WHY YOU WANT TO AVOID A CONSERVATORSHIP

A conservatorship proceeding arises when a husband, wife, aunt, uncle, neighbor or anyone else is no longer able to manage their affairs due to any kind of incapacity. If there is no preordained conservator of choice named in a living trust, then someone out there who wants control of those finances can set in motion a “Petition for Conservatorship” filed in probate court requesting the court nominate itself as manager of the finances and personal well-being of the incapacitated party. This is for a fee, of course, and does not always work out favorably for the rest of the family.

Not only is a conservatorship proceeding expensive for the estate (because it often has to pay all the attorneys’ fees) but it pits many competing family members, government agencies and financial entities against one another to gain control over the conservatee’s assets. These competing interests range from errant relatives to court-appointed “professional” conservators. These professional conservators and their entourage of health care providers and financial assistants can be a disease on an estate as ghastly as the plague – they won’t stop until the estate is gone.

If a person becomes incapacitated due to an accident or disease, and has not directly addressed the issue of who will govern his/her estate, it will be a starting gun for competitive interests to gain control, particularly where a blended family is involved. It is not a pretty sight when the court ends up ordering unwanted strangers to move into a person’s house to care for the same person they have been caring for their entire adult life.

Herewith an example of how this works.

Hypothetical Anecdote #1

Consider what happened to Dr. X and his wife, Wilma, who lived up North:

Dr. X was an emergency room physician and had been married to Wilma for 26 years. They both had daughters from a previous marriage, Anna and Beatrice, who had gotten along well during their teenage years before moving out and going their separate ways. Wilma continued to take care of her husband as best as any wife can do.

In his late seventies the Dr. began to exhibit signs of Alzheimer’s and he deteriorated quickly. He could no longer manage his estate and Wilma did the best she could with what little knowledge she had about his financial holdings. She could certainly balance a checkbook and knew very well the needs of running the house she had lived in for 26 years.

Before long the Dr.’s daughter, Anna, who had very little presence in the home before, began coming by more often and taking items of value from the home. Because she believed, or so she represented, that she was to inherit the house when her father died, Anna convinced personal contacts at the bank to release large sums of money to remodel the family home.

About this time Wilma was diagnosed with an early stage of breast cancer and began undergoing treatment, after which she fully recovered. Her daughter from the former marriage, Beatrice, a doctor herself, came home from Arizona to help take care of her mother and Dr. X, her step-father. This is when the boxing gloves came off.

Anna began a full verbal attack on Wilma for not being able to properly care for her father, and accused Beatrice of imposing on the family home and leaching off her mother (thereby leaching off Anna’s potential inheritance). Even though Anna, as the Dr.’s daughter, is not the favored relative by law to be appointed as her father’s conservator, she nevertheless petitioned the court for the appointment so she could gain control over his estate.

Ironically, the first person by law to be considered the best conservator for the Dr., or any other incapacitated husband, is his wife. Unfortunately for Wilma, Anna’s personal attacks and accusations about Wilma and Beatrice were heard by the court. Anna sought alliance from her friends at the bank and got it, if only to protect the bank.

Based on that information the judge decided to:

• Assign a court-appointed attorney to represent the incompetent Dr. X;

• Order a professional conservator to be appointed by the court attorney;

• Order health care providers to live in the family home 24 hours a day;

• Order every penny that Wilma spent to be authorized by a bank trustee;

• Order Beatrice and Anna restrained from the family home; and

• Order strict visiting hours for Beatrice and Anna to visit their mother and father.

In this example, it is no stretch to suggest that the court-appointed attorney, conservator, health care provider service and bank trustee are all friends, and all will extract large fees from Dr. X’s estate. This was not the first estate they were appointed to and it won’t be the last. That is the way the “conservatorship system” operates.

Such instances are rarely simple or easily defined. If contemplating a way to prevent such an outcome, please consult an estate planning expert.