How to Minimize the Need for a Conservatorship

A successful estate plan anticipates disability while the planner is still capable of asserting their wishes. In particular, a person can legally designate trusted individuals to act on their behalf under specific circumstances. Such authorizations include:

• Durable powers of attorney, which allow a selected individual to manage one's financial affairs in case of incapacity (as defined in detail in the document).
• Advance health care directives—including a health care proxy (a.k.a. medical power of attorney) and a living will—which enable another individual to make medical decisions on the principal's behalf and outline the principal's preferred approach to medical intervention if they're unable to communicate.
• Successor trustees, who can step in to manage and administer a trust according to its terms if the primary trustee is incapacitated.

For all these roles, naming co-agents or alternates can offer critical backup should a designated agent become unavailable or unwilling to fulfill their duties.

Lacking estate-planning documents that delegate decision-making to trusted individuals, a family may be forced to petition the court for conservatorship—a legal arrangement that authorizes someone to make decisions on behalf of a person who can't manage their own affairs due to a decline in their cognitive or physical abilities.

When considering conservatorship cases, courts require evidence of incapacity. This may include medical evaluations or testimony from physicians, as well as documented examples of the proposed conservatee's diminished abilities, such as financial losses resulting from a prolonged romance scam or a precipitous decline in health due to missed medical appointments or prescriptions. The court also assigns an investigator to conduct an independent review of the situation, including interviews with relevant individuals.

If a judge rules in favor of a conservatorship, they will determine the level of oversight required. Though definitions and regulations vary by state, there are essentially two types of conservatorships:

• General, which gives a conservator full authority over a conservatee's financial affairs (known as a conservator of the estate); personal affairs, including health care (conservator of the person); or both.
• Limited, which is generally reserved for adults with developmental disabilities and that grants a conservator circumscribed authority—based solely on a conservatee's limitations and needs—with the conservatee retaining an appropriate level of autonomy.

Generally, courts attempt to appoint a conservator with a personal connection to the individual in question, since a family member may be most familiar with that person's cognitive state, financial situation, and medical needs.

Once appointed, a conservator becomes a fiduciary, meaning they're legally responsible for acting in the conservatee's best interest without apparent or deliberate self-dealing. A conservatorship generally remains in effect until a new petition—which can be filed by the conservator, conservatee, or another person close to the case—successfully demonstrates the conservatee has regained their ability to make their own decisions.

Even with the protections outlined in Scenario 1 in place, legal intervention may not be avoidable, but its likelihood can be substantially reduced—which is important for several reasons:

• The administrative and legal costs of a conservatorship can quickly add up. Attorney fees, court costs, and conservator compensation are often paid from the conservatee's estate. If there's family conflict or competing petitions for conservatorship, the ensuing legal battles can drain an estate long before it's passed down to heirs.
• Setting aside issues of personal agency and the potential for abuse, even trusted family members with the best of intentions may not share the same financial values or investment strategy as the individual they're tasked with overseeing, which can further erode the value of the estate.
• Conservatorship proceedings are matters of public record, and the court records are generally accessible unless sealed by the judge—potentially exposing the conservatee's assets, income, and other financial and personal details to unwanted scrutiny.

It's never easy to contemplate your own potential decline, but the consequences of failing to plan for such an eventuality can be even more unpleasant—for you and your loved ones.