Conservatorship: Oops! … I Did It Again

The Britney Spears saga to escape the conservatorship that controlled her finances, personal life and medical decisions educated a whole generation of Americans to a highly complex legal framework that, in reality, is applicable to a very small percentage of the population.

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    Conservatorship: Oops! … I Did It Again

    Conservatorship: Oops! … I Did It Again

    The Britney Spears saga to escape the conservatorship that controlled her finances, personal life and medical decisions educated a whole generation of Americans to a highly complex legal framework that, in reality, is applicable to a very small percentage of the population.

    News stories were dominated by the alleged abusive practices of her father, the conservator of her financial estate and personal life, highlighting some very important issues that many lesser-known Americans face every day.

    Establishing a Conservatorship

    The legal presumption is that every adult is capable of making their own decisions. Of course, this isn’t always the case. Some individuals may not be capable of making basic financial and health-related decisions on their own due to mental illness or incapacity. These reasons alone may not be a sufficient reason for establishing a conservatorship, however. It must be determined that an individual is incapable of managing their financial and personal affairs; it is not enough that they may make decisions that appear to be foolish or irresponsible.

    The judgment that someone is incapable of making financial and personal decisions is made by a state court, and each state has different standards by which that determination is made.

    Should a court determine that an individual is incapable of administering their own affairs, a conservatorship is established by court order. A guardian is appointed by the court to make the necessary health care and nonfinancial decisions, while a conservator is appointed to take care of an individual’s finances.

    Abuse of Power

    One of the biggest challenges of a conservatorship is when the conservator acts unethically in the exercise of their powers. For instance, seeking reimbursement for phantom expenses or hiring friends to perform unnecessary duties and overpaying them.

    Family members may generally be considered a trustworthy conservator, but they are actually one of the more common sources of abusive practice. The financial powers are broad, and they can provide strong temptations to an adult child or sibling who has personal financial challenges or wants to accelerate their inheritance. The only way to remove an abusive guardian or conservator is by petitioning the court.

    Financial advisors can play an important role in helping clients side-step the dangers of a court-appointed guardian or conservator by encouraging individuals to be proactive about putting into place less restrictive and lower risk alternatives, such as a Power of Attorney or a revocable trust using a trustee that the individual trusts.

     

    Please reference disclosures: https://blog.americanportfolios.com/disclosures/

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