In a conservatorship proceeding, the court can grant a conservatorship of the person, of the estate or both of the person and of the estate. The conservator of the estate has management and control subject to the powers granted by the court to manage assets titled in the individual name of the conservatee (the incapacitated person). It is important to note that the appointment of a conservator of the estate does not automatically revoke a power of attorney. In order for an existing power of attorney to be invalided or terminated, the court has to specifically order that and that is included in either the Order Appointment Temporary Conservator or Order Appointment Conservator.
The assets not subject to a conservatorship of the estate are the following:
- Community property assets per Probate Code §3051
- Assets titled in the name of a trust
- Assets owned in joint tenancy if contributions were equal between the owners
- Custodial accounts such as a Uniform Transfer to Minors Account
There is a separate court procedure regarding a well spouse or domestic partner’s (or the conservator of a spouse or domestic partner) ability to take action on community property assets. This procedure is an alternative to a spouse or domestic partner obtaining a conservatorship for a one-time transaction (i.e., selling real property titled in both spouses’ or domestic partners’ names). However, sometimes a conservatorship is necessary if there are ongoing management needs such as managing a retirement account owned by the incapacitated spouse or domestic partner. In this case, the petitioner should request that accountings and bonds be waived due to the asset being community property, if it truly is community property.
Assets titled in a trust such as a revocable trust created by the conservatee, are not subject to a conservatorship unless that trust has been invalidated. If the issue is that there is no named or acting trustee and assets in a trust need to be managed, then the proper procedure is to either comply with the terms of the trust to get a successor trustee appointed or petition the court under the trust’s name to appoint a successor trustee. If the trust makes distributions directly to the conservatee, then those funds or assets are part of the conservatorship estate and must be accounted for in the conservatorship. The conservator does stand in the shoes of the conservatee in the conservatee’s capacity as a beneficiary of any trust or estate.
Joint tenancy assets have to be analyzed regarding the source of the contributions. If it is a bank account and the joint tenant did not contribute funds to the account or were added just for convenience purposes only, then the account is subject to the conservatorship proceedings. If there was equal contributions, then the conservator should work with the joint owner to divide the funds in the account according to each party’s contribution. If there is no cooperation with the joint owner and they are suspected of misconduct, then the conservator has the authority to close the account or inform the bank so the account can be frozen.
Any accounts that have a custodian such as a Uniform Transfers to Minors Account – referred to as a CUTMA in California – is managed by the named custodian. Even though these accounts are for minors and conservatorships are only for adults, there is an option on a CUTMA to have it managed until the person turns 25. So there is a chance that an incapacitated adult could still have an interest in a CUTMA account. Like a trust, the conservator steps into the conservatee’s shoes regarding the conservatee’s interest in the CUTMA.
As discussed above, there could be several different types of assets that a conservatee has an interest in, but that are not subject to the conservatorship proceedings. A court can require that a trustee, an agent under a power of attorney, a custodian under a CUTMA, a spouse with community property and a joint owner of an account provide an accounting of those assets.
All the assets subject to a conservatorship must be inventoried on an Inventory and Appraisal and most likely regular accountings of those assets will be required.