Estate planning attorneys are frequently contacted by family members or friends who are concerned about the well-being of a loved one. Sometimes a person has suffered a stroke or an accident, or has been incapacitated as the result of an illness, such as Alzheimer's or another form of dementia. Unfortunately, incapacity can impact anyone, and even the young can become incapacitated as a result of an auto accident, head injury or other medical condition.
What happens when a person is no longer capable of managing their own financial affairs or making medical decisions on their own? If the person has a comprehensive estate plan, including a durable power of attorney for financial matters and an advance health care directive, these documents will specify who will make financial decisions and medical decisions on behalf of the incapacitated person. If the person hasn't executed these estate planning documents, a petition for a conservatorship may be required.
When a person is incapacitated and can no longer manage their affairs, a family member or a concerned friend may petition the court to appoint a conservator to protect the incapacitated person. The conservator may be a family member, friend or business associate, or may be a professional conservator or institution. Many people are appalled at the thought of a complete stranger making decisions for them, but failure to properly plan can result in the appointment of someone you have never met being appointed as your conservator.Conservatorship Litigation is Increasing in Frequency
Other articles on our website provide a comprehensive explanation of the conservatorship process and the importance of having your estate planning documents in order. This article will focus on one of the most contentious areas of trust and estate litigation; conservatorship litigation. Conservatorship litigation is often cited by trust and estate litigators as the fastest growing area of litigation; people are living longer, but at some point they may become incapacitated and require a conservator.
There are many reasons why a conservatorship might result in litigation. Anytime that another individual is given access to another person's finances or in charge of overseeing the care of another person, such as in a conservatorship, there is bound to be someone who will question the actions of the conservator. Conservators are held to a fiduciary standard of care, and anyone acting as a conservator must be aware that their actions are subject to constant scrutiny.
Conservatorship litigation often arises when:
- Someone contests the appointment of a certain conservator
- Someone believes that the appointment of a conservator is not necessary
- There is a challenge to a conservator's accounting or allegation that the conservator is not managing the conservatee's finances properly
- There is an allegation that a conservator has breached their fiduciary duty to the conservatee
- There is an allegation that the conservator has mismanaged or misappropriated funds from the conservatee
If an incapacitated person does not have a reliable family member or friend who is willing to serve as conservator, a professional conservator may be appointed by the probate court. A professional conservator is an individual or entity that is in the business of managing the affairs of those who are incapacitated. Professional conservators are entitled to fees for their services as well as reimbursement for any costs incurred on behalf of the conservatorship, and these fees and costs are paid for out of the estate of the conservatee. Professional conservators are paid well, and their fees generally run from $100-150 per hour.
Conservators, whether they are professional conservators or a family member or friend of the conservatee, are required to submit detailed accountings to the court on an annual basis for the entire duration of the conservatorship. Conservators are also required to submit a petition requesting fees for approval by the court before paying themselves for their services. This supervision by the probate court is supposed to protect the interests of the conservatee and ensure the safety and security of the conservatee's finances.
In 2005, reporters for the Los Angeles Times wrote a scathing series of articles about professional conservators. Professional conservators are licensed by the Professional Fiduciaries Bureau administered by the Department of Consumer Affairs (formerly the Statewide Registry of Private Conservators, Guardians and Trustees). The series of articles highlighted numerous cases of wrongdoing on the part of professional conservators, including cases where the conservatee was left destitute after the conservator misappropriated all of the conservatee's funds.
The articles in the Times highlighted the need for increased supervision and protection of conservatees. According to the reporters from the Times, an examination of court cases revealed that since 1997, there were at least 2,400 conservatorship cases involving incompetence, neglect and even theft by conservators that went unnoticed by the probate courts. It is important to note that these cases also involved wrongdoing by conservators who were family members or close friends of the conservatee, not just professional conservators. The size of the estate was irrelevant; small estates were as likely to be purged as larger estates.
San Diego County has had its share of litigation involving professional conservators. One article highlighted the case of a professional conservator in San Diego who was appointed by the San Diego Probate Court to manage the estate of an elderly woman with dementia. The woman had maintained a frugal lifestyle and managed to save $1 million to provide for her needs for the rest of her life. The professional conservator immediately gave $500,000 to her son to invest on behalf of the conservatee. The professional conservator's son was a former car salesman with no prior experience as an investment consultant, and he promptly lost $400,000 of the funds on poor investments.Conservatorship Litigation Requires Experienced Legal Representation
Conservatorship litigation is a specialized area of litigation that requires a thorough understanding of conservatorship law and effective trial advocacy skills. If you have a loved one who is subject to a conservatorship, or if you are a conservator who is seeking to defend the appropriateness of your actions, contact the experienced conservatorship litigation attorneys at Pinkerton & Doppelt.