What happens if you become mentally or physically incapacitated? Who will manage your financial affairs, including paying your bills, running your business, sign your tax return and pay your income taxes? Who will confer with your doctors on your medical care and treatment? Who will make medical decisions on your behalf when you are unable to express your wishes with regard to medical care? These are all questions which are covered in a comprehensive, well-prepared estate plan, but what happens if incapacity strikes you before you’ve executed your estate planning documents?
Unfortunately, this is a question we have had to confront on more than one occasion. When tragedy strikes and a person becomes incapacitated, whether it be due to an accident, a stroke, or even as the result of a criminal act by another person, the incapacitated person may lack the legal capacity or ability to create a valid estate plan. If the person lacks the capacity to create a legal document, the only alternative may be to seek a conservatorship over the person and/or the person’s estate to ensure the well-being of the incapacitated person and to properly manage the person’s finances.
A conservatorship is established after a judge determines that a person (called the “conservatee”) can no longer oversee their finances or are unable to take care of themselves. The judge will then appoint another person or an organization (called the “conservator”) to handle the conservatee’s care or finances, or both. There are two types of conservatorships: 1) of the person; and 2) of the estate.
A conservator of the person arranges for the conservatee’s care and protection, decides where the conservatee will live and make decisions regarding the conservatee’s health care, food, clothing, housekeeping, transportation and recreation. A conservator of the estate is in charge of handling the conservatee’s finances. The conservator of the estate takes an inventory of all of the conservatee’s assets, ensures that the conservatee’s bills are paid, taxes are filed and paid, makes a plan to make certain the conservatee’s financial needs are met, invests assets, and maintains financial records. It is permissible and often common for the conservator of the estate to be the same individual or organization as the conservator of the person.
Conservatorships can be limited or permanent. A temporary conservatorship may be appropriate for a limited period of time, usually 30 – 90 days to handle a temporary or emergency situation. As a example, an individual may develop a mental or physical condition which renders him unable to take care of himself at home and is in an unsafe environment. A temporary conservator may be appointed to make arrangements for caregivers, in home health care, or movement to a care facility. If the conservatee recovers sufficiently, the temporary conservatorship can be terminated or on the other hand, a permanent conservator may have to be appointed.
It is a common misconception that the conservatee loses all rights upon the court appointing a conservatorship over the conservatee. The conservatee actually retains the following rights:
• To make or change their will or estate plan (unless the judge grants this right to your conservator
• Be represented by a lawyer
• Receive notice of all hearings related to the conservatorship and attend such hearings
• Get married
• Receive mail
• Control their own spending money (if the judge allows for an allowance)
• Ask the judge to change conservators
• Ask the judge to end the conservatorship
• Vote (unless the judge determines they are unable to do so)
• Make their own health-care decisions (unless the judge determines they are not able to do so)
Establishing a Conservatorship
The first step in establishing a conservatorship involves filing a Petition for Conservatorship. A Petition for Conservatorship can be filed by a friend or relative, professional conservator, nonprofit agency, or public official. The proposed Conservator must be bondable, meaning that this person or organization should be trustworthy such that a surety company is willing to vouch for their behavior. Throughout the entire process of conservatorship for an individual, the conservator needs to have an attorney represent them.
California Probate Code Section 1801(a) stipulates that it must be demonstrated that the individual who would be the conservatee is no longer able to care for themselves, specifically decision making that involves food, clothing, residence, and maintaining their own physical and mental health.
Furthermore, California Probate Code Section 1801(b) declares that it must be demonstrated that the proposed conservatee is no longer able to oversee her or his finances and is at risk of falling prey to those willing to defraud or otherwise negatively influence him or her.
The person or entity filing the petition for conservatorship must also state alternative methods for achieving the equivalent of a conservatorship and why these other methods do not measure up or are otherwise unsuitable. Alternate remedies include assistance of some sort accepted voluntarily by the individual, other legal remedies such as limited, special, or general power of attorney, creation of a trust, or drawing up of an advance health care directive.
Once the petition is filed with the court, the court will appoint a court investigator to interview the proposed conservatee and report the investigator’s findings back to the court. The court will then set a hearing on the petition where the judge will determine whether or not to grant the petition for conservatorship and if a conservatorship is warranted, what powers to grant to the conservator.
A conservator of the estate must file an Inventory and Appraisal within 90 days of becoming conservator and an annual accounting one year after becoming conservator, then every two years thereafter.
Conservatorship Terminates on Death of Conservatee
A conservatorship terminates on the death of the conservatee, when a judge terminates it because it is no longer needed, or if a judge appoints a different conservator. If the conservatorship is being terminated because of death, the conservator will pay any expenses of the conservatee’s last illness and is responsible for the preservation of the conservatee’s estate until it is delivered to the personal representative of the estate or otherwise lawfully distributed
Disadvantages of a Conservatorship
Conservatorship proceedings are often criticized as being costly, time-consuming and inflexible. The costs associated with a conservatorship include court costs and filing fees, court investigator costs, premiums for the conservator’s surety bond, compensation for the conservator and attorney’s fees.
California law requires court approval before a conservator takes certain actions; if you are unsure of whether you are authorized to act, you should consult an attorney.