Caring for aging parents, special needs children or other relatives can add new dimensions to your estate plan. There are various legal and financial issues that may need to be untangled in these situations. Establishing conservatorship or guardianship may be a necessary part of this process. While each of these terms have similarities, they can carry entirely different meanings and responsibilities. If you have questions about how your estate plan can be affected by conservatorship or guardianship, consider speaking with a financial advisor.
What Is a Conservatorship?
Before digging into the definitions of conservatorship and guardianship, it’s important to note that how these terms are used can vary from state to state. And different states can have different laws regarding when conservatorship or guardianship can be used and what range of powers and responsibilities are assigned to either one. The process for becoming a conservator or guardian for someone else can also vary.
With that in mind, conservatorship generally has to do with managing someone’s financial affairs on their behalf. Conservators are court-appointed individuals who can be called on to handle someone’s finances when that person is unable to do so because of illness, injury or because they’re otherwise incapacitated in some way.
Depending on the nature of the person’s financial situation and needs, you may be tasked with:
- Paying bills
- Managing investment accounts
- Paying health care-related expenses
- Managing debt payments
- Handling the receipt of government benefits, such as Social Security or disability benefits
In an estate planning scenario, you or your siblings might ask to be appointed as conservator of your parents’ financial accounts if they’re not able to manage them because of illness or reduced mental faculties due to aging. Or if you have an adult child or sibling with special needs, you may act as their conservator in managing things like government benefits and other financial accounts.
What Is Guardianship?
Guardianship is also a legal role that’s assigned at the court level. What’s different about guardianship is what the scope of duties involve.
While a conservator may look after someone else’s financial affairs, a guardian is typically more concerned with caring for that person’s day-to-day needs. For example, say that you’re a guardian for your aging parent. As their guardian, you may be responsible for things like:
- Deciding where they’ll live
- Helping them transition to assisted living or nursing home care if necessary
- Making decisions with regard to their health care
Legal guardianship can also apply in other situations. If you have minor children, for instance, you could draft a will naming one or more individuals to act as their legal guardian in the event that you pass away before they reach adulthood. In that case, a legal guardian might be responsible for making sure their needs are met, overseeing their education and making decisions relating to their health care.
Temporary guardianship may also be necessary in certain situations, such as an ongoing court case where divorcing parents are disputing custody. This type of guardianship usually has a fixed end date and can be replaced by a permanent guardianship order.
Conservatorship vs. Guardianship: Which One Do You Need?
Whether it’s necessary to establish a conservatorship, guardianship or both on behalf of someone else really depends on the details of the situation.
If you’re taking care of your parents as they get older, for example, it might make sense for you to act as both guardian and conservator if you’re an only child. On the other hand, if you’re sharing responsibility for their physical and financial care with a sibling, you may prefer for one of you to act as a conservator while the other acts as a guardian.
The person’s age and mental capacity also come into play. Typically, a conservatorship is reserved for situations where someone is physically or mentally unable to manage their finances. So this is something you may need if you’re performing financial caregiving tasks for an adult. Guardianship, on the other hand, can apply to both adults as well as minor children.
How to Become a Guardian or Conservator
There are two primary avenues to becoming a guardian or conservator. First, someone can appoint you to either role by drafting specific estate planning documents. For example, your parents could draft a financial power of attorney naming you as their conservator and a separate advance health care directive giving you guardianship powers. Or your sister might choose to name you as a legal guardian for your niece and nephew in her will.
The other avenue is to petition the court to be named as a conservator or guardian for someone else. Again, the process for becoming a conservator or guardian can vary from state to state. If you’re not sure how the laws work in your state, talking with an estate planning attorney can give you some perspective on what to expect.
It’s also important to know that the court can appoint you as a co-conservator along with someone else, depending on the circumstances. In that scenario, you and the other conservator would have equal say in financial decision-making.
In most cases, the court will try to name the closest family member possible to act in a conservatorship or guardianship role. But the court can also use discretion in naming people outside the family if they’re deemed to be the best fit for either role.
You should also be aware that as a conservator or guardian, the fiduciary standard may apply to any activities you carry out on behalf of someone else. Being a fiduciary means that you must act in the best interests of the person whose financial or personal affairs you’re managing. So if you’re overseeing their investment account, for example, you can’t engage in any trading activity that would benefit you personally.
The difference between conservatorship and guardianship centers primarily on what each is expected to do on behalf of someone else. It’s possible to become both a conservator and a guardian for a parent, child or another family member, though it’s important to understand what that involves since doing both could prove demanding.
Think about this as you’re creating your estate plan or helping your parents to create theirs. Have discussions around who would act as a conservator or guardian should either one become necessary. There are several signs that aging parents need help handing their finances, so you should be familiar with those.
Estate Planning Tips
- Consider talking to a financial advisor about what would happen to your assets if you became incapacitated and needed a conservator. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- When mapping out your own estate plan, consider what documents you may need. Paperwork like this could help you protect your investments and other financial accounts. For example, a will is important, but it may also be advisable to create a revocable living trust. A trust can offer protection against creditors while potentially minimizing estate taxes for its beneficiaries.
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