Providing Customized Legal Solutions Since 1979

Why a Conservatorship May Still Be Necessary When There are Estate Planning Documents

by | Mar 13, 2024 | Firm News

Most of the conservatorships I handle involve an incapacitated person who never executed estate planning documents.  But I have a few conservatorship matters where the conservatee had executed a power of attorney, an advance health care directive, or a trust. Typically having an estate plan is an alternative to a conservatorship and in fact, you must show the court that any existing estate planning documents are unsuitable and that is why a conservatorship is necessary.  Below is a discussion of each of these three documents and how they either interplay with a conservatorship or when they may be unsuitable.

Advance Health Care Directive.  An agent (also called an attorney-in-fact or proxy) under an Advance Health Care Directive (“AHCD”) can make medical decisions for the principal or proposed conservatee consistent with the wishes expressed within the terms of the AHCD.  This is an alternative to a conservator of the person.  However, the appointment of a conservator of the person does not terminate the agent’s authority under an AHCD.  The court must specifically order that the agent’s authority is suspended for the conservatorship of the person to have the power to medical decisions for the conservatee.  A conservator of the person does have standing to petition the court for determination of whether the agent under the AHCD is acting in the conservatee’s best interest.

So why would a party seek the appointment of a conservator of the person if there is an existing AHCD?  The situations I see most of the time is when the agent named under the AHCD is either not making medical decisions for the conservatee or is not acting in the conservatee’s best interest.  The agent named could lack capacity or does not want to act as an agent.  Under these circumstances, it is prudent to request that the court suspend the agent’s authority under the AHCD.

Another situation where a conservatorship of the person may be necessary is when the proposed conservatee is uncooperative and the agent is unable to provide care for the proposed conservatee without a court order.  Other family members could also be preventing the named agent from providing care.  In these circumstances, the agent named in the document could be the proposed conservator.

Some AHCDs are older and the agent’s named are unable or unwilling to act and there is no alternative agent named and no process to get one in place.  This could require the appointment of a conservator of the person or, if viable, a petition under the AHCD.  Some older AHCD or durable power of attorney for health care may have an expiration date.  If the directives given in the document have an expiration date, then a conservator of the person will be necessary to make medical decisions.

Durable Power of Attorney for Financial Management. An agent or attorney-in-fact is named in a Durable Power of Attorney for financial management (“DPAF”) to handle a person’s financial matters.  A DPAF can be immediately effective or can spring into effect upon proof that the person is incapacitated.  The DPAF provides specifics on who to determine when the person lacks capacity.  This commonly involves obtaining one or two opinions from the person’s doctors.  Sometimes the opinion of the doctor must be signed under penalty of perjury.

If the DPAF is springing and the proposed conservatee refuses to see a doctor, then the DPAF is useless because the agent cannot comply with the requirements for it to spring into effect.  Another problem could be that the proposed conservatee’s doctors refuse to disclose the information because of HIPAA restrictions.

If the DPAF is not durable meaning that it includes specific language that the power of attorney shall not be affected by the subsequent incapacity of the person executing the power of attorney.  If that language is not included, then the power of attorney is nondurable an ineffective as an alternated to a conservatorship.

Like with the agent named in an AHCD, the agent in the DPAF may not be able or willing to act or may not be acting in the proposed conservatee’s best interest such as committing financial elder abuse.  The appointment of a conservator of the estate will become necessary.

I have had a few conservatorship where the proposed conservatee was subject to undue influence such as a child taking advantage or the proposed conservatee is a victim of a lottery scam.  The proposed conservatee may not necessarily lack capacity which would invoke a springing DPAF or the DPAF does not contain the necessary language to stop the undue influence.  A conservator of the estate becomes necessary under these circumstances to protect the proposed conservatee’s finances.

Some of the inquiries regarding conservatorships that I have encountered lately is a spouse’s ability to handle an incapacitated spouse’s retirement accounts or benefits (i.e., 401(k) or pension).  If the couple has executed DPAFs, the powers in those DPAFs may not specifically address retirement accounts or may not include specific language that a financial institution requires.  In that case, a conservator of the estate must be appointed with specific authority to manage the proposed conservatee’s retirement accounts.

Similar to AHCDs, the appointment of a conservator of the estate does not terminate a DPAF unless the DPAF specifies this, or the court orders its termination.  If the DPAF is still valid, then the agent under the DPAF must account to the conservator of the estate and the conservatee.

Trust.  A proposed conservatee may have executed a trust before losing capacity and this can be a viable alternative to a conservator of the estate.  However, if the trust is invalidated because it was determined that the proposed conservatee lacked capacity or it was executed under undue influence, then a conservator of the estate becomes necessary.

Also, the trustee named in the trust may not be able to act, may be unwilling to act, or is acting inappropriately as the trustee.  If a trust action to remove or name a successor trustee is not viable, then a conservator of the estate can be appointed to step in the settlor’s/beneficiary’s shoes to enforce the proposed conservatee’s rights under the trust.

As with the other two documents, the trust can dictate how a settlor is determined incapacitated and a successor trustee steps in, if the settlor is acting as trustee.  This can involve getting a doctor or doctors opinion.  If this proves difficult, then a conservator of the estate can be appointed to make the determination that the person lacks capacity.

A trustee under a trust does not necessarily have authority to control all of the proposed conservatee’s assets.  A trustee only manages assets that are titled in the name of the trust.  If the proposed conservatee removed assets or failed to transfer assets to the trust, then a conservator of the estate can manage those assets or obtain court authority to transfer assets to the trust.  Certain assets, such as retirement accounts, are not assets of a trust and a conservatorship of the estate will be necessary to manage those assets if the DPAF is not sufficient.

There are several circumstances where a conservator of the estate or person may still be necessary if there is an existing AHCD, DPAF, or trust.  I have several conservatorships where there is a conservator of the estate, a conservator of the person, an agent under an AHCD, an agent under a DPAF, and a trustee of a trust.  Sometimes it is all the same person and sometimes they are different people acting in the various fiduciary positions.  It then becomes necessary to properly coordinate everyone to act in the conservatee’s best interest.