Hopefully, none of us will ever suffer an injury or illness that leaves us unable to manage our affairs or communicate our wishes. If that does happen and you do not prepare for such misfortune, your family will be faced with the traumatic task of petitioning the court to establish a conservatorship of your person or your estate or both.
What is a Conservatorship?
If the court decides that you are unable to manage your personal needs, it will appoint a conservator of your person. And if the court concludes that you are unable to manage your financial needs, it will appoint a conservator of your estate. Your family members will be called upon to testify in court about your inability to care for yourself, which will likely be painful for them. The emotional toll that a conservatorship hearing takes on the proposed conservatee's family cannot be overstated.
If the conservatorship is granted, the court takes away certain of your rights and liberties, and entrusts certain responsibilities to the conservator that it appoints, who will now make decisions and act on your behalf. Your conservator's actions will be subject to ongoing supervision and approval by the court.
How Can You Avoid Becoming a Conservatee?
There are 3 primary estate planning tools that you may employ to prevent having a conservatorship established for you if you become incapacitated:
Advance Health Care Directive - While you are legally competent, you may execute an Advance Health Care Directive (AHCD), which allows you to appoint a trusted family member or friend as your agent to act on your behalf with doctors, hospitals, etc. An AHCD allows you to document your wishes regarding life-sustaining treatment if your doctors conclude that you have no chance of recovery, which was one of the major plot points of 2011 Academy Award winner The Descendants. Your AHCD also permits you to document your wishes regarding burial or cremation, organ donation, etc.
If you become incapacitated without an AHCD in place, your court-appointed conservator will make these decisions for you after consulting with your family members. If your family members don't agree on major issues, such as whether to continue life-sustaining treatment, it could lead to serious acrimony between them. The prime example of such a conflict is Terri Schiavo, who remained in a coma for 15 years while her husband and parents fought a 7-year legal battle over her fate; and eventually their dispute triggered a very public, political battle in the U.S. Congress in 2005.
Durable Power of Attorney - While you are legally competent, you may execute a Durable Power of Attorney (DPA), which allows you to appoint a trusted family member or friend as your agent to act on your behalf with banks, insurance companies, etc. Again, if you become incapacitated without a DPA in place, your court-appointed conservator will make financial decisions on your behalf.
Revocable Living Trust - While you are legally competent, you may establish a Revocable Living Trust to hold, manage and distribute your assets, such as your home, bank and brokerage accounts, personal property, etc. Typically, you are the trustee of your trust, which gives you complete control of your assets as long as you still have mental capacity. Your trust should provide for one or more successor trustees to take over management of your assets when you are no longer able to do so due to incapacity or death. Although the agent under your DPA has legal authority to act on your behalf, the successor trustee of your trust is far less likely to encounter resistance from a bank or insurance company. On the other hand, your successor trustee is authorized to manage only the assets held in your trust, whereas the agent under your DPA is authorized to manage all of your financial assets, which is why the optimal estate plan includes both documents.
All estate planning is essentially an effort to insure that your wishes - financial and otherwise - will be respected when you are no longer able to communicate them personally. A well-designed estate plan also protects your dignity and preserves harmony among your surviving family members to the greatest extent possible. For these reasons, an Advance Health Care Directive, a Durable Power of Attorney, and a Revocable Living Trust are essential elements of a comprehensive estate plan.
Please contact me at 323.654.9513 or email@example.com if you would like to discuss any aspect of your current estate plan.
Brooks Paley, J.D., LL.M.