What can Britney Spears teach us about conservators and guardians?

Though the terminology may vary from jurisdiction to jurisdiction, in general, and for the purposes of this article, a conservator is an individual appointed or approved by the court to engage in the handling of a person's financial affairs. Conversely, a guardianship will refer to an individual approved to handle another person's physical health and safety.

Both a conservatorship and a guardianship can apply to both minors who are without parental figures or adults who have been deemed incapacitated. Incapacity is a legal concept that can be loosely defined, for purposes of a conservatorship or guardianship, to describe a person who is incapable of possessing a certain minimum baseline ability to make decisions concerning either or both their personal care and safety or their finances. When a person is deemed to be incapacitated, the court may appoint a conservator and/or guardian to stand in the protected person's shoes to make these decisions are made on their behalf.

In most states, the conservator's ability to exercise dominion over the ward's health or financial decisions can range from a grant of authority to exercise full and complete control or may be limited in scope based on the specific needs of the person. Likewise, the court-ordered relationship can either be temporary or permanent, depending on the circumstances.

Let's explore some common questions about conservatorships and guardianships to provide a more complete explanation of the inner-workings of the role. Then, we'll identify some key estate planning solutions that people might employ to reduce the risk of a guardianship or conservatorship when planning for themselves or their family members.

In the case of minors, the parents of a child may name someone to raise the child if both parents pass away before the child becomes an adult in their last will and testament.

In the event a guardian is not named by the parents, either because the parents did not have a will or because the parents failed to designate a guardian in a will, a judge will decide who will raise the child. This decision will obviously need to be made without understanding the preferences of the parent. Without the assistance of the parents' written will, the court will be left to look to the closest relatives of the child, despite the potential that this may be contrary to the parents' wishes.

Like a conservatorship or guardianship related to an incapacitated adult, the minor's guardian will make all financial and health care decisions for the child in place of the parents.

In the case of minors, the parents of a child may name someone to raise the child if both parents pass away before the child becomes an adult in their last will and testament.

Upon a petition to appoint a guardian or conservator, the court will make a determination as to who the most appropriate and fit party is who is both willing and able to serve. This is often family members, but it can also be any other willing party. In some cases, a third-party neutral corporate guardian or conservator may be appointed for a fee.

In the event that a conservator would predecease the protected person, the court will often look first to the will of the conservator to see if they may have indicated a successor to their position. If a successor has not been designated, the court will either look to family members or corporate guardians to assume the role.

It may come as a surprise to many that the court's decision to appoint or remove a conservator is often not based to any large degree on the protected person's personal preference. As the result of the Spears case, some lawmakers are seeking to carve out an ability for a protected person to petition the court for the appointment of a third-party guardian when they are dissatisfied with the services of the conservator. Currently, however, the laws of most states don't consider the protected person's dissatisfaction to be paramount in a court's decision-making to remove a conservator.

The court's approach seems unreasonable to many people. After all, it would seem that the protected person should have someone handling their assets whom they like and whom they trust.

Much like the case of a trustee serving a trust beneficiary or an agent under a power of attorney, a conservator owes a fiduciary duty to the protected person. That is, generally, a conservator has an obligation as act in the best interests of that person and to carry out their duties reasonably and prudently.

Self-dealing behavior, such as using the protected person's assets for personal purposes or borrowing assets, is universally prohibited. Likewise, imprudently investing or managing the assets is ordinarily also trigger a breach of the fiduciary duty.

Often, state law will provide for some manner of judicial review when the protected person or any person associated with that person alleges that a conservator or guardian is mishandling the assets that they are responsible for.

Usually, these claims will result in a hearing where the court will review the inventories created by the conservator and all other modes of record keeping. If a court finds that the conservator has acted improperly or has otherwise failed to keep record of their activity, the court may order that the conservator be removed, or may penalize them with a surcharge.

The problem is that impropriety may be exceedingly difficult to prove despite the duty to keep accurate records. Transactions could be hidden or could be so complex so as to not be readily apparent based on a review of the records.

Though there is more than enough opportunity for a conservator to take advantage of the system, the existence of the above-mentioned safeguards may reassure families that their loved one is not being taken advantage of. It is true that these safeguards can be very helpful to provide redress in the event of impropriety and self-dealing. However, it is by no means a perfect system.

Any person can be the subject of a conservatorship or guardianship. Fortunately, there are ways that a person can minimize the risk that unscrupulous people might take advantage of them or their children through the use of a couple of important estate planning tools.