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Avoidance of Conservatorship

A conservatorship is to an adult what a guardianship is to a child, and like guardianships, there are two different types of conservatorships: a Conservatorship of the Estate and a Conservatorship of the Person.

A Conservatorship of the Estate is proper when an adult, for whatever reason (incapacity or otherwise) is substantially unable to manage his or her financial resources or resist fraud or undue influence. In these circumstances, any interested person can initiate a conservatorship proceeding and have himself/herself or another appointed as Conservator of the Estate to manage the assets of the conservatee (incapacitated person).

A Conservatorship of the Person is proper when an adult, for whatever reason, is unable to properly provide for his or her personal needs for physical health, food, clothing, or shelter. In these circumstances, any interested person can initiate a conservatorship proceeding and have himself/herself or another appointed as Conservator of the Person to care for the physical needs of the conservatee (incapacitated person).

A Conservatorship of the Estate and Person may exist independent of one another:

  • A person may have a Conservatorship of the Estate, but not a Conservatorship of the Person. This may occur where there is undue influence being exerted by, for example, a neighbor or in-home nurse for the proposed conservatee to leave all of his or her estate to the one exerting the undue influence; or
  • A person may have a Conservatorship of the Person, but not a Conservatorship of the Estate. This may occur where the individual proposed conservatee is incapacitated enough that they are unable to care for their physical needs, but yet they still have the mental capacity so that they can manage their finances and resist any undue influence or fraud; or
  • A person may have a Conservatorship of the Estate and the Person together. The same individual may be both the Conservator of the Estate and Person, or there may be different individuals who are the Conservator of the Estate and Conservator of the Person. This is a decision which is made by the Probate Court, which supervises conservatorship initiation and administration.

The disadvantage to a conservatorship of any type is primarily its cost. To establish a conservatorship requires employment of an attorney, and can run thousands of dollars, particularly if the incapacitated person objects, which often they do. In addition, there are costs associated with the administration of the conservatorship, including the court filings which are required so that the court may supervise the conservatorship to ensure no improprieties are occurring.

Conservatorhip of the Estate

The properly drafted and funded Living Trust will completely avoid a Conservatorship of the Estate, and therefore all of the costs associated with it.

Remember, the concept of the Living Trust for probate avoidance purposes is that the Living Trust, not the individual who created the Living Trust, is technically the owner of the assets. Therefore, upon death there are no assets which are owned by the decedent, and thus there is no probate, even though during his or her lifetime as trustee the creator of the Living Trust still had complete control over all the assets. After the death of the person who created the Living Trust, another person who was named by the creator of the Living Trust as a successor trustee becomes the current trustee, and that person then is authorized to act on behalf of the Living Trust.

This same concept applies to a conservatorship. Thus, with a fully funded Living Trust there are no assets which are owned by the individual upon his or her incapacity, and therefore there are no assets over which to have a conservatorship. All of his or her assets are owned by the Living Trust, which by its terms provides that upon the mental or physical incapacity of the creator of the trust, the successor trustee becomes the current trustee during the period of such incapacity, and therefore can transact business with regard to all the trust assets.

A PROPERLY DRAFTED AND FUNDED LIVING TRUST AVOIDS THE NEED FOR A CONSERVATORSHIP OF THE ESTATE BY ALLOWING THE SUCCESSOR TRUSTEES TO MANAGE THE TRUST ASSETS DURING THE PERIOD OF INCAPACITY.

Conservatorship of the Person

With a properly funded Living Trust, you will not need a Conservatorship of the Estate because your assets will be owned by your Living Trust, and managed by your successor trustee after your incapacity; however, you may still need a Conservatorship of the Person to physically care for the incapacitated person.

A LIVING TRUST DOES NOT AVOID A CONSERVATORSHIP OF THE PERSON.

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