Our Colorado Probate Lawyer’s Guide to Conservatorship

When a beloved family member falls ill or is in an accident, it can be shocking. Devastating. Overwhelming. Anyone who has dealt with a family member’s incapacitation can attest that it’s a surreal experience. If your loved one has fallen ill, is unable to make decisions for him/herself, and has no previous power of attorney set up, it may be necessary to petition a state court for a conservatorship.

You might be wondering: what is a conservatorship? Conservatorship is a situation in which a court-appointed conservator manages the financial affairs of a conservatee. What is a conservator? A conservator acts as the protector and administrator of their assets when a person is incapacitated or otherwise unable to make financial decisions. Conservators are usually appointed for individuals with severe mental disabilities or illnesses, which must be proven by evidence from a physician or psychiatrist. Thus, even without an estate plan in place, a family member’s assets can be protected until their death or recovery.

Both conservatorship and guardianship are legal arrangements in which a court appoints an individual to act on behalf of another person who is unable to manage their own affairs. The type of authority granted depends on what kind of help the individual needs.

A court-appointed conservatorship grants a conservator the authority to manage a person’s financial affairs. This role involves managing income, paying bills, handling investments, and overseeing business or property interests. Conservatorships are commonly used when an elderly person becomes incapacitated or when someone is unable to make sound financial decisions.

In some cases, a court-appointed conservatorship may also apply to minors. For example, in Colorado, a conservator must be appointed if a child inherits more than $11,000 or receives property or life insurance benefits. The conservator manages these assets until the child reaches the age of 21.

A guardianship, on the other hand, allows a court-appointed guardian to make decisions about a person’s personal welfare—such as their housing, medical care, food, and daily needs. The person under guardianship is called a ward. Guardianships are most often established for minors or incapacitated adults who can no longer make responsible decisions about their health or living situation.

The main difference between the two arrangements lies in the scope of authority:

• Conservatorship deals with financial management.

• Guardianship deals with personal care and well-being.

In some situations, both may coexist simultaneously. For instance, if Robert is in a car accident that leaves him in a coma, the court might appoint his wife as his guardian to handle his medical and personal needs. At the same time, his adult son serves as conservator to oversee his financial matters. Once Robert recovers, both the guardianship and conservatorship would end.

While these legal tools are designed to protect vulnerable individuals, they can become complicated or even contentious. Disagreements among family members or misuse of funds by a conservator or guardian can occur. Having experienced legal counsel helps ensure transparency, accountability, and the protection of the individual’s best interests—both personal and financial.

Conservatorship can only be petitioned by specific people who are related to or affected by the potential conservatee. The person to be protected by the conservatorship is, of course, allowed to petition. Similarly, their family can also be affected by the management, or mismanagement, of a person’s estate, and anyone who is affected can petition for a conservatorship of that estate. This means that, for example, an unmarried significant other who lives with the potential conservatee can also file a petition for conservatorship.

“(1) The following may petition for the appointment of a conservator or for any other appropriate protective order: (a) The person to be protected; (b) An individual interested in the estate, affairs, or welfare of the person to be protected, including a parent, guardian, or custodian; or (c) A person who would be adversely affected by lack of effective management of the property and business affairs of the person to be protected.” C.R.S.A. § 15-14-403

A petition for conservatorship is evaluated based on:

• Disability. The potential conservatee has a sufficient physical, mental, or developmental impairment that renders them unable to manage their own financial affairs. This must be verified by a medical professional.

• No Alternatives. No one has been selected and subsequently authorized to manage the disabled person’s assets, or there is such a person, but they are unwilling or unable to do so.

Both conservatorships and powers of attorney allow one person to make decisions on behalf of another, but they differ in the circumstances under which that authority is granted.

A power of attorney (POA) is a voluntary legal document in which an individual—called the principal—designates another person, known as an agent or attorney-in-fact, to make financial or medical decisions on their behalf. The principal must have the mental capacity to understand and sign the document when it is created. Powers of attorney can be broad or limited in scope and may take effect immediately or only if the principal becomes incapacitated.

