Protecting Yourself: How to Avoid a Court Conservatorship With a Little Planning

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Most of us think of estate planning as something that doesn’t matter until we’re dead.  But a good estate plan takes into account the possibility that you may someday be unable to care for yourself.  Commonly, old age diminishes us.  But incapacity can also happen to younger people who are injured or become ill unexpectedly.  That risk of incapacity lurks for us all.

The law provides judicial procedures for creation of a conservatorship and appointment of conservators for incompetent adults.

What is a Conservator?  A conservator is a person appointed by a court to manage the estate of a protected person who has been judged incompetent.  In California, a representative appointed on behalf of an adult is called a conservator.  A representative of a minor is called a guardian.  California recognizes two kinds of conservatorships: those of the person and those of the estate.  Typically, the same conservator acts over both the person and the estate.  Conservators must file a bond, account to a court, and obtain court approval for sales, investments and distributions.  Trustees are freer from court control.

A living trust can avoid a conservatorship.  Nothing lasts forever.  If you become incapacitated, someone needs to be able to take over your finances – from paying bills to filing your tax returns. The advantage to an older or ill person is that a living trust eliminates the need for an expensive and possibly embarrassing court proceeding.

How it’s done:  In your living trust, you designate a successor trustee who assumes responsibility upon defined circumstances, such as whenever a physician certifies that you are no longer capable.  This can avoid the expense and embarrassment of judicial proceedings to have you declared incompetent.

Whomever you name must be a person in whom you have absolute trust. If you become incapacitated, this is the person who will manage the assets for you.  Generally, this successor trustee will have the same powers to manage your assets as you would were you not incapacitated.  If you have reservations about your successor trustee, but he or she is the best nominee, you may consider naming co-trustees to share the responsibility.

Conclusion:  If you become disabled, life must go on.  Bills will have to be paid.  Your business will have to carry on.  Your property will have to be managed.  Knowledgeable estate planners prefer trusts to conservatorship for incompetent adults.  Advance planning for financial decision-making is the most effective means of ensuring that your wishes will be followed if you become incapacitated.  And it avoids burdening those closest to you with a daunting judicial proceeding.

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