What Is a Conservatorship?
A conservatorship is the legal establishment of a court appointed manager for the personal and financial affairs of someone who is legally incapacitated, also referred to as a ward.
The ward may be physically or mentally incapacitated, or be a minor. Once appointed, the conservator is responsible for overseeing the finances, living arrangements, and physical care of that person.
How a Conservatorship Works
In the case of an individual, such as a minor child or someone who is mentally or physically disabled, conservatorship is typically determined and ordered by a probate court judge of the state where the ward resides.
In the case of physical or mental incapacity, determination must be made by a psychiatrist or psychologist (in the case of mental incapacity) or a physician with related expertise.
Once appointed, the conservator’s performance will be monitored on a regular basis by the court. This will include review of the conservatorship’s financial accounts to ensure that the conservator is abiding by the conservatorship laws of that particular state.
Conservatorship can also apply to companies or organizations. During the financial crisis of 2008, the Federal Government appointed the Federal Housing Finance Agency (FHFA) as conservator for the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) in order to backstop the U.S. housing market. In these instances, the conservatorship is seen as temporary and is facilitated by a regulatory or statutory (governmental) authority.
Victoria’s elderly aunt, Joan, is showing clear signs of early dementia. However, Joan has no spouse, children, or immediate family. Victoria consults with an attorney, who files a petition with the local probate court to create a conservatorship and appoint Victoria as conservator. Victoria’s attorney provides suitable documentation from Joan’s doctor that she is indeed suffering from progressive dementia and her capacity to take care of her own day-to-day needs is severely diminished.
Upon her appointment, Victoria assumes control of her aunt Joan’s financial affairs which includes paying her bills, keeping up Joan’s house, and arranging for a sitter and home health nurse to look after her aunt. A court investigator will monitor and evaluate Victoria’s performance as conservator on an annual basis by observing her Aunt Joan’s care as well as reviewing her financial records.
How to Get Conservatorship
As discussed above, conservatorship can be applied to both individuals and organizations. In the case of an individual, conservatorship can only be established via court order. The court must be petitioned on behalf of the individual in question by an interested party.
In the case of an organization, the government or a regulatory body appointed by the government steps in. However, the authority granted to the conservator is temporary.
Conservatorship vs. Guardianship
While these terms are often interchangeable, they are different in legal definition. A guardian is appointed to direct the physical and medical care of a person with determined, limited capacity.
A conservatorship, however, is the appointment of a person or institution designated specifically to manage the financial affairs of an individual who is incapacitated, a minor, or an older adult with limited capacity.