Our Colorado Probate Lawyer’s Guide to Conservatorship: Protecting the Estate
Protecting the Estate: Colorado 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.
Conservatorship is a situation where a court-appointed conservator manages a conservatee’s financial affairs. When a person is incapacitated, or otherwise unable to make financial decisions, a conservator acts as the protector and administrator of their assets. 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 with no estate plans in place, a family member’s assets can be protected until their death or recovery.
Conservator vs. Guardian
A conservator typically only controls a conservatee’s estate; when a court grants command over a person’s self, to take charge of that person’s daily activities, it is typically called guardianship, and the person under guardianship is called a ward. Guardianship is most common when dealing with minors. Conservatorship, on the other hand, is most often utilized for elderly persons approaching the end of their natural lives who are entering, or have already entered, a state of mental illness or disability that prevents them from lucid functioning.
For example, Robert is in an auto accident which leaves him in a coma, unable to make decisions. He cannot pay the mortgage for his house, where his wife lives. He cannot manage the substantial insurance payout he is due after the accident, nor can he pay the contractors working on an ongoing office remodel. His wife is appointed as his guardian (as she is qualified to take care of, and is trustworthy with, his welfare and health needs), but his adult son is appointed conservator, since he is familiar with his father’s financial matters already and is recommended by family. They serve the court on Robert’s behalf for six months, until he awakens from the coma. At this point, both the guardianship and the conservatorship are no longer needed, so are terminated by the court.
That’s a pretty smooth example, but guardianship and conservatorship can be complex matters. Unfortunately, they often result in abuse of the conservatee or ward. Family members or “friends” who are appointed conservators often embezzle from conservatees. Other times, families have intense disagreements among themselves on how assets should be managed.
Having well-informed legal representation who understands your family member’s estate and their medical situation is the defense against them being taken advantage of by anyone. It allows for more careful, thoughtful, and prepared control of these important assets.
When a Conservator is Needed
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. So is their family—interestingly, however, anyone who is affected by the management, or mismanagement, of a person’s estate can petition for a conservatorship of that estate. This means that, for example, a live-in significant other (who is not married to the potential conservatee) could file a petition for conservatorship as well.
“(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 sufficient physical, mental, or developmental impairment that the person cannot 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. 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 of them becoming disabled. A power of attorney can be as wide 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 his or her conservator. A living will, or a durable power of attorney, may name a desired conservator, and are likely be favored by the court as such—as long as they are able to perform the duties required.
Should I Become a Conservator?
If you have a close loved one who is unable to manage their own affairs, you may be considering becoming their conservator. Before taking conservatorship upon yourself, you should consider carefully if you can fulfill what would be required of you. It requires careful record keeping, and as an officer of the court, you will be required to make regular reports to the judge in your case. This will be time consuming, and is also a long commitment—conservatorship, in most cases, lasts until the conservatee’s death. Conservatorship carries with it a substantial liability, as well; for the protection of the conservatee, mistakes and mismanagement are punishable, may require out-of-pocket compensation, and if the problems are serious enough, a replacement conservator could be appointed if the judge deems it appropriate.
Conservatorship is a serious matter, and only undertaken when deemed necessary. If possible, the disabled person is involved in every decision made by a conservator. In Colorado, the conservator must also provide annual reports on the disabled person’s estate, and the court reviews the conservatorship separately, with the power to request evidence from anyone involved. Major decisions or transactions also require approval of the court.
Despite oversight and the protective intentions behind a conservatorship, one appointed by a court may not have the agreement and harmony of everyone involved with the conservatee’s affairs; court-decided conservatorship really is 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 conservator according to the will of the court; it protects the conservatee from having assets mishandled. When someone believes that assets are being mishandled, they issue a claim against this bond. Claims can be made for several reasons: Misuse of money, theft, fraud, misrepresentation, going against the conservatee’s wishes, and other similar allegations.
Claims against bonds must be paid by the conservator, or a surety company the bond is acquired from. 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 is different from an insurance policy; instead of the bond-holder paying a claim and expecting no recompense, a conservator is responsible for paying back claims paid by the surety company. Bonds are obligatory in most cases.
The Tragic Tale of Mickey Rooney
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 had his estate placed into a conservator’s trust voluntarily. He alleged that his own family was abusing him, stealing his money, and confining him to his home.
His family’s infighting was a common story in Los Angeles tabloids, and sources close to him were frequently appalled at the vulturous nature of their treatment towards him. They 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, it was a skilled legal team that used 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, and actually enabled 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 93 years old, and Night at the Museum: Secret of the Tomb was dedicated to his memory.
Terminating a Conservatorship
Because the very nature of conservatorship involves transferring control of assets, abuse often occurs. 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, everyone involved is 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 and 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 conservatorship.
It is important to make these arrangements carefully. The court has the ultimate choice over who will be named conservator, and while they will do their best to choose an appropriate conservator and/or guardian, having a strong legal position will maximize chances that their first choice and yours will be the same. Get an attorney who will make every effort to understand your family’s unique situation, and who will compassionately pursue what’s best for your loved one.
Robinson and Henry’s skilled probate attorneys are standing by to answer your questions about conservatorship—give us a call at 303-688-0944 to schedule an assessment today.