The Cost of a Conservatorship Can Be Substantial
In order to establish a conservatorship, it will likely cost you (the incapacitated person) tens of thousands of dollars in the first year. This is because the person seeking to assist you (the proposed conservator or other person) needs to hire an attorney, and if a conservator is appointed, they will have the ability to seek reimbursement for attorney's fees incurred in having a conservator appointed for your benefit. Any costs incurred (filing fees, etc.) will also be paid out of your assets if a conservator is appointed.
But that's generally not the only attorney involved in these proceedings. In most cases, the court will appoint an attorney for you (the incapacitated person), and that person will have a right to seek attorney's fees paid from your assets, whether or not a conservator is ultimately appointed. This attorney is appointed to pursue your wishes in the matter—perhaps opposing the conservatorship.
In addition, the court will appoint a separate person, typically an attorney, to act as your Guardian ad Litem, which is a person that the court appoints to make a determination as to what is in your best interest, regardless of what you wish to occur. This person will also have a right to seek compensation from your assets, whether or not a conservator is ultimately appointed.
If a conservator is appointed, they will have a right to seek compensation for any time they spend assisting you, and they, too, will have an attorney that will also have their fees paid out of your assets.
The worst part about a conservatorship is that even if you did not need a conservator, or if you die prior to a conservator being appointed, your assets are still charged a substantial amount of money—yet you would receive no benefit.
Once a conservator is appointed, it does not end there. If you have a conservator of the person only (i.e., for medical decisions because you have no assets to be managed in a conservatorship), then there may be periodic requests for compensation to the court to the extent you have a source of assets to pay for such compensation. Other than this, there would be few other expenses because, in such a case, you are unlikely to have any other assets.
If you have a conservator of the estate appointed (for financial decisions), then after the first year, the conservator must prepare and file a formal accounting with the court, and every other year thereafter. This means that there are ongoing costs every year which bring little value to you, other than peace of mind that your assets have been managed properly—but these accountings are required by law.
If your expenses exceed your income, then the conservator will need to petition the court to liquidate your assets, thereby increasing the attorney's fees and conservator compensation for obtaining such relief.
If these ongoing expenses were not bad enough, it is important to note that the conservator is also required to post a bond in an amount that exceeds the value of your assets—which is there to protect your assets in the event the conservator absconds with your assets—but the premium on this bond is paid out of the assets of your estate.
Unfortunately, many people initiate conservatorship proceedings without really understanding the cost, and people simply disregard the real value in having an estate plan in place.
Now, it is also important to understand that an estate plan will not preclude the appointment of a conservator—it merely acts as a vehicle to assist in avoiding the necessity of a conservator. We have had many cases where a person had an estate plan but, due to significant family conflict, the estate plan is simply disregarded (or set aside) to protect the incapacitated person.
There are additional measures that can be taken to avoid conflict—one of the most common is simply discussing your estate plan with your family members. Another is to appoint a neutral third party to serve in certain roles to minimize familial conflict. Depending on your specific situation, you might have additional or alternative options, but it is best to discuss those potential options with a licensed attorney to understand the risks and benefits of each course of action.
You may also be interested in:
- Conservatorships Generally Eliminate Informal Estate Planning Mechanisms
- How Long Does a Conservatorship Last?
- What is a Conservatorship, and Do I Need One?
- Estate Plan Essentials That Could Save You Tens of Thousands in Your Lifetime
- My Parent Needs a Power of Attorney—Can I Have it Prepared for Their Signature?
- What is an Estate Plan?
- Why Should I Have an Estate Plan?
- Why Should I Use an Attorney Versus a Document Preparation Company?