If you are like many people in California and across the United States, you’ve a basic idea of the concept of legal terms like last will and testament, power of attorney, and trust. You may not have much of an understanding of what is meant by a conservatorship. In order to have the clearest possible understanding about how a person’s assets and finances can be managed, you are best served having a basic understanding of a conservatorship.
In basic terms, a conservatorship is a legal concept in which a court appoints a person to manage the financial affairs of another. The judicial creation of a conservatorship occurs upon a finding by a judge that an individual is legally incapacitated and cannot manage his or her own financial affairs. Examples of incapacity that can underpin the judicial creation of a conservatorship include:
- Mental illness
- Mental infirmity
- Other health issue
- Minor child
Guardianship and Conservatorship
A person may be unable to properly tend to his or her financial affairs and yet be able to take care of other elements of daily living. In such a situation, a court would only establish a conservatorship. If a person is unable to tend to all aspects of daily living, financial and otherwise, a court will establish what is known as a guardianship and conservatorship.
If a minor child loses his or her parents, and inherits the estates of the parents, a guardianship and conservatorship would be in order. A guardianship is necessary to address the child’s daily living needs. A conservatorship is needed to take care of the child’s financial affairs.
Creation of a Conservatorship
The first step in establishing a conservatorship in the state of California, and elsewhere, is the filing of a petition with the local court. In the United States, petitions seeking the establishment of a conservatorship typically are filed in the local probate court. In some jurisdictions, a petition for conservatorship is presented to the family court.
After the filing of a petition for conservatorship is undertaken, the court directs that an investigation be undertaken to ascertain if a conservatorship is in fact necessary. A court typically appoints what is known as a guardian at litem to undertake this investigation. This independent investigator reviews the evidence and will meet the person who is the subject of the petition for conservatorship. A medical or psychological evaluation (or both) typically is part of this process as well.
A hearing is then held before a judge. Evidence is presented by the person who filed the petition for guardianship and by the guardian ad litem. In addition, if the person who is the subject of petition objects to the creation of a conservatorship, he or she can “have a day in court” as well. Moreover, if there are other individuals who question the creation of a conservatorship, or the appointment of a particular person as the conservator, they also have the ability to present their position at the court hearing as well. After considering the testimony and other evidence presented, the judge makes a final decision as to whether or not a conservatorship should be created.
A specific person is appointed by the court to serve as the conservator. Oftentimes, this is the individual named in the petition. A court is not bound to appoint the individual named in the petition to serve as the conservator of an estate.
Role of Conservator
A conservator has what is known as fiduciary duty. This means that a conservator must undertake activities associated with the conservatorship for the sole benefit of the disabled individual. Indeed, a fiduciary duty is the highest legal duty established by law in the United States.
Court Oversight of Conservatorship
Once a conservatorship is created, the court retains jurisdiction over the matter. What this means is that the court has ongoing oversight over the conservatorship and the conservator.
A conservator will be required to provide annual reports to the court accounting for the disabled individual’s assets as well as expenditures made on that individual’s behalf. In addition, the court will hold regular hearings to review the state of the conservatorship itself as well as of the disabled individual. In addition, certain major transactions may also require the specific approval of the court before they can occur. The sale of a disabled person’s home is one such example.
Duration of a Conservatorship
A conservatorship technically is in existence until one of two events occur. First, the subject of the conservatorship is not longer disabled. Second, the subject of a conservatorship dies.
If a person is no longer disabled, that individual has the legal ability to take control over his or her finances. If the individual dies, the deceased disabled individual’s assets pass to heirs via a previously existing will or trust. If neither a will or trust was created before the onset of the disability, the assets pass to heirs according to California law or the law of the state in which the person resided.