Managing Mom’s Finances? 5 Pros and Cons of a Financial Conservatorship

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5 important things to consider before seeking a financial conservatorship

If you have an aging family member who no longer has the mental capacity to make financial decisions for themselves, you might be considering a financial conservatorship.

There is also something called a “conservatorship of the person” that covers medical and personal decisions, but this article focuses on financial conservatorships.

A financial conservatorship is when someone, called a “conservator,” is named by the court to manage the financial affairs of the incapacitated person, known as the “ward.”

Conservatorships can be voluntary. That’s when the ward understands that a conservatorship will help them and asks a judge to grant it.

But more often, conservatorships are involuntary. That means the ward isn’t able to consent or refuses to cooperate. In those cases, the request for a conservatorship is brought to the court by family, friends, or a government agency.

No matter how it’s done, a conservatorship is a major decision that has a big impact on the ward, conservator, and family members.

To weigh the options, Molly Anderson, an ARAG® network attorney, shares five important pros and cons and a few essential questions to ask yourself.

Thinking through these considerations helps you decide if a financial conservatorship is right for your older adult’s situation.

 

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Pro 1: A financial conservatorship makes it possible to manage assets

When someone lacks the decision-making capacity to manage their assets, it can be difficult (or impossible) to sell real estate, cash out assets, properly administer government benefits, and more.

But once a conservator is appointed, they will have a duty to manage all of the ward’s financial affairs — including real estate, bank accounts, investments and other assets. Plus, conservators are legally bound to manage those assets in the best interests of the ward.

“One example of this benefit,” says Anderson, “is when someone is diagnosed with dementia and needs to move out of her home and into a nursing home.

“Without a conservatorship or a properly executed power of attorney, it would be impossible to sell the person’s home until she died. This can result in property being tied up in limbo for years.

“However, if a conservator is appointed, the conservator can petition the court for permission to sell real estate and immediately use those assets to pay for the ward’s care.”

 

Pro 2: A financial conservatorship can protect wards from financial elder abuse

“We’ve all heard the stories about people taking advantage of parents who have become cognitively impaired,” says Anderson.

“A conservatorship can ensure that an abusive person has no access to the ward’s finances by putting a responsible third party in control. This can provide great financial protection from elder abuse.”

 

Con 1: A financial conservatorship can put wards at risk for financial elder abuse

If a dishonest person is named as conservator, their power over the ward’s finances makes it very easy to steal from the ward or commit other acts of financial abuse.

“Obviously this is illegal,” Anderson points out. “But the fact the law has been broken will not necessarily help the ward get their stolen money back.”

That’s why it’s critical for family and the court to choose a financially responsible conservator who truly has the older adult’s best interests at heart. This person can be a family member, but doesn’t have to be.

How the conservator is related to a ward is much less important than how that conservator will manage the ward’s finances.

 

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Con 2: A conservatorship can cost the family and ward a lot

To establish a conservatorship, court costs must be paid to file the case and attorney fees can be substantial.

Anderson explains that in involuntary conservatorships, attorney fees add up especially quickly when the role of conservator is challenged.

“Sometimes conservators are also required to post bond for the value of the ward’s assets,” says Anderson. “This is to protect the assets of the ward and avoid financial elder abuse.”

 

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Con 3: A conservatorship can cause family conflict

The process of naming a conservator can also put a strain on family relationships.

“These proceedings can get very ugly and embarrassing if family members disagree,” says Anderson.

“Sometimes filing for a conservatorship reveals that friends or family members have been financially abusing the proposed ward and they resent their predatory behavior being brought to light.

“In some cases, family battles over conservatorships can cause wounds that take years to heal.”

 

Essential questions to ask when considering a conservatorship

Anderson offers these final words of advice to anyone considering a conservatorship for an aging parent or family member:

“First, consider whether your family member still has the mental capacity to execute a financial power of attorney. This document allows a person to designate who will make their financial decisions when they become incapacitated.”

A financial power of attorney is cheaper, easier and less public than establishing a conservatorship. Once you have one, a financial conservatorship should become unnecessary.

If a power of attorney is not an option, then Anderson recommends that you assess the family situation.

Does everyone agree that a financial conservatorship is needed and who should serve as conservator? Is a voluntary conservatorship possible?

The process runs much more smoothly if a consensus can be reached before going to court.

Finally, conservatorships are complicated, so you’ll want to make sure you’re working with an attorney who is well-versed in your state laws and familiar with the specifics of your situation.

For more information about how you can connect with affordable, local attorneys and have 100% of attorney fees paid in full for legal matters like conservatorships, visit ARAGlegal.com.

 

Limitations and exclusions apply. Depending upon a state’s regulations, ARAG’s legal insurance plan may be considered an insurance product or a service product. Insurance products are underwritten by ARAG Insurance Company of Des Moines, Iowa, GuideOne® Mutual Insurance Company of West Des Moines, Iowa or GuideOne Specialty Mutual Insurance Company of West Des Moines, Iowa. Service products are provided by ARAG Services, LLC. This material is for illustrative purposes only and is not a contract. For terms, benefits or exclusions, call 800-758-2860.

 

This article is sponsored by ARAG®. For more information, see How We Make Money.


 

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