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13.10

mortgage real estate and other property

• collect benefits from Social Security,

Medicare or other government

programs or civil or military service

• invest your money in stocks, bonds and

mutual funds

• handle transactions with banks and

other financial institutions

• buy and sell insurance policies and

annuities for you

• file and pay your taxes

• operate your small business

• claim property you inherit or are

otherwise entitled to

• transfer property into your living trust

• represent you in court or hire someone

to represent you, and

• manage your retirement accounts.

Whatever powers you give the attorneyin-fact, the attorney-in-fact must act in your

best interests, keep accurate records,

keep your property separate from his or

hers and avoid conflicts of interest.

I have a living trust. Do I still

need a durable power of

attorney for finances?

A revocable living trust can be useful

if you become incapable of taking care

of your financial affairs. That’s because

the person who will distribute trust

property after your death (the successor trustee) can also, in most cases,

take over management of the trust

property if you become incapacitated.

Few people, however, transfer all

their property to a living trust, and

the successor trustee has no authority

over property that the trust doesn’t

own. So a living trust isn’t a complete

substitute for a durable power of attorney for finances.

Can my attorney-in-fact make

medical decisions on my behalf?

No. A durable power of attorney for

finances does not give your attorneyin-fact legal authority to make medical decisions for you.

You can, however, prepare a durable

power of attorney for healthcare, a

document that lets you choose someone to make medical decisions on your

behalf if you can’t. In most states,

you’ll also want to write out your

wishes in a healthcare directive, which

will tell your doctors your preferences

about certain kinds of medical treatment and life-sustaining procedures if

you can’t communicate your wishes.

Healthcare documents are discussed in more detail in the previous

section of this chapter.

When does the durable power

of attorney end?

It ends at your death. That means

that you can’t give your attorney-infact authority to handle things after

your death, such as paying your debts,

making funeral or burial arrangements or transferring your property to

the people who inherit it. If you want

your attorney-in-fact to have authority to wind up your affairs after your

death, use a will to name that person

as your executor.

Your durable power of attorney

also ends if:

• You revoke it. As long as you are

mentally competent, you can revoke a

durable power of attorney at any time.

• A court invalidates your document.

This happens rarely, but a court may

declare your document invalid if it

concludes that you were not men-

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tally competent when you signed it,

or that you were the victim of fraud

or undue influence.

• You get a divorce. In a handful of

states, including Alabama, California, Colorado, Illinois, Indiana,

Minnesota, Missouri, Pennsylvania,

Texas, Washington and Wisconsin,

if your spouse is your attorney-infact and you divorce, your exspouse’s authority is automatically

terminated. In any state, however, it

is wise to revoke your durable

power of attorney after a divorce

and make a new one.

• No attorney-in-fact is available. A

durable power of attorney must end

if there’s no one to serve as attorney-in-fact. To avoid this problem,

you can name an alternate attorneys-in-fact in your document.

More Information About

Durable Powers of Attorney

for Finances

Quicken Lawyer Personal (software from

Nolo) walks you step by step through the

process of writing your own durable

power of attorney for finances. You can

also use the program to prepare a valid

will, living trust, healthcare directive and

other useful legal documents.

Medical Directives & Powers of Attorney

in California, by Shae Irving (Nolo),

provides complete forms and instructions

to help California residents prepare a

durable power of attorney for finances.

Conservatorships

A conservatorship is a legal arrangement in which an adult has the courtordered authority and responsibility

to manage another adult’s financial

affairs. Many states use the terms

“conservator” and “guardian” interchangeably, or use other terms such as

“custodian” or “curator.” In this book,

we use the term “guardian” for a person who makes personal decisions for

a child or an incapacitated adult, and

“conservator” for someone who takes

care of financial matters for an incapacitated adult. The adult who needs

help is called the “conservatee.”

If you need information about

guardianships for children, see Chapter 16, Parents and Children.

When is a conservatorship

necessary?

A conservatorship is permitted only

when someone is so incapacitated that

he cannot manage his own financial

affairs. Generally, conservatorships are

established for people who are in comas, suffer from advanced stages of

Alzheimer’s disease or have other serious illnesses or injuries.

Conservatorships are rarely needed

for people who have made—or can

knowingly sign—financial documents, such as a durable power of attorney for finances. (See the previous

set of questions.)

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Adults May Need

Guardians, Too

In addition to help with finances, an

incapacitated adult may also need

assistance with personal matters, such as

medical decisions (if the adult has not

prepared a healthcare directive) and

decisions about where the adult will live

and what his or her daily activities will

be. If a court appoints someone to take

care of these things, that person is usually

called a “guardian” or “conservator of

the person.” The incapacitated adult is

often called the “ward.” An incapacitated

adult may need a guardian or a conservator, or both. The same person can be

appointed to take both jobs. As with

conservators, guardians are supervised

and held accountable to a court.

What are the advantages of a

conservatorship?

