Many of us have known a family member or a friend who wasn’t able to care of themselves. This could be due to a disability, failing health, or mental or physical trauma. Or we have learned about a friend or family member who suddenly suffers a stroke and is unable to speak or communicate with others. When these unexpected events happen, it becomes necessary for someone to step in and take care of things. This usually means scheduling medical appointments, doing the grocery shopping and cooking, arranging for transportation, and housekeeping, not to mention getting the bills paid. At the very least, it may mean hiring a care provider to handle these daily activities.
Unfortunately, people often forget or neglect to plan for these life events and then it is too late to make their wishes known. It is important to be proactive and plan in advance how you want these matters handled. By making a plan in advance, you can designate someone to care for your minor children or adult disabled child; designate a caregiver to speak for you and handle your daily affairs; specify where you want to live; and dictate how your assets are to be managed. Otherwise, the courts will make these decisions for you.
When there is no plan in place, the courts must decide. This area of law, known as probate law, insures that persons affected by some disability are properly cared for. Conservatorships are used to manage the lives of adults who are unable to make decisions themselves. (Guardianships are the same but for minor children.) Conservatorship laws give the courts authority to put someone else in charge to pay the bills, make medical decisions, and handle all the activities of daily living such as grocery shopping, cooking and scheduling dentist appointments. This authority also includes deciding what services are needed, what doctors, dentists or care providers will be hired, how assets will be used and even where a person will live. Anyone who does not want strangers making these life changing decisions for them, needs to plan in advance.
HOW CONSERVATORSHIPS WORK
Picture this, Carrie is 76 years old and she lives alone in San Francisco. She has difficulty remembering to pay her bills. Both her telephone and electricity have been disconnected because she forgot to pay them. Once she left a pot on the stove which caused a small fire. She can no longer drive and requires someone to take her to the grocery store or her doctor’s appointments. Carrie has plenty of money and could easily afford to hire someone but she has issues trusting others to manage her affairs.
One day Carrie slipped and fell while climbing the stairs in her home. She could not reach the phone and even if she could, the service had been turned off due to nonpayment. Fortunately, Carrie’s neighbor stopped by and was able to get her the medical attention she needed. Clearly, Carrie can no longer take care of herself without risk to her safety. The social worker assigned to Carrie contacts Carrie’s son who lives in Nevada and explains the situation. Because Carrie refuses to authorize her son to take care of her bills or hire someone to help around the house, Carrie’s son feels that he has no choice but to seek conservatorship over his mother. He starts the process by filing a petition with the court.
The petition for conservatorship is a legal document that tells the court what is happening in Carrie’s life and why she needs someone to take care of her. On the petition, Carrie will be known as the conservatee and the person asking for the court’s permission to manage her affairs is the conservator. The proposed conservator in this case is Carrie’s son. The petition must state information about Carrie’s assets, her relatives, the specific incidents that led to her difficulties, the status of her mental and physical health and the risks she faces if a conservator is not appointed.
Once the petition is filed with the court, the case will be put on the court calendar for a hearing. The court will assign a court investigator to the case. The court investigator is responsible for verifying the information in the petition. The court investigator will do this by speaking to Carrie, her neighbor, her son and anyone else named in the petition. After gathering all this information, the court investigator will file a report with the court and make a recommendation to the court on whether Carrie needs a conservator.
The court will also assign an attorney to represent Carrie. Our legal system wants to insure that Carrie has a voice during these proceedings. This attorney, likely a complete stranger to Carrie, has the job of protecting Carrie’s rights and getting her side of the story. The attorney will explain the court process to Carrie and what will happen if a conservator is appointed to take care of her. Carrie’s attorney is also there to let the court know how Carrie feels. She can object to her son being appointed as her conservator. She can even request a particular person for the job of conservator. The attorney must also tell the court if Carrie objects to the conservatorship. The attorney will speak with Carrie’s family members and neighbors to get a better understanding of Carrie’s situation. After reviewing all the available information, the attorney will make a recommendation to the court on whether the conservatorship is needed and who should be the conservator.
This process can take anywhere from 45 to 60 days. In extreme situations where someone’s health or safety is in danger, the court can appoint a temporary conservator to make decisions right away. The temporary conservator can be appointed in as little as three or four days in cases where the need is urgent.
On the day of the hearing, Carrie’s attorney will be present, along with Carrie’s son, his attorney (if he has one), other interested family members or friends, and perhaps Carrie herself. At the hearing, the judge will ask everyone for additional information they would like to add. The judge may also ask questions about the information contained in the petition, the court investigator’s report or the attorney’s recommendation. The judge will either grant or deny the petition or schedule the case for a future hearing date to consider any new information. If the judge grants the petition, Carrie’s son will have access to all of Carrie’s bank accounts, authority to manage her investments, and with the court’s permission sell her home or choose where she will live. Carrie will be dependent upon her son to make all of her daily living and financial decisions.
It can be costly to go through the court process of appointing a conservator. For starters, the fee for filing the petition is $435. At the time the petition is filed, the court will also request $800 to pay for the cost of the court investigator. The attorney appointed to represent Carrie must also be paid. The average rate for attorneys in California is $300 an hour. If it takes an estimated ten hours for the attorney to represent Carrie before and at the hearing, the attorney will be owed $3,000. Adding all these figures, the estimated cost for a conservatorship proceeding will be a minimum of $4,235. Once the hearing is over, the attorney must file a petition for payment of her fees. The cost of filing this petition is also $435. All of these costs will be paid from Carrie’s bank accounts.
But Carrie may not be the only one to pay here. If Carrie’s daughter believes that a conservatorship is not needed or that her brother is not the best person to take care of Carrie, she must file an objection with the court. And like the other filing fees, the cost for filing an objection is $435.
Once a conservatorship is granted, the court will supervise Carrie’s case until the conservatorship is terminated or Carrie dies. The case is supervised through regular reporting to the court. Carrie’s son will be responsible for updating the court on Carrie’s status with routine reports. That reporting begins with an inventory of all the assets Carrie owns. After Carrie’s son prepares the inventory, the property will be appraised by the court’s probate referee. The probate referee is assigned to the case by the court just like the court investigator. He or she is responsible for placing a dollar value on Carrie’s assets – her home, stocks, bonds, household furnishings, jewelry, all income sources and bank accounts. The probate referee’s appraisal will serve as the starting point for the future financial accounting Carrie’s son must make. And just like the court investigator fee, the probate referee’s fee will also be paid from Carrie’s bank account.
Once the inventory is filed with the court, Carrie’s son must report every dollar of Carrie’s money that he spends on her behalf and every dollar she receives in the form of interest, retirement or rental income. This is the court’s way of insuring that Carrie’s assets are being used for her care and benefit and not stolen or squandered. This mandatory reporting usually starts one year after the conservator is appointed and is required every other year after that. Carrie’s son will also have to report on Carrie’s mental and physical health. This reporting must be in the court mandated format. It is not unusual for a conservator to require the assistance of an attorney or a probate accountant in preparing these reports. And again, these hired professionals will be paid from Carrie’s assets which of course adds to the cost.
A copy of each bi-annual report must be given to Carrie, her attorney, all of Carrie’s immediate family members, and the court investigator to review. It is the court investigator’s job to make sure all of the expenditures are reasonable and accurately included in the report. The court investigator will also make sure the balances in Carrie’s bank accounts are correct using the probate referee’s appraisal as the starting point. In fact, copies of all of Carrie’s bank statements must be submitted to the court along with the report. Carrie’s son will have to explain any discrepancies found in the report. Each time a report is filed, the court will schedule a hearing date to review and approve the report.
Because each bi-annual report is considered a petition when it is filed with the court, the cost each time is $435. Carrie’s attorney is also entitled to payment for her time reviewing the report. If Carrie’s son employs the services of an attorney and/or probate accountant to help him prepare the report, these individuals must be paid for their services as well. Again, all of these costs will come from Carrie’s assets. It is not unusual for the costs of a bi-annual accounting to cost $5,000 or more. And because Carrie may live for several years, these costs will be repeated each time a report is filed. Most people also may not realize it but the bi-annual reports, the petition and the inventory and appraisal are all public documents available for anyone to review.
Most of us probably wouldn’t have a problem with our son or daughter taking care of our affairs. And for most of us, the conservatorship would be fine aside from the cost, the court mandated reporting and the publicity. But what if Carrie had reservations about her son’s ability to take care of her affairs? What if Carrie thought he was irresponsible with money? What if Carrie was not able to object to her son’s appointment as her conservator? Or worse, what if Carrie’s son did not want to be her conservator and there was no other family member to take care of her affairs? Under any of these circumstances, Carrie could end up with a professional fiduciary taking care of her or the county public guardian in some cases. A professional fiduciary is usually someone that is suggested to the court by Carrie’s court appointed attorney or the court investigator. A professional fiduciary is in the business of managing other people’s affairs and is paid at a competitive rate between $100 and $150 per hour. The professional fiduciary typically has no relationship with the conservatee or her family. They know nothing of the conservatee’s lifestyle, habits, traditions or customs. Usually any information the professional fiduciary learns about the conservatee is derived from the conservatee’s documents such as bank statements, credit card statements, and interviews. In any case, it boils down to a complete stranger making decisions about Carrie’s quality of life and it is not uncommon for the professional fiduciary’s opinion to outweigh what Carrie thinks is best.
HOW TO AVOID A CONSERVATORSHIP
One simple way Carrie could have avoided a conservatorship is by executing a durable power of attorney. A power of attorney is a private legal document in which you authorize someone to handle your affairs. This may include withdrawing funds from your bank accounts, making decisions about selling or buying stocks or other investments, paying your bills or making gifts to your favorite niece. A power of attorney can be as expansive or limited as you like. But in order for the power of attorney to work for you when you cannot speak for yourself, it must be a durable power of attorney. A general power of attorney has no legal effect once the individual becomes incapable of making their own decisions.
In a durable power of attorney, the person granting the power is called the principal. The person using this power is called the agent. When you give your agent authority to act, you give him or her permission to act or do anything just as you would. That authority can be narrowly defined (such as pay my phone bill each month). Or it can be all inclusive giving someone complete control (such as handle all of my personal and financial affairs).
This authority is also completely revocable. You can change your mind at any time. You can change your agent if you like. You can even specify that your power of attorney won’t take effect until you become incapacitated. This is known as a ‘springing’ power of attorney. Under a springing power of attorney, your agent has no authority to act until a specific event happens like your 75th birthday or you suffer from a mental defect such as dementia or Alzheimer’s disease.
Another great feature of a durable power of attorney is the simplicity of the document. It does not have to be a twenty page document full of legal terms no one can understand. It can be as short as one or two pages. You don’t even need a lawyer to prepare it. Pre-made forms are available that require you to simply initial the different powers you want to give to your agent. Once the form is completed, it must be notarized. A power of attorney has no effect until it is notarized. Then keep the original in a safe place and provide your agent with a copy. When it is time for your agent to act on your behalf, he or she just has to present the notarized document to the appropriate bank representative, retailer or creditor.
A power of attorney is just one of the fairly simply tools available which can save you and your loved ones a great deal of time, expense and stress