A conservatorship, by contrast, is not voluntary. A court-appointed conservatorship is established when someone is deemed to be unable to manage their financial affairs. The court then appoints a conservator to take over those responsibilities.

In short:

• A power of attorney is a proactive measure, chosen and defined by the individual.

• A conservatorship is a reactive measure, imposed by the court when no such plan is in place—or when disputes arise about an individual’s capacity.

Because conservatorships involve ongoing court supervision and can be more restrictive, many people in Denver and Colorado Springs choose to establish a durable power of attorney in advance to avoid the need for future court intervention.

How to Avoid a Court-Appointed Conservator

The most common way to avoid having a court-appointed conservator is through a durable power of attorney, which authorizes an individual to manage the financial affairs of another in the event that they become disabled. A power of attorney can be as broad or as narrow in scope as desired. However, when there isn’t a viable power of attorney, or there is but there’s a dispute over the chosen person’s suitability, a court may be petitioned to appoint a conservator.

An individual has control over who may become their conservator. A living will, or a durable power of attorney, may name a desired conservator and is likely to be favored by the court as such, as long as they can perform the duties required.

If you have a close loved one who is unable to manage their own affairs, you may be considering becoming their conservator. Before taking on conservatorship, consider whether you can fulfill the requirements that come with it. 

What is Required of a Conservator

Being a conservator is time-consuming and often involves a long-term commitment. In most cases, a conservatorship lasts until the conservatee’s death. The position requires meticulous record-keeping, and as an officer of the court, you will be required to submit regular reports to the judge in your case.  In Colorado, the conservator is also required to provide annual reports on the disabled person’s estate. The court reviews the conservatorship separately, with the power to request evidence from anyone involved. Major decisions or transactions also require the court's approval.

Conservatorship also carries substantial liability for the protection of the conservatee. Mistakes and mismanagement are punishable and may require out-of-pocket compensation. If the problems are serious enough, the court may appoint a replacement conservator.

Conservatorship is a serious matter and is only undertaken when deemed necessary. If possible, the disabled person is involved in every decision made by a conservator. Despite oversight and the protective intentions behind a conservatorship, one appointed by a court may not have the agreement and harmony of everyone involved in the conservatee’s affairs; a court-decided conservatorship is essentially a “plan B” that takes effect when an estate is inadequately planned or managed.

Conservator Bonds are another way that conservatees are protected. A bond is a promise to perform the obligations of a conservator according to the court's will; it protects the conservatee from having their assets mishandled. When someone believes that assets are being mishandled, they issue a claim against this bond. Claims can be made for several reasons, including:

• misuse of funds

• theft

• fraud

• misrepresentation

• actions contrary to the conservatee’s wishes

• other similar allegations

Claims against bonds must be paid by the conservator or a surety company from which the bond was acquired. If the conservator can’t pay, the surety company will investigate the claim and pay it themselves. They will then seek reimbursement from the conservator. In this way, a bond differs from an insurance policy; instead of the bondholder paying a claim and expecting no recompense, the conservator is responsible for reimbursing claims paid by the surety company. Bonds are obligatory in most cases.

A famous (and bizarre) conservatorship case involved one of Hollywood’s most beloved actors and one of the last silent film stars, Mickey Rooney. In 2011, when Rooney was 90 years old, he voluntarily placed his estate into a conservator’s trust. He alleged that his own family was abusing him, stealing his money, and confining him to his home.

His family’s infighting was a familiar story in Los Angeles tabloids, and sources close to him were frequently appalled at the vulturous nature of their treatment of him. They allegedly physically beat him, stole his money, sold his possessions as paraphernalia, and withheld his medications to coerce him.

In this rare case, the conservator himself, Michael Augustine, said that Rooney was “completely competent” to make decisions, but acknowledged how important it was for someone else to control affairs for Mickey’s safety.

