MY last article discussed the reasons why everyone should have a power of attorney for assets as well as a power of attorney for healthcare. But what if a loved one has an incapacitating accident without executing a power of attorney? What if Mom is suffering from the beginning stages of dementia or Alzheimer’s disease and is giving property away or being targeted by scam artists?
You may need a conservatorship. A conservatorship is a court ordered relationship whereby an adult has been given the authorization and responsibility to care for another adult. The person who takes on this responsibility is called the “conservator”, and the person who is being taken care of is called the “conservatee”. The conservator may ask the court to set aside any contract entered into by the ill conservatee while she lacked capacity. The conservatorship is a tool to safeguard against the ill person being taken advantage .
The conservatorship proceeding begins with a petition filed with the court, followed by an investigation by a court investigator and a court hearing. Many factors can affect a conservatorship. For example, if the conservatee objects to the conservator’s appointment, he or she may object and the court will assign counsel for the conservatee for that purpose. If several people want to be the conservator and in charge of the disabled loved one, the court uses “preference rules” in the probate code to determine who shall become the conservator.
After the judge appoints you conservator and you have qualified for the appointment, you must obtain your Letters of Conservatorship from the court clerk. This document shows your authority to act as conservator. You will need certified copies of your Letters to do the following:
1. To open a bank account for the conservatee’s money;
2. To transfer the conservatee’s bank accounts, stocks, mutual funds, and bonds in one or more accounts into your name as conservator.
3. To get into the conservatee’s safe deposit box and to open a new safe deposit box in your name as conservator.
4. To enter a change of address for the conservatee at the post office.
5. To sign agreements such as leases and home-care contracts for the benefit of the conservatee.
6. To request information about the conservatee’s affairs from government agencies and private businesses, pension plans, and others.
7. To prove to doctors and hospitals that you are authorized to consent to the conservatee’s medical treatment, if the court has given you that authority.
8. To apply for government or other benefits on behalf of the conservatee
9. To gather the conservatee’s assets from anyone who has been holding them for safekeeping.
Remember, a conservatee does not lose all of their legal rights. They can still have a say in important decisions. They have the right to be treated with understanding and respect and have their wishes considered. If the conservator is not acting in the conservatee’s best interests, the conservatee has the right to ask the court to change or end the conservatorship.
A year after you are appointed conservator of the estate, you must file an accounting that give details of the conservatee’s assets, and how the conservatee’s money was spent. After that, you must do this again every 2 years. Therefore, you must keep complete, exact records of every financial transaction that has to do with the estate. Save your receipts since the court may want to see them. Remember to keep the conservatee’s money separate from your own, i.e., never deposit estate money into your personal account.
Although you may set-up checking accounts for everyday expenses, the rest of the money must be placed in interest-bearing accounts. Do not put more than $100,000 in any one bank (FDIC insures $100,000 per bank, not per account)! You must also make reasonable investments, not risky or speculative ones.
As you can see, conservatorships are time consuming, expensive, and should only be used when absolutely necessary. However, in instances where proper estate planning has not been done for whatever reason, conservatorships can protect a loved one from fraud, abuse, and financial ruin. Another major advantage is that a conservator can petition the court for approval of appropriate Medi-Cal planning transactions such as: (1) using the “spend down” provisions in order to qualify for Medi-Cal benefits; or (2) protecting the exempt home from a future Medi-Cal lien.
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Elder Law Services of California is proud to announce that attorney Andrew Paranal has joined its trust department. Mr. Paranal began his career in estate planning in 2013 and has since expanded into asset protection and Medi-Cal planning. He became interested in Elder Law after helping care for a family member who experienced a debilitating event. Mr. Paranal is excited to join an established law firm and hopes to educate his Filipino community about the tremendous benefits of proper estate planning.
For more information, please visit elderlawcalifornia.com or call 1-800-411-0546
It’s really interesting how you said that you need to keep exact records of every transaction that has to do with the estate when you are conservator. This also makes a lot of sense though because you have been appointed the caretaker of the estate and its management. If you didn’t keep a good record of things, then it could seem like you are taking advantage of the position that you have been given.