Prior to the infamous Britney Spears case, the legal concept of conservatorships wasn’t a part of the public consciousness. However, over 1.3 million Americans (1) are under a conservatorship. So, it is an issue that many families will hire an estate planner to help them with.
The Britney Spears legal battles have damaged the reputation of this legal arrangement. But a conservatorship can play a very important role in a family’s financial dynamic.
What is a conservatorship?
A conservatorship is a legal arrangement in which a person (conservator) is appointed to manage another person’s (conservatee) financial matters. In most cases, the conservator is a spouse, parent, or guardian. The agreement may also be held in conjunction with guardianship terms (2). However, guardianships focus on managing another person’s physical and medical care.
It is only valid once the courts have formally designated the conservator. Conservatorships fall into two categories:
- General conservatorship – this is when the conservator gains full control over the conservatee’s financial matters and decisions.
- Limited conservatorship – this is when the conservator only takes responsibility for predetermined items while the conservatee retains control in all other matters.
Conservators are also referred to as trustees or guardians in some locations. Either way, they can become responsible for the conservatee’s housing, health care, housekeeping, education, meals, and recreation. Conservators are usually required to document the financial management. This is another reason to work with estate planner.
When are conservatorships used?
A conservatorship may be arranged under U.S legal systems (3) to give the conservator control over the finances of a child or an adult. They are needed in situations where the conservatee is incapable of managing their own finances. Some examples include;
- The conservatee has had an accident that leaves them temporarily or permanently incapacitated.
- The conservatee has developed a serious mental health condition, such as Alzheimer’s.
- Learning difficulties mean that the conservatee is not capable of making financial, legal, or medical decisions.
- Drug or alcohol addiction has resulted in the conservatee no longer being of sound mind.
- A child who earns money or receives a large inheritance is not yet capable of making financial decisions.
Conservatorship does not have to be permanent. In many cases, the agreement is only a temporary arrangement. For example, it could end when the conservatee recovers from the accident that left them incapacitated.
Conservatees may also request to end the legal status once they believe that outside support is no longer required. Thankfully, this usually needn’t become as messy as the Britney Spears case. After all, conservators generally want the best for their loved ones.
What else should you know about conservatorships?
As well as conservatorships for individual conservatees, conservators may be appointed in relation to corporations. This is usually a temporary arrangement that sees government powers take control of private firms in times of difficulty. It is unlikely that you will need to know about this, but an estate planner can support you if required.
When considering conservatorships for children, a range of other solutions may be more suitable. Estate planner can talk to you about establishing a financial power of attorney, joint property ownership or bank accounts, and special needs trusts.
Get legal advice from a conservatorship estate planner
If you feel that a conservatorship is needed to protect a spouse or child’s financial affairs, Family.Estate can connect you to a local qualified estate planner who will help organize a conservatorship and provide legal advice for your situation. Take our quiz today and promptly get matched with an estate planner.