Conservatorships

Conservatorship is a major area of practice in our firm and we have extensive experience in Title 14 conservatorship proceedings.

What is a conservatorship?

A conservatorship is when the court appoints someone to manage a person’s finances and property upon finding that:

  • the person is unable to manage their own financial affairs effectively for reasons such as mental illness, mental deficiency, mental disorder, physical illness or disability, chronic use of drugs, or chronic intoxication; and
  • the person’s property will be wasted or dissipated unless property management is provided or that funds are needed for the support, care and welfare of the person or their dependents and a conservatorship is necessary or desirable to obtain or provide those funds.

A person over whom conservatorship is sought is called the “protected person.”

When is a conservatorship necessary?

Unfortunately, many people have not planned ahead and do not have life planning documents, such as powers of attorney or a trust. If the person is already incapacitated, it is too late to have documents prepared. If an incapacitated person cannot manage their financial affairs because, for example, they cannot pay their bills, the person may need a conservatorship.

In many cases, a financial power of attorney may prevent the need for a conservatorship, but not always. Creating a power of attorney does not take power away from the principal (that is, the person who is appointing an agent under a power of attorney). The principal still has access to their own funds and the agent has access as well. A conservatorship may be required to protect assets from being wasted by the incapacitated person or stolen by an exploiter.

Similarly, joint accounts do not provide any protection if the joint owner is the exploiter. A joint owner can pay bills and monitor the account, but has no authority to direct assets that are not jointly owned.

A trust provides more protection. When the person who created the trust is acting as their own trustee and they lose capacity, the successor trustee can remove the person’s name from the assets so the person can no longer access the assets. If the successor trustee is the exploiter, however, then this is still not a solution to the problem. A court-supervised trust, where the court removes the exploiter and appoints another person or a professional fiduciary and requires periodic accountings, may be appropriate in this situation.

A conservatorship is court-supervised and an attorney is appointed to represent the interests of the protected person.

Who can be appointed as conservator?

Any competent person may petition the court for appointment as conservator. The law sets out the priority of certain individuals to be appointed, in the order listed:

  1. A person appointed as conservator for the protected person in another jurisdiction
  2. A person nominated by the protected person, if they have sufficient mental capacity to make an intelligent choice
  3. The person nominated to serve as conservator in the protected person’s most recent financial power of attorney
  4. The protected person’s spouse
  5. An adult child of the protected person
  6. A parent of the protected person or a person nominated to serve as the protected person’s conservator under the will of a deceased parent
  7. Any relative of the protected person with whom the protected person has lived for more than six months prior to filing the petition
  8. The nominee of a person who is caring for or paying benefits to the protected person
  9. If the protected person is a veteran, the spouse of a veteran, or the minor child of a veteran, the Department of Veterans’ Services
  10. A licensed private fiduciary
  11. A licensed public fiduciary

The court may pass over a person who has priority, for good cause, including a determination that (a) the protected person’s power of attorney is invalid, (b) honoring the protected person’s power of attorney would not be in the physical, emotional or financial best interest of the protected person, and/or (c) the estimated cost of the fiduciary and associated professional fees would adversely affect the ability to provide for the protected person’s reasonable and necessary living expenses. Another example of good cause would be if the person with priority is exploiting or abusing the protected person.

How is a conservator appointed?

For a conservatorship, a health professional’s statement supporting the finding of incapacity is not required, but is recommended.

  1. A petition must be filed with the court to request that a conservator be appointed. The petitioner files the necessary paperwork at the Probate Court and obtains a hearing date. Depending on whether or not an emergency exists, the appointment can take place within hours of within 60 days or so.
  2. The court appoints an investigator to the case and an attorney to represent the proposed protected person. Both of these appointments are required by law and add to the cost of the conservatorship.
  3. The petitioner must arrange for personal legal service of the court papers upon the protected person and upon anyone else required by law to be served.
  4. The proposed conservator must also complete the state’s online conservatorship training and file the signed completion certificate with the court. http://www.azcourts.gov/educationservices/COJET-Classroom/Probate-Conservatorship.
  5. The petitioner must attend a court hearing and explain why the petitioner or the nominee should be appointed conservator.
  6. The petitioner, if qualified by the court, is appointed as conservator and is issued Letters of Conservatorship, which are then used by the conservator to show their authority when they make financial decisions on behalf of the protected person.

A conservatorship bond will also be required in most cases. A bond is like an insurance policy that covers the accessible amount of the protected person’s estate in the event of malfeasance by the conservator, so the bonding company will require details about the protected person’s estate as well as the finances, criminal history, and credit history of the proposed conservator before they will issue a bond.

A temporary conservatorship without notifying the protected person may be requested on an emergency basis if there is a substantial risk that immediate or irreparable injury, loss or damage will result if advance notice is given. Otherwise, 14 days’ advance notice by mail and personal legal service is required. The request for both temporary and permanent conservatorship must be made in the petition if the petitioner wants a temporary emergency conservator appointed. A separate hearing is held on the petition for temporary conservatorship; however, the petitioner may request that both hearings be held on the same day as the permanent hearing. An order appointing a temporary conservator is effective until the date of the permanent hearing. A permanent conservatorship is effective for the ward’s entire lifetime unless the conservatorship is terminated by the court.

The court may order that certain assets may not be sold, encumbered or conveyed without a court order. Assets subject to such orders are called “restricted assets.” The court will decide how much money the conservator needs to pay necessary bills over the next year and which assets should be restricted. The conservator is not required to bond for restricted assets. The conservator must file proof with the court that the assets have been restricted from sale, encumbrance, and conveyance.

The court order will set deadlines for the conservator to:

  • obtain and file proof of the bond, if one is required
  • file an initial inventory and appraisement of the protected person’s estate and a credit report for the protected person
  • file proof of restricted assets
  • file the first annual accounting

What happens once the conservator is appointed?

Once the conservator is appointed, if bond is required, the conservator will need to provide a copy of the court order to the bonding company and pay the bond premium. The bond premium may be paid out of the protected person’s estate. Once the bond is issued, the conservator must file proof of the bond with the court, at which point the Letters of Conservator will be issued.

Once the Letters of Conservator are issued, the conservator must retitle the protected person’s assets into the conservatorship. For example, the protected person’s bank account title would be changed from the protected person’s name to “Conservator’s Name as conservator for Protected Person.” For real property, the Letters of Conservator must be recorded with the County Recorder in the county where the property is located and, if the real property is restricted, the court order must be recorded as well. Proof that the order and Letters were recorded must be filed with the court. For financial accounts, the conservator must obtain proof from the financial institution that the account has been restricted and must file that proof with the court.

The conservator must also prepare an initial inventory and appraisement of the protected person’s estate and obtain the protected person’s credit report and file them with the court on or before the court’s deadline. The conservator must also file proof of restricted assets, if any.

The powers and duties of the conservator also include the following:

  • The conservator must use the estate funds only for the support, care, and benefit of the protected person and those legally dependent on the protected person.
  • If a guardian has been appointed, the conservator works with the guardian on decisions that have financial implications.
  • The conservator pays the bills of the protected person from estate funds.
  • The conservator must maintain accurate and complete records of all receipts and expenditures from the estate.
  • A conservator must file an accounting with the court at least once a year. The court sets the annual due date for the accounting and the accounting is subject to court approval.

How much does a conservatorship cost?

The costs for filing a conservatorship vary from county to county. The legal fees vary based on the complexity of the matter, whether the matter is an emergency, whether a guardianship is also requested, and whether the conservatorship is contested by an interested party. The petitioner can typically expect to pay anywhere from a few thousand dollars to tens of thousands, depending on whether an emergency exists, the complexity of the issues/assets, whether the matter is contested, what the protected person’s attorney charges, and, if a dispute exists, how quickly the parties can settle or if the dispute has to go to trial. An appointed conservator is entitled to reimbursement from the incapacitated person’s assets for payment of legal fees. The fees of the attorney appointed to represent the alleged incapacitated person are also chargeable against the incapacitated person’s assets.