The short story of a conservatorship is that a conservatorship is a legal method by which someone is appointed to control the money of another person and the person controlling the money is supervised by the court.  Most often, the person for whom money is being controlled is a minor or underage person, but it may also be that the person for whom money is being controlled is incapable of handling their own affairs.  When someone is incapable of handling their own financial affairs or if someone receives money, but is too young to handle the money on their own, a conservatorship can be established through the courts to give someone else the powers to handle the money and use it for the benefit of the incapacitated or underage person.  When a conservatorship is set up, the person appointed as a conservator is responsible to use the money on behalf of the underage or in capacitated person.  The person appointed as a conservator can access the money to be used on behalf of the incapacitated or underage person, but must also give an accounting to the court and regularly report to the court on expenditures made on behalf of the underage or incapacitated person.

The person acting as a conservator is restricted on what types of expenditures can be made and how much may be spent on a incapacitated person or underage person, as dictated by the court, and as in the best interest of the person for whom the money is being used.  A court may decide certain expenditures are too much, or were improperly made, or could even prevent certain expenditures if the court deems the expenditures to be improper or excessive.  Of course, courts are usually not so strict as to prevent a conservator from being able to help the underage or incapacitated person they are serving, but most people I know don’t want to be subject to second guessing and oversight by the courts if it can be avoided.

 

A Trust Can Be An Alternative to A Conservatorship for Minor Children

When setting up an estate plan to leave money or other assets to minor children, a trust is often a useful and helpful tool.  A trust is a legal method or setup that holds property for the use and enjoyment of someone called a beneficiary.  The beneficiary of a trust can be a minor child, and the trust can hold the assets for the benefit of a minor child, so that the minor child is not given assets outright at too young of an age.  Instead, a different adult is named as a trustee – the person in charge of a trust – to use the assets on behalf of the minor child.  A trust can contain guidelines, restrictions, and incentives on how to use the money on behalf of a minor child, and can also give a future date or a future time when assets will be distributed outright to the child, once the child is no longer a minor and able to handle the assets themselves.  You can even set up someone who is not the trustee to oversee the expenditures and ensure assets are being used properly if the trustee needs supervision.

The time frame for distribution is up to the person making the trust – you – so you don’t need to just go with the default rule for a conservatorship of age 18.  If you want to have your assets distributed outright to your children after they graduate from college, or even later, you can set that up in a trust.  A trust is also a private document, so you don’t need to have the court actively supervising or checking in on how assets are being used for your minor children.  Instead, you can pick a trusted relative or friend who will have your surviving children’s best interest at heart to control the money, and do so without court supervision.

 

Financial Powers of Attorney Are Also Quite Helpful Alternatives

When you set up your estate plan, one of the essential documents to set up is a financial power of attorney.  A financial power of attorney is a document that you create at the time you set up your estate plan, but it is not something you generally want to use right away.  Instead, a financial power of attorney is a document that says someone else can make financial decisions on your behalf, but only if you were to become incapacitated or incapable of making your own decisions.  Sometimes a financial power of attorney is set up to be immediately effective, but that isn’t always what is best for estate planning.  For people who are able to make their own decisions, they want to keep and preserve their own ability to make their own financial decisions and not give up that power immediately.  So, a financial power of attorney would allow someone to start making decisions on behalf of someone else only after the person becomes unable to make their own decisions.

Of course, if a financial power of attorney gives someone the power to make decisions on behalf of another person, and financial decisions are able to be made, there would not be a need to apply to the court for a conservatorship, as the power to make financial decisions has already been granted in the financial power of attorney.  A financial power of attorney is what the courts refer to as “less restrictive means” than a conservatorship to have an incapacitated person’s financial decisions made and have the individual cared for by the named agent under a financial power of attorney.

I find it somewhat entertaining that the courts acknowledge that a conservatorship will be more restrictive than a financial power of attorney in their own terminology.  The courts themselves seem to know conservatorship can be restrictive and cumbersome and courts would prefer less restrictive means like a financial power of attorney, or a trust, be in place, if possible.

 

Conservatorship Isn’t Bad, It’s Just Usually More Work

Conservatorship is really a great thing to have available.  If someone dies with a minor child as an heir, or if someone becomes incapacitated without having estate planning or a financial power of attorney in place, then having a legal process to care for and conserve the money and assets for the underage or incapacitated person is essential and necessary, and WONDERFUL!  Conservatorship is a great backstop to ensure financial affairs can be handled.  Or, if someone really needs to have a court supervising expenditures to ensure funds are properly used, then conservatorship is great for that.

As mentioned above, a trust can also have oversight built into the trust, so conservatorship may not be necessary if you set up a trust correctly.  Financial powers of attorney can also help avoid the more restrictive nature of a conservatorship.  But, to reap the reward of a trust or a financial power of attorney, you need to plan ahead and get your estate plan in place prior to the need to set up a conservatorship – before you become incapacitated, or (more permanently) deceased.  To start planning ahead and make things easier on those you leave behind, click the button below.