Filing for conservatorship, which Mickey did through his legal team, was ultimately a desperate attempt to protect himself from his own family by making it pointless to coerce him. In this case, a skilled legal team utilized conservatorship to do what was best for their client—and protect his assets. Having the right conservator made a world of difference for Mickey Rooney, actually enabling him to begin working again. With some irony, placing his estate in a conservatorship protected the money he would make, and he went on to act in the Night at the Museum series, appearing in the third film shortly before his death. He died in 2014 at the age of 93. Night at the Museum: Secret of the Tomb was dedicated to his memory.

Establishing a conservatorship is a formal legal process that begins with a petition to the court. The person seeking appointment—often a family member, close friend, or professional fiduciary—must show that the individual in question is unable to manage their own financial affairs due to incapacity, disability, or another limiting condition.

Step 1: File a Petition

The process starts when the petitioner files a petition for conservatorship in the county where the person needing protection (the proposed protected person) resides. If the potential conservatee is living in Denver, the petitioner would file in Denver County. For a Colorado Springs resident, the petitioner would file in El Paso County. The petition must include details about the person’s financial situation, the reasons conservatorship is necessary, and the petitioner’s qualifications to serve.

Step 2: Notify Interested Parties

After filing, the court requires that all interested parties—such as close relatives, caregivers, and, in some cases, the person themselves—receive notice of the proceeding. This ensures that everyone affected has an opportunity to agree, object, or provide input before the court makes a decision.

Step 3: Court Evaluation

In most cases, the court will appoint a visitor or evaluator to investigate the situation. This person may review financial records, interview family members, and assess the proposed protected person’s ability to manage their affairs. The evaluator then submits a written report to the court with recommendations.

Step 4: Court Hearing and Appointment

If the judge determines that the individual is indeed unable to manage their finances, they will issue an order establishing the conservatorship and appointing a conservator. The conservator must take an oath and may be required to post a bond to ensure they handle the estate responsibly.

Step 5: Ongoing Oversight

Once appointed, the conservator must file regular reports and accountings with the court, detailing how the protected person’s assets are being managed. The court continues to oversee the conservatorship to ensure the conservator acts in the person’s best interests.

A conservatorship can be modified or terminated if the protected person regains capacity, passes away, or if the court finds the arrangement is no longer necessary.

Because the very nature of conservatorship involves transferring control of assets, abuse is often a concern in Colorado. The conservatee is in a vulnerable position; being declared unfit for decision-making renders them effectively powerless to take charge of their own assets if they are indeed fit to do so.

The conservatee can petition the court to terminate the conservatorship. The court will require evidence that they are once again able to handle their own affairs, and this evidence should be strong since cases of this nature can be quite complicated (as in the case mentioned above). If a conservatorship is challenged, all parties involved are given notice.

“Notice of the hearing on a petition for termination of conservatorship must be served on the protected person, if then living, and all other interested persons, as defined by law or by the court pursuant to § 15-10-201(27), C.R.S., if any. Such hearing may be held pursuant to Rule 24.” Probate Procedure Rule 26, CO

There are a few ways to approach a conservatorship. Robinson & Henry can help you decide who to recommend as your loved one’s conservator, what they should be in charge of, and ultimately, lay out a plan for how best to handle your loved one’s assets going forward. We have experience in a myriad of legal practice areas and can help you manage even the most complex conservatorships.

In conclusion, it is crucial to make these arrangements carefully. The court ultimately decides who will be named conservator, and while it will do its best to choose an appropriate conservator and/or guardian, having a strong legal position will maximize the chances that their first choice and yours will be the same. Hire a probate attorney who will make every effort to understand your family’s unique situation and compassionately pursue what’s best for your loved one.

Book a case assessment online today with one of our experienced Denver and Colorado Springs, Colorado probate attorneys. You can also call 303-688-0944 to schedule your appointment to have your questions about conservatorship answered by our knowledgeable legal team.