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Probate and Planning

Conservatorship and Guardianship

What Is Conservatorship and Guardianship?

Conservatorship and guardianship typically result from court proceedings in which the court appoints someone (a “conservator” or “guardian”) to manage another person’s financial affairs or personal care decisions. Generally, those proceedings are permitted only when a person becomes so incapacitated or impaired that he or she is unable to make financial or personal decisions, and has no other viable option for delegating these duties to another (e.g., through a durable power of attorney, living trust, or some other means). Using these standards, conservatorships or guardianships might be established for people who are in a coma, suffering from advanced stages of Alzheimer’s disease, or have other serious injuries or illnesses.

Under Minnesota law, conservatorships and guardianships are used to appoint a person when an individual is unable to make personal decisions or is unable to meet his or her financial needs, even with appropriate technological assistance. The court orders the appointment of a person (a “conservator” or “guardian”) to act as a decision maker for another person (the “protected person” or “ward”). A court must base this decision on clear and convincing evidence that the protected person or ward has been found to be unable to make necessary decisions on his or her own behalf. Once a court makes a finding of incapacity or impairment, the person no longer has the right to manage his or her affairs until proven capable.

What Is the Difference Between a Conservatorship and a Guardianship?

A conservator is appointed to make financial decisions for a protected person. The conservator typically has the power to collect all the conservated assets, pay bills, make investments and perform other financial functions, as well as engage in estate planning, including the right to amend or revoke the protected person’s will. However, the conservator must seek court approval for transactions such as the purchase or sale of real property, gifting of assets, or engaging in estate planning for the protected person.

A guardian is appointed to perform duties related to personal care, custody, and control. The guardian has the authority to make decisions such as where the ward will live and what medical treatment they will receive.

What Are the Duties of a Conservator?

Within 60 days after being appointed, a conservator must inventory the protected person’s estate, including any real estate, furniture, clothing, mortgages, bonds, notes or debts, and any other personal property. Thereafter, the conservator must file an annual accounting with the court showing, in detail, all property received and disbursed, and listing all property on hand. The conservator must pay for the support, maintenance, and education of a protected person, using government benefits when available; pay the protected person’s debts; and manage the protected person’s estate. Often the conservator must also post a bond—a kind of insurance policy that pays if the conservator steals or misuses property. The conservator may also have to receive court approval for certain transactions, such as selling real estate or making slightly risky investments. A conservator’s duties terminate at death or upon order of the court.

What Are the Duties of a Guardian?

A guardian has the duty to assure that provisions have been made for the ward’s care and comfort, including food, health care, and social requirements. Whenever possible, the guardian should meet these needs through governmental benefits or services to which the ward is entitled, rather than from the ward’s estate.

A guardian has the power to give consent to enable the ward to receive necessary medical or professional care, but the guardian shall not consent to care which would violate the moral or religious beliefs of the ward.

A guardian shall also take reasonable care of the ward’s clothing, furniture, and other personal effects. The guardian must file a notice of intent to dispose prior to the disposition or sale of the ward’s personal effects.

The guardian must file with the court a report of the ward’s personal well-being, at least annually or whenever ordered by the court. The report must contain the current mental, physical, and social condition of the ward; the living arrangements for all addresses of the ward during the period of the report; the medical, educational, vocational, and other services provided to the ward; and a recommendation as to the need for continued guardianship. A guardianship terminates upon death of the ward or order of the court.

Does a Conservator or Guardian Have Absolute Power and Authority?

The law allows the court to grant the conservator or guardian limited power to exercise authority over the ward or protected person. A conservator or guardian may only use their authority as necessary to provide care and services for the ward or protected person. The court should ensure that decisions of a conservator or guardian will not be overly restrictive of the ward’s or protected person’s rights.

Why Might I Need a Conservator or Guardian?

If you have other informal arrangements with relatives or formal planning arrangements, such as a durable power of attorney, you may not need to do conservatorship or guardianship planning. However, if it is likely that someone would challenge your planning arrangements (for example, if there might be disagreements within the family), you may want to consider using conservatorship or guardianship planning as a “backup” to your other planning arrangements. Remember, anyone can petition to be a conservator or guardian for an incapacitated or impaired person, and a conservator or guardian can revoke or terminate some prior planning arrangements. By choosing a person you would want to be your conservator or guardian, you protect yourself against the appointment of someone you would not want to be in this position.

How Do I Establish a Conservatorship?

“Conservatorship planning” (also called “nomination of conservator”) involves a written document, like a will, in which you name the person you want for your conservator. You can also include instructions on how you want your financial matters handled by your conservator. For example, the conservator could be instructed to manage your property and be informed about your wishes regarding estate planning. Then, if you should become impaired and need a conservator, the court must name the person you chose and order that your instructions be followed, unless the court finds that this would not be in your best interests. Be aware that the person you choose is not required to serve as your conservator—so choose a reliable person and discuss your plan with the person in advance to make sure he or she agrees with it. You should consult an attorney for conservatorship planning. Any person may petition the court for the appointment of a conservator of an individual who is unable to manage property and business affairs because of an impairment in the ability to make decisions. Once a petition is filed with the court, a court investigator may be appointed to interview the proposed protected person. The investigator reports back to the court with an opinion on whether or not the appointment of a conservator is justified. The petition is set for hearing and the protected person must appear in court unless excused by the court for good cause. The judge determines, based on the petition, the investigator’s report, and any evidence taken during the hearing, whether or not the conservatorship is required and what types of special powers may be granted to the conservator. The proposed protected person has a right to have an attorney represent his or her interests in conservatorship proceedings.

What Are the Advantages of a Conservatorship?

Conservatorships are subject to court supervision which provides a powerful safeguard for an impaired adult’s property. Because the conservator is required to file an inventory of the protected person’s property and provide accountings and other reports to the court, a conservatorship offers a higher degree of protection to the protected person than other management mechanisms. A conservatorship also allows for the management of an impaired person’s financial affairs when he or she does not have an alternative mechanism in place to do so. Another advantage to a conservatorship proceeding is that it provides a method to assist an impaired individual who may be unwilling to accept such assistance.

What Are the Disadvantages of a Conservatorship?

Conservatorships are time-consuming and expensive; they often require court hearings and the ongoing assistance of a lawyer. The paperwork can also be a hassle because the conservator must keep detailed records and file court papers on a regular basis. The conservatorship can also be a cumbersome method of managing a person’s financial affairs, as the conservator must return to court for approval of certain transactions, such as the sale of real property, borrowing money, setting up a trust, etc. These formal court hearings require additional attorney fees and can create delays in completing these transactions.

In addition, as noted above, a conservator must usually post a bond. The bond premiums are paid by the protected person’s estate. Bonds are usually required, but may prove to be an unnecessary expense if the conservator is competent and trustworthy.

Another disadvantage is that occasionally a conservator will mismanage a protected person’s assets. Common abuses range from reckless handling of the protected person’s assets to outright theft. Although each state has rules and procedures designed to prevent mishandling of assets, few have the resources to keep an eye on conservators and follow through if they spot trouble. Many cases of incompetence or abuse go unnoticed.

Finally, a conservatorship can be emotionally trying for the protected person. The court proceedings and documents are often public records, which can be embarrassing for someone who values independence and privacy.

What Are the Alternatives to a Conservatorship or Guardianship?

Revocable Living Trust

Through the establishment of a revocable living trust the individual can appoint a trustee to manage his or her financial affairs and thus can avoid the need for an appointment of a conservator of the estate. A person must be competent to establish a living trust.

Durable Power of