Nobody wants to imagine a situation in which he or she will be unable to manage his or her own finances or health care, but the reality is that as we age, many of us will need assistance with these deeply personal matters. For some people, dementia, mental illness, or other forms of disability may create a situation in which the individual becomes either a financial or medical hazard to him or herself. If the proper legal planning is not in place, a family member or hired professional may have to pursue conservatorship over the disabled person – an arduous and often contentious court proceeding that can be very expensive. On the other hand, if the individual in question has carried out thoughtful advance planning measures by creating powers of attorney for finances and health care, conservatorship proceedings may be avoided and the individual’s own wishes may be better enforced.
Conservatorship is a legal process through which a court appoints someone to be the conservator, a type of guardian, of the at-risk individual. It may be initiated by either the would-be conservator or by another party. Sometimes the court appoints a family member as conservator, whereas other times a professional, such as a lawyer or financial expert, may be appointed. The conservator holds full financial and/or health care rights over the at-risk individual, and the individual does not retain rights to control his or her own financial or medical affairs. The goal is that the conservator will control the individual’s risky behavior, such as gross overspending. Obtaining conservatorship over an individual requires clear and convincing evidence of disability, takes at least 45 days to complete (though some cases may drag on for years), and generally costs a minimum of several thousand dollars, though the expenses are often far greater. In general, conservatorship is a hassle for everyone involved. Conservatorship does, however, provide a method for controlling risky behaviors. In those cases where risky behavior is a factor, conservatorship is an appropriate and helpful course.
Sometimes the need for conservatorship cannot be foreseen or avoided, but in many cases it can be prevented if the at-risk individual has planned well for the future by creating powers of attorney. There are generally two types of power of attorney (POA): financial and health care. Through a POA, an individual names an agent of his or her choice to oversee his or her financial or medical matters. POAs are wonderfully flexible documents which can be tailored to the individual’s wishes. For instance, for her own convenience the individual may enable her agent to sign checks on her behalf even though she has the capacity to do so; on the other hand, she may have the financial POA written such that her agent only has check-signing authority in the event that she becomes incapacitated. POAs are generally quick and easy to obtain, private, cost-effective, and revocable if the individual changes his or her mind.
An individual who has been diagnosed with dementia, mental illness, or some other progressive physical or psychological condition would do well to create his or her POAs as soon as possible. He or she may have the documents drawn up in such a way that the agent has authority to act on his or her behalf immediately or once the condition progresses to the point of incapacity. A diagnosis of dementia does not prevent an individual from signing a POA as long as he or she experiences periods of lucidity, but it is important to act sooner rather than later and consult carefully with an attorney and medical professional to ensure that the legal standard of capacity is met.
The following chart illustrates the key differences between POAs and conservatorship.
|
POA |
Conservatorship |
| Private & informal | Public |
| Cost effective (usually about $450-$600) | Expensive, minimum of about 3000, plus annual costs |
| Individual chooses fiduciary (agent) | Court chooses fiduciary (conservator) |
| Individual (principal) and fiduciary share powers | Legal powers removed from individual and placed in conservator |
| Does not control risky behavior | Can control risky behavior |
| Requires legal capacity to create: does the person understand the nature and consequences of the act? (Note: dementia diagnosis does not prevent a person from signing a POA as long as the attorney, perhaps in consult with physician, determines that person is lucid at the time of signing.) | Requires clear & convincing evidence of disability: court determines person with a partial or full disability needs partial or full supervision, protection, and assistance; disability = mental illness, physical illness or injury, developmental disability, or other mental or physical incapacity |
| Medical evidence not required | Physician affidavit submitted and can be used as evidence |
| Customized & flexible – broad or limited, many variations to suit individual preferences | Rigid – all actions require court approval, but it should be the “least restrictive alternative” |
| Accountings and bond optional | Accountings and bond generally required every year |
| Convenient | Inconvenient |
| Anyone from any state can serve as agent | Requires a TN resident over finances, but not for CVS over person |
| Quick to obtain | 45 days to months/years of ongoing proceedings |
| Revocable by individual | Undo only with court approval |
In some cases, if the POA does not sufficiently limit the risky behavior of a disabled individual, conservatorship proceedings may still be necessary. However, with carefully written POAs in place, the individual maximizes the chances that he or she will retain some autonomy and control over his or her financial and medical affairs. For assistance with either generating a POA or handling conservatorship proceedings, contact the offices of Elder Law of East Tennessee. We can help you create financial and medical POAs that reflect exactly what you want, or we will gladly assist you with conservatorship proceedings for an at-risk loved one.
