Legal & Financial Planning

What Family Caregivers Need to Know About Conservatorship

Cameron Huddleston
Cameron Huddleston
June 9, 2022
What Family Caregivers Need to Know About Conservatorship

When you hear the term conservatorship, you might associate it with Britney Spears. After all, the pop star has been in the news recently because she was fighting in court to have her father removed from his role as her conservator. Spears said in court that the arrangement that had given her father control over her estate since 2008 was abusive. 

However, conservatorship can be a valuable tool for family caregivers who need the legal right to make financial decisions for loved ones they’re caring for who no longer are competent enough to manage their own finances. Here’s what to know about conservatorship—and alternatives to this legal process.

What is conservatorship?

A conservatorship is a legal process where a judge appoints someone—a conservator—to manage the affairs of an adult who can’t make his or her own care or financial decisions. Typically, someone who is appointed to handle financial decisions is called a conservator of estate, and someone who is appointed to handle personal care decisions is called a conservator of person. However, in many states, a person who is appointed to handle personal care decisions is called a guardian.

When is conservatorship needed?

Just because someone isn’t making smart financial decisions doesn’t mean that person needs to be placed in conservatorship. Generally, only those who are mentally incompetent or incapacitated can be placed in conservatorship because they are unable to make responsible decisions.  For example, a conservatorship might be used if someone has advanced Alzheimer’s disease or is in a coma.  

Often, conservatorship is needed when people become incapacitated and haven’t already named a power of attorney to make financial decisions for them. Chris Cooper, a Certified Financial Planner™ professional and licensed fiduciary in California, said that one of the first conservatorship cases he was involved with was this sort of situation. A man was in a nursing home, and his wife would have him sign forms to make withdrawals from his retirement account to pay for the nursing home. 

“After a while, the financial institution wouldn’t accept his signature because it just basically started to look like an ‘X’,” Cooper said. The woman hadn’t been named her husband’s power of attorney and didn’t have the legal right to make withdrawals from her husband’s account. So a conservatorship was needed because the man was no longer competent enough to name his wife his power of attorney. 

[ Watch: Our Interview With Chris Cooper ]

What is the process to establish conservatorship?

Let’s say your father has dementia and no longer can manage his finances. To establish conservatorship, you would need to petition the probate court in the county where he lives, Cooper says. From there, though, the process can vary from state to state.

The court might require that your father be evaluated by at least one doctor but possibly several doctors. Cooper says that some states will allow any type of doctor to do the evaluation, but others require a psychiatric evaluation.

Then there will be a hearing. Typically, all parties would be represented by an attorney, and a judge will listen to testimony to determine whether your father is incapacitated and needs a conservator to manage his financial affairs for him. 

[ Read: Dementia and Managing Money: When Your Parent Refuses to Let You Help ]

Who can be a conservator?

A conservator must be appointed by a judge, so it’s not a role that someone can simply volunteer to take on. Typically, family members are appointed as conservators, Cooper said. However, if family members aren’t available or don’t want to fill this role, an attorney, accountant, public conservator or private professional fiduciary, such as Cooper, might be appointed. 

What are the responsibilities of a conservator?

Being a conservator is no small task. For starters, conservators must act as fiduciaries. “They must act in a position of trust, and they're acting for the benefit of somebody even to the detriment of themselves,” Cooper said.

Conservators are given broad powers to decide how money is spent and managed. However, to ensure that they are acting in the best interests of conservatees, they must report regularly to the court. 

Cooper says conservators must take inventory of their wards’ assets and keep records of how they are spending or investing those assets for their wards’ benefits. Typically, they must file an annual report with the probate court. However, they might be required to meet with a judge and file reports on a monthly or quarterly basis, Cooper said.  

What are the costs of conservatorship?

The conservatorship process can be time consuming and expensive, Cooper says. Lawyers must be hired to represent the person petitioning for conservatorship and the person for which conservatorship is needed. There could be fees for the doctors or specialists who are needed for evaluations and testimony. Plus, there are court fees for hearings and filing financial reports once conservatorship is established. 

Family members who are appointed conservators might need to hire accountants to help with financial reporting to the court. Iif a professional fiduciary is appointed as conservator, that person must be paid. Even family members can get paid for the services they provide as conservators.  Payment comes from the estate of the person in conservatorship or possibly from the state if the person has little to no funds.

Costs can add up quickly and become overwhelming. “This can be a problem because you could run the person [in conservatorship] out of money,” Cooper says.

What are the alternatives to conservatorship?

Conservatorship usually can be avoided by making sure a power of attorney document has been drafted and signed before someone becomes incapacitated. A power of attorney document allows you to name someone to make financial decisions and transactions for you if you can’t. 

You must be mentally competent to sign this document. So it’s important to draft a financial power of attorney—and health care power of attorney document naming someone to make medical decisions—as soon as possible.  Having these documents allows people to decide who makes financial and medical decisions for them if they  can’t rather than leaving it up to a court to decide if they become incapacitated.

Typically, you won’t need to petition the court for conservatorship if you’ve already been named power of attorney for a parent or loved one who needs care. However, Cooper said he has seen cases where power of attorney documents weren’t written properly and didn’t provide all of the powers that were needed to manage someone’s finances. That’s why it’s a good idea to meet with an estate planning attorney or elder law attorney to draft a power of attorney rather than rely on low-cost online power of attorney document that might be too general. 

Another option to avoid conservatorship is establishing a living trust, transferring assets to the trust and naming a trustee to oversee the assets. Again, it’s best to work with an attorney to create a trust to ensure that it’s done properly. 

[ Keep Reading: The Ultimate Guide to Financial Power of Attorney ]

Cameron Huddleston

Cameron Huddleston

3 Steps to Safer Money,
Try it Free for 30 Days

Step 1

Start your free,
no-risk trial

Step 2

Connect the accounts and cards you want protected

Step 3

Stay alerted to any
unusual activity