Managing Your Finances through Conservatorship
Wisconsin Guardianship Support Center
CWAG Elder Law Center
2850 Dairy Drive, Suite 100
Madison, Wisconsin 53718-6751
Attorney Michele Hughes
What is Conservatorship?
If you feel that managing your finances has become increasingly difficult or burdensome because of disability or other reason, you may want to consider asking a court to appoint a conservator on your behalf to manage your finances. Conservatorship is a court-supervised system in which you voluntarily agree to allow another individual of your choosing to manage your estate. In a court proceeding, a judge will determine whether the individual you have chosen to be your conservator is suitable, and if so, appoint the individual to manage your finances. A conservator must file an initial inventory of all of your assets with the court. He or she must also file an annual accounting where he or she reports your income and expenditures to the court. The court may require the conservator to post a bond to protect you against theft or mismanagement.
What are Some of the Reasons People Seek a Conservatorship?
One of the most important advantages of conservatorship is that, unlike guardianship, the judge will not find you incompetent. There is no need for you to be evaluated by a physician or psychologist. In a conservatorship, you do not lose fundamental rights such as the right to vote, marry, contract, or obtain a driver's license or other state license, which you might lose if a court appointed a guardian of the person and estate over you, and did not limit the guardianship. In a conservatorship, the court will only inquire into two matters: 1) do you desire a conservator; and, 2) is the conservator you have chosen suitable. If the court is satisfied that the answer to both questions is yes, it will appoint your chosen conservator to manage your finances. Other advantages to conservatorship include:
- Guardianship proceedings can be contentious. Family relationships may become strained due to the difficulty of determining whether you need guardianship, as well as who should be your guardian.
- Guardianship proceedings can be costly, especially if the guardianship becomes contested.
- In a guardianship, you would have much less control over the decision of who your guardian is. In a conservatorship, you choose who your financial decision-maker will be, whereas in guardianship of the estate, the court will merely consider your choice of guardian as one factor, along with the opinions of your family, the evidence, and the parties' attorney's recommendations in making a best interest determination of who the guardian will be.
- If you decide that you no longer want to be under conservatorship, you may apply to the court at any time to terminate the conservatorship. The court must grant this request unless it is clearly shown that you are incompetent. Terminating a guardianship is much more difficult.
- A conservatorship helps insure that the individual you have chosen will use your assets on your behalf, since the conservator is accountable to, and monitored by the court.
What are the Disadvantages of Seeking a Conservator to Manage your Assets?
There are court and attorneys fees needed to establish a conservatorship. Your conservator also may receive court approval to charge you for his or her services for managing your finances. There are less expensive ways to obtain assistance in managing your estate. These options include:
- Executing a power of attorney for finances. Many individuals complete a power of attorney for finance document, in which an individual names a person as agent to manage his or her finances. The agent is usually a family member or close friend who is chosen because the principal (the person executing the document) trusts the chosen agent to act responsibly. An agent is a fiduciary, which means that the agent must act in accordance with the requirements of the power of attorney document, and not convert the principal's assets for his or her own use or for the use of others. In a power of attorney for finances document the principal may specifically require the agent to account periodically to another family member or friend as a safeguard. A power of attorney for finances document may be "durable" by containing provisions that the agent's authority remains in effect even when the principal becomes incompetent. The widespread use of power of attorney for finances documents has largely replaced the need for conservatorshipproceedings.
- Establishing a Revocable Living Trust. A trust is a written agreement that allows a person you choose, called a trustee, to manage your property. You may place all or some of your money in the trust, and add to it at any point in time. You decide what authority to give the trustee through specific property management provisions in your trust. You will also name one or more beneficiaries who will receive the residual trust funds after you die. You may avoid the need for appointment of a guardian of the estate or a conservator through a revocable living trust. However, if you become incapacitated and do not have all of your money in the trust, you will need a power of attorney for finances document that allows the agent to place your assets into the trust. Thus, many individuals who have a trust also execute a power of attorney for finances. It is advisable to contact an experienced elder law attorney to assist in drafting the terms of the trust.
- Creating Power of Attorney Bank Accounts. You may wish to create a power of attorney bank account with another person. A power of attorney bank account allows the person you choose complete access to funds you place in the account. The other person acts as your agent, and can only use the funds on your behalf. The agent is not considered an owner, nor will the agent inherit the money left in the account when you die. If you want the agent to inherit, consider adding a "POD" (payable-on-death) feature.
- Representative Payee. You may voluntarily choose to allow another person to be your representative payee if you are, for medical reasons, unable to manage your Social Security,Railroad Retirement or Veteran'sBenefit funds. If you have limited assets and only this type of income, a representative payee may be sufficient for all your money management concerns, even if you become incompetent.
When Is Conservatorship Right for Me?
Even though less expensive and more flexible planning options than conservatorship are available, conservatorship may nonetheless be right for you. You may have no close family, and might hesitate to choose a person such as a neighbor or distant relative to manage your funds without court supervision. Many agents under power of attorney for finance documents steal the principal's money, despite the principal's careful planning and considered choice of agent. Some individuals may even have concerns about appointing a family member as agent under a power of attorney for finances document and would prefer to have the family member accountable through the court system, and possibly be required to file a bond as insurance against theft.
Another reason a person may seek conservatorship is when there has been a history of distrust and disagreement amongst family members, especially about financial matters. In a common scenario, siblings in a family disagree about the way a parent is choosing to spend his or her money. If the relationships are seriously strained, one adult child may file for guardianship despite the parent having chosen another adult child as agent under a power of attorney for finances document, thereby possibly nullifying the parent's choice of financial decision-maker. In this situation, the individual may avoid having a guardianship imposed by choosing a court appointed conservator.
Conservatorship is likely not a good option for you if wish to continue making many of your financial decisions. Under the conservatorship law, it is uncertain to what extent you retain authority to make financial decisions. Additionally, court decisions have not completely resolved the issue of how much authority you retain to manage your finances. In one decision, the Wisconsin Supreme Court held that a conservatee is not considered completely incapable of looking after his or her own property and can gift his or her property where both the conservator and the court do not object. However, in another decision, a Court of Appeals held that a conservatee's transfer of a home to another family member was void even though the conservatee was competent at the time of the transfer, because the conservatee did not have authority to dispose of his or her property without the conservator or court's approval. Thus, if you wish to continue to make some of your own financial decisions without obtaining the conservator's approval, a conservatorship is not the best option for you.
What Are the Procedures for Filing for Conservatorship?
To begin the process of conservatorship, you must file a petition. A filing fee is required to be filed at the time the conservator files the inventory. This fee is $20.00 if your current estate's value is less than $10,000, or 0.2% of your gross estate if your estate is larger than $10,000.
After filing the petition, the court will set a time and place for the hearing and determine who should receive notice of the hearing. At the hearing, the court will personally ask you questions. If he or she is satisfied after questioning you that you desire a conservator and that the person you have nominated is suitable, the court will issue letters of conservatorship to the nominated person.
Most individuals seeking conservatorship retain an attorney to assist them with these procedures.
What Are the Responsibilities of a Conservator?
The powers and duties of a conservator are the same as the powers and duties of a guardian of the estate. These general duties are set forth in Chapter 880 of the Wisconsin Statutes.
Some of a conservator's duties include:
- Filing an initial inventory of all of your assets with the court within six months of appointment.
- Filing an annual accounting to report your income and expenditures to the court.
- Posting a bond when required by the court.
- Protecting and preserving your assets.
- Carrying out his or her fiduciary responsibilities to exercise good business judgment and common sense.
- Using your property and income for you, your spouse and dependent family member's suitable education, maintenance, and support.
- Collecting your income and paying your debts.
- Hiring professionals such as lawyers and CPA's, where necessary.
- Applying for public benefits such as AFDC, SSI or Medical Assistance.
- Obtaining court permission to sell real estate.
- Petitioning the court to place assets in an already established revocable living trust.
A conservator may not:
- Loan any of your funds to him or herself unless you wish to loan him or her money and the court approves.
- Purchase your property without following specific statutory guidelines and obtaining court approval.
- Use any of your money or property for his or her personal needs unless you want him or her to and either you or your conservator obtain court approval.
- Make gifts of your money or property.
Can a Conservator Make Health Care Decisions?
No. In Wisconsin only an agent under a power of attorney for health care or a guardian of a person can make health care decisions on behalf of an incompetent or incapacitated person. Thus, it is important that in addition to financial planning through conservatorship, a power of attorney for finances document, a living trust, or other means, you complete a power of attorney for health care document. In this way, you can avoid the need for a guardian of the person to be appointed. Free forms are available by calling the number listed below.
When is a Conservatorship Terminated?
You may apply to the court at any time to terminate your conservatorship. The court will set a hearing date, and require that 10 days notice by mail be given to your guardian, if any, your conservator and your presumptive heirs. The court must remove your conservator and order your property restored to you unless it is clearly shown that you are incompetent. If the court determines, after hearing that you are incompetent, the court may: 1) order the conservatorship continued; 2) appoint a successor conservator of your choosing, if the court finds that the successor conservator is suitable; or 3) direct that guardianship proceedings be commenced. If you desire, you may also nominate a successor conservator, which the court may appoint if suitable. The conservator must provide a final accounting to the court before being dismissed. If the conservatorship continues, a conservator's authority ceases upon your death.