Conservatorships – Acting as a Trustee of Another Person’s Property

A conservator is a person who acts as a trustee of another person’s property. If a minor (a person under age 18) or a disabled adult owns property that needs protection and management, a conservator should be appointed. The same person may serve as a conservator and guardian.

A conservatorship proceeding may be started by an elderly person who desires protection of his or her property, or by any person interested in the estate, affairs or welfare of the disabled person. The disability may be mental or physical. Missing persons and prisoners of war are considered disabled persons under the conservatorship statutes.

Appointment of a conservator or other protective order may be made in relation to the estate and affairs of a minor if the court determines that a minor owns money or property that requires management or protection that cannot otherwise be provided or has or may have affairs that may be jeopardized or prevented by minority or that funds are needed for the minor’s support and education and that protection is necessary or desirable to obtain or provide funds.

Appointment of a conservator or other protective order may be made in relation to the estate and affairs of a person if the court specifically finds on the record both of the following:

1. the person is unable to manage the person’s estate and affairs effectively for reasons such as mental illness, mental deficiency, mental disorder, physical illness or disability, chronic use of drugs, chronic intoxication, confinement, detention by a foreign power or disappearance; and
2. the person has property that will be wasted or dissipated unless proper management is provided, or that funds are needed for the support, care and welfare of the person or those entitled to be supported by the person and that protection is necessary or desirable to obtain or provide funds.

The court may require each person who seeks appointment as a conservator to furnish a full set of fingerprints to enable the court to conduct a criminal background investigation. Licensed fiduciaries and employees of a financial institution, however, are not subject to criminal background investigations.

There is no requirement that an adult be declared “incompetent” in order for a conservator to be appointed. The test for disability is whether or not the adult is able to manage his or her property and affairs effectively. The court, depending on the nature of the alleged disability, may appoint a physician to examine the person and an investigator to investigate the issue of disability.

Once a conservatorship petition is filed, notice must be given to certain persons whose interests may be affected by the outcome of the proceeding. Those persons include a spouse, a guardian, parents and children. Any interested person may participate in the proceeding, and may file a demand for notice. If a demand for notice is filed, the person filing the demand will receive notice of all events and copies of all court papers in the proceeding.

In a conservatorship proceeding, the court may appoint an attorney to represent the minor, and must appoint an attorney to represent the adult if he or she does not have counsel of their own. The appointment of counsel is to ensure that the alleged disabled person’s rights are protected.

The court will require a conservator to furnish a bond conditioned upon faithful discharge of all duties according to law, with sureties as it shall specify. Unless otherwise directed, the bond will be in the amount of the aggregate capital value of the property of the estate in the conservator’s control plus one year’s estimated income minus the value of securities deposited under arrangements requiring an order of the court for their removal and the value of any land which the fiduciary, by express limitation of power, lacks power to sell or convey without court authorization. For good cause shown, the court may reduce or eliminate the bond to the extent of regular fixed expenses paid for the benefit of the protected person. The court, in lieu of sureties on a bond, may accept other security for the performance of the bond, including a pledge of securities or a mortgage of land.

A bond is not required of a conservator which is a national banking association, a holder of a banking permit under the laws of this state, a savings and loan association authorized to conduct trust business in this state, a title insurance company qualified to do business under the laws of this state, or a trust company holding a certificate to engage in trust business from the superintendent of financial institutions or the public fiduciary.

The conservator’s bond is subject to periodic review, and the amount may be adjusted by the court from time to time. A conservator’s bond may be purchased from most insurance companies.

The conservator is vested with legal title to all property of the protected person. The court-issued Letters of Conservatorship are evidence of the authority of the conservator. The conservator has the power to sell, buy, lease, transfer, encumber or otherwise dispose of the property of the protected person. The exercise of these broad powers is subject to fiduciary duties and the same standard of care applicable to trustees. When in doubt regarding a particular transaction or course of action, the conservator may ask the court for instructions.

Within ninety days after appointment, a conservator must prepare and file with the court an inventory of the assets of the protected person on the date of the conservator’s appointment, listing it with reasonable detail and indicating the fair market value of each asset as of the date of appointment.  The conservator must attach to the inventory a copy of the protected person’s consumer credit report from a credit reporting agency that is dated within ninety days before the filing of the inventory.

The conservator must provide a copy of the inventory to the protected person if the protected person can be located, has attained fourteen years of age, and has sufficient mental capacity to understand these matters; and to any parent or guardian with whom the protected person resides.  The conservator must keep suitable records of the conservator’s administration and exhibit the records on request of any interested person.

Unless otherwise ordered by the court, a person who is entitled to notice of the conservator’s annual account may request in writing that the conservator do one of the following not more than once every thirty days:

1. (allow the person to view the protected person’s financial records, the conservator’s billing statements, the billing statements of the conservator’s attorney or other records related to the protected person under the conservator’s control;
2. provide the requesting person with copies of these documents.  Unless otherwise ordered by the court, the conservator must allow the person to view or provide copies of the requested documents to the person as soon as practicable but no later than thirty days after receiving the request.  The requesting party must pay reasonable copying costs; or
3. provide a report of receipts and disbursements of the conservatorship.

A conservator may resign by petitioning the court, or may be removed for good cause. If the conservator resigns, is removed, or dies, the court may appoint a successor conservator.

The conservatorship should terminate:

1. in the case of a minor, when the minor reaches age 18 (assuming no other disability)
2. in the case of a disabled adult, when the disability has ceased
3. in all cases, when the protected person dies. Upon termination of the conservatorship, title to the assets passes to the person for whom the conservator was appointed, or if that person is deceased, to his estate.