britney Spears found herself under both financial and personal conservatorships (with her father as the conservator) due to a series of unfortunate public incidents that occurred circa 2007. The conservatorship was initially temporary before the court later made it permanent, though Britney successfully petitioned for termination after nearly 14 years of conservatorship.

Conservator responsibilities

If a court grants you the authority to manage your conservatee’s finances, you are considered a fiduciary: meaning you’re legally required to make decisions in the best interest of the conservatee, to the best of your ability. Most importantly, you are not permitted to use the conservatee's resources for your own personal benefit (e.g., moving the conservatee into an assisted living facility and then yourself into his/her home). Both the court and other interested parties have the right to enforce this fiduciary duty; for example, a relative with reason to believe you’re not acting in the best interest of the conservatee can sue you.

On a day-to-day basis, a financial conservatorship requires ensuring bills are paid, investments are managed, and taxes are filed. You’ll also need to ensure the conservatee has sufficient funds to cover daily expenses, if necessary, and to keep records and documentation supporting your decisions as proof that you’re acting in the best interest of the conservatee. Depending on the type of conservatorship, this can extend to financial records, health records, receipts, and medical recommendations.

Conservatorship advantages

The biggest benefit of conservatorship is safeguarding vulnerable individuals from exploitation, neglect, and/or undue influence. By placing decision-making authority in the hands of a responsible conservator, the court aims to shield the conservatee from harm and ensure his/her well-being.

Another advantage is that conservatorships provide a structured framework for decision-making, ensuring that important matters such as healthcare, finances, and living arrangements are addressed in a comprehensive manner.

Finally, conservatorships provide families with a formalized way to support loved ones while fostering collaboration among family members and professionals to effectively meet conservatee needs.

Conservatorship disadvantages

Conservatorship is not without its disadvantages, however, the most significant of which is perhaps the potential erosion of the conservatee's autonomy and self-determination. By delegating decision-making to a conservator, the conservatee may feel disempowered and sidelined in matters directly impacting his/her life. Most notably when the conservator is the conservatee’s child, this role reversal may prove emotionally difficult (for both parties).

Establishing and maintaining a conservatorship can also involve significant financial expenses including court fees, legal representation, and ongoing administrative tasks such as reporting requirements and accounting obligations.

Finally, the risk of abuse or mismanagement is also in play. Despite safeguards and oversight mechanisms, conservatorship is not immune to instances of abuse, negligence, or mismanagement by unscrupulous conservators: a risk underscoring the importance of robust monitoring and accountability measures to protect conservatee interests.

Exploring conservatorship alternatives

Power of attorney

A durable power of attorney (POA) empowers an individual to designate a trusted agent to make decisions on his/her behalf in the event of incapacity. This approach can accomplish many of the same things as a conservatorship while allowing for more flexibility and customization. The biggest difference between a conservatorship and POA is that the latter is at the discretion of the individual—meaning the person who initially granted the power of attorney also has the ability to revoke it.

Trusts

Establishing a trust enables individuals to transfer ownership of assets and property to a trustee who will then manage the same per specified terms and instructions. Trusts offer a more private and streamlined alternative to conservatorship, allowing for greater control over asset management and distribution.

Supported decision-making

This evolving model emphasizes collaboration and assistance rather than substitute decision-making, empowering individuals to make their own choices with support from trusted allies, family members, and/or professionals: an approach that respects their autonomy and dignity while providing assistance and guidance as necessary.

In sum: the ins and outs of conservatorship

Conservatorship is a vital mechanism for protecting and supporting individuals who lack the capacity to manage their own affairs. While this approach offers essential safeguards and structure, it also raises significant ethical, legal, and practical considerations; stakeholders should therefore make informed decisions that prioritize the well-being and autonomy of vulnerable individuals and consider alternatives when possible.

Questions? Schedule a FREE discovery call with one of our CFP® professionals today.