Definition. A conservatorship is used in California where a person cannot handle their own financial matters or take care of themselves physically, so another person is appointed by the Court to handle these matters.
Since 1981, in California a guardianship can only be obtained for someone under the age of 18. Other states, though, use the term “guardianship” for what California now calls a conservatorship.
Terminology. A conservatorship must be established by a court. The person needing the help is called the “conservatee” and the person who receives authority to handle financial, medical and/or other matters for the person needing the help is the “conservator”.
Types of Conservatorships. There are two basic types of conservatorships, a conservatorship of the person and a conservatorship of the estate. Often one conservator fills both roles, but it does not have to be that way.
Conservator of the Person. A conservator of the person makes sure that the conservatee has appropriate food, clothing, shelter, healthcare, social contact and sources of enjoyment.
Conservator of the Estate. A conservator of the estate handles the conservatee’s finances.
A conservator of the estate must use the conservatee’s money and other assets to support (and educate, if appropriate) the conservatee and any dependents the conservatee has.
If the appropriate court order is obtained, the conservator can handle not only the conservatee’s personal finances but his/her business matters as well.
Starting the Process. A conservatorship is started by filing papers with the Probate Court and giving copies to the proposed conservatee and his/her close relatives.
Obviously, this can be a painful process for the conservatee, who is being required to give up rights to manage his/her finances, make his/her own medical decisions, etc. Still, sometimes a conservatorship is unavoidable.
Court Investigator. A court investigator must talk with the proposed conservatee and others who may know something about the situation.
The Hearing. A hearing date is scheduled and at the hearing the judge decides whether a conservator will be appointed and, if so, who that will be.
Unless the proposed conservatee is unable to attend for medical reasons, the proposed conservatee should be present at the hearing, as the Judge will often want to question them.
Note that it is possible for someone else, usually a family member, to object to the proceeding or propose a different conservator.
Inventory and Appraisal. Within 90 days of the date the Judge signs the Order Appointing Probate Conservator, the conservator must file a report with the Court listing the assets that the conservatee owns.
More specifically, the conservator prepares an Inventory and Appraisal form. If there are assets other than cash, the conservator must forward the Inventory and Appraisal to the probate referee, who is appointed by the Court. The probate referee will appraise the non-cash items, complete the Inventory and Appraisal by inserting the value of those items, and return it to the conservator, who must file it with the Court. The probate referee usually takes four to six weeks to return the form.
The estate is charged a fee for the appraisal, generally 1/10th of 1% of the total value of the conservatee’s estate, with a maximum fee of $10,000. The probate referee may also be able to recover expenses, such as mileage, in addition.
Court Investigations. Once a conservatorship is in place, the Court conducts periodic investigations to confirm that the conservatorship is still needed and that the conservatee is being treated appropriately.
Bond and Periodic Accounting. If the conservator is handling the conservatee’s finances (which is generally the case), the conservator must post a bond and must provide detailed accounts periodically to the Court that list all income and expenditures.
Amount of Bond. The amount of the bond depends on the assets that the conservatee has and his/her annual income, as well as whether a professional bonding company (versus family members or friends) is providing the bond.
Bonding Companies. Note that most bonding companies will not issue a bond unless an attorney is handling the conservatorship proceedings
Status Reports About the Conservatee. Often the conservator must also prepare periodic status reports stating how the conservatee is faring and what the conservator is doing in regard to his/her duties.
Cost. Usually the cost of the conservatorship comes out of the conservatee’s income or other assets.
Fees and Reimbursements for the Conservator.
Expenses. Generally, the conservator is entitled to reimbursement for reasonable expenses incurred on behalf of the conservatee, including expenses to establish the conservatorship and sometimes money spent supporting the conservatee prior to the conservatorship.
With the exception of Court filing fees and premiums on the bond, the conservator must obtain Court approval before receiving reimbursements from the conservatee’s estate.
It is crucial for the conservator to keep receipts and records of all expenses (and reimbursements).
The conservator is allowed to hire help as needed – for example, an accountant – as long as the expense is reasonable in comparison with the size of the conservatee’s estate.
Generally the conservator cannot be reimbursed for postage, photocopies, mileage or the cost of trips to court.
Compensation for Time.
It is crucial that a conservator who wishes to receive compensation for his/her time keep a detailed written record of the time spent on the conservatorship, indicating the date, amount of time and the work done on an entry-by-entry basis.
Courts usually allow a family member to recovery only for time spent on managing the finances of the estate, and not for any time spent acting as a family member (such as visiting the conservatee) or for acting as a conservator of the person.
Courts may not allow compensation for time if little time has been spent on financial matters or if the conservator has not followed court procedures, including filing accountings on time.
Some courts have schedules that set out the compensation that a conservator may receive for his/her time, often a percentage of the conservatee’s estate.
The conservator may only petition the Court for compensation for time after the later of both:
90 days after the Letters of Conservatorship were issued; and when the Inventory and Appraisal is filed.
Powers of Attorney. Unfortunately, the process of obtaining and maintaining a conservatorship is expensive, which is why we strongly urge people to sign powers of attorney that designate who will handle their affairs if they become incapacitated. If the proposed conservatee is mentally competent, by far the best approach is to have him/her sign durable powers of attorney. There are two types of powers of attorney.
Durable Power of Attorney for Finances. One type of power of attorney is a durable power of attorney for finances, which designates which people can handle the grantor’s financial affairs (such as paying bills) if the grantor becomes incapacitated.
Advance Health Care Directive. The other type is durable power of attorney for health care. In California this is now known as an advance healthcare directive. This is designed to allow the grantor’s designated agents to make health-care decisions if the grantor is incapacitated.
Agents. Frequently the spouse (or partner) is the primary agent, and then adult children or friends are the successor agents in case the primary (or subsequent) agent is unable (due to incapacity, etc.) or unwilling to act.
Medical Decisions. Often if a person is incapacitated, medical personnel will allow the family members to make medical decisions if they are all in agreement. It is also possible to obtain court authorization for specific medical procedures, but if authority is needed on an ongoing basis a conservatorship may be more effective.
Representative Payees. Most government agencies allow another person (a “representative payee”) to receive checks for the beneficiary and spend that money on the beneficiary’s behalf. Each agency has its own application procedures and requirements. Many agencies require the representative payee to provide them with periodic accountings.
Community Property. If one spouse becomes incapacitated, the other spouse usually can manage all of the community property that they have.
This will not help if action needs to be taken regarding any separate property the incapacitated spouse has.
Also, even with community property, the spouse with capacity may not be able to roll over Treasury bills, sell stock, or sell or obtain loans against real property.
Again, it is possible to have the court authorize the spouse to make specific transactions, but it may be easier to obtain a conservatorship if ongoing authority is needed.