Conservatorships are subject to court

supervision, which provides a powerful safeguard for an incapacitated

adult’s property. To prevent a conservator from mismanaging the property

of the person she is helping (the

conservatee), most courts require the

conservator to provide periodic reports and accountings that give details about the conservatee’s assets and

how the conservatee’s money was

spent. Many courts also require the

conservator to seek permission before

making major decisions about the

conservatee’s property, such as

whether to sell real estate.

What are the downsides to

a conservatorship?

Conservatorships are time consuming

and expensive; they often require

court hearings and the ongoing assistance of a lawyer. The paperwork can

also be a hassle because, as mentioned

above, the conservator must keep detailed records and file court papers on

a regular basis.

In addition, a conservator must

usually post a bond (a kind of insurance policy that protects the

conservatee’s estate from mishandling). The bond premiums are paid

by the conservatee’s estate—and are

an unnecessary expense if the conservator is competent and trustworthy.

Occasionally, however, a conservator

will mismanage a conservatee’s assets.

Common abuses range from reckless

handling of the conservatee’s assets to

outright theft. Although each state has

rules and procedures designed to prevent mishandling of assets, few have

the resources to keep an eye on conservators and follow through if they spot

trouble. Many cases of incompetence or

abuse go unnoticed.

Finally, a conservatorship can be

emotionally trying for the conservatee.

All court proceedings and documents

are public records, which can be embarrassing for someone who values independence and privacy.

How are conservators

compensated for their services?

The conservatee’s estate must reimburse the conservator for necessary

expenses and must usually pay for the

conservator’s services—if these pay-

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13.13

ments are “reasonable” in the eyes of a

court. Generally, payments are made

to professional or public conservators,

but a family member who has been

appointed conservator may also seek

compensation by making a request to

the court.

Are there ways to block

a conservatorship?

Before a court approves a conservatorship, notice must be given to the proposed conservatee and his close family

members. Anyone—including the

proposed conservatee, family members

and friends—may object to the conservatorship in general, or to the specific choice of conservator. The person

who wants to block the conservatorship must file papers with the court,

inform all interested parties (the proposed conservatee, family members

and possibly close friends) and attend

a legal hearing. The final decision is

up to a judge.

The best way to avoid a conservatorship is to prepare a durable power

of attorney for finances before a health

crisis occurs. That way, someone

you’ve hand-picked will be able to

step in and make decisions for you if

necessary. (For information about preparing a durable power of attorney,

see the previous set of questions.)

How does a judge choose

a conservator?

When a conservatorship petition is

filed in court, a judge must decide

whom to appoint. Often, just one

person is interested in taking on the

role of conservator—but sometimes

several family members or friends vie

for the position. If no one suitable is

available to serve as conservator, the

judge may appoint a public or other

professional conservator.

When appointing a conservator, a

judge follows certain preferences established by state law. Most states

give preference to the conservatee’s

spouse, adult children, adult siblings

or other blood relatives—and a couple

of states give priority to a registered

domestic partner. But a judge has

some flexibility; he may use his discretion to pick the person he thinks is

best for the job. Without strong evidence of what the conservatee would

have wanted, however, it is unlikely

that a nonrelative would be appointed

over a relative. Because of this, conservatorship proceedings may cause great

heartache if an estranged relative is

chosen as conservator over the

conservatee’s partner or close friend.

Who financially supports the

conservatee?

If the conservatee has the means,

money for his support will come from

his own assets. But a conservator

should seek all financial benefits and

coverage for which the conservatee

may qualify. These benefits may include Social Security, medical insurance, Veterans Administration benefits, pension and retirement benefits,

disability benefits, public assistance

and Supplemental Security Income.

When needed, close family members

(including the conservator) often contribute their own money to help support a conservatee.

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When does a

conservatorship end?

A conservator must care for the

conservatee’s finances until the court

issues an order relieving her from

responsibility. This ordinarily happens when:

• the conservatee dies

• the conservatorship estate is used up

• the conservatee regains the ability to

handle her own finances, or

• the conservator becomes unable or

unwilling to handle the responsibilities. In this situation, the conservatorship itself does not end, but

someone else takes over the

conservator’s duties.

More Information

About Conservatorships

The Conservatorship Book, by Lisa

Goldoftas & Carolyn Farren (Nolo),

contains forms and instructions for getting

a conservator appointed in California,

without a lawyer. For information about

conservatorships in other states, visit your

local law library.

o n l i n e

h e l p

h e l p o n l i n e h e l p o n l i n e h e l p

http://www.nolo.com

Nolo offers self-help information on a wide

variety of legal topics, including

healthcare directives, powers of attorney

and conservatorships.

http://www.partnershipfor

caring.org

Partnership for Caring offers information

and publications about healthcare directives, as well as state-specific forms that

you can download for free.

Many sites offer state-specific information

about durable powers of attorney for finances and conservatorships. If you need

more information about your state’s laws,

you can use an online search engine to hunt

for a site that will help you. See the Legal

Research Appendix for more information

on how to do this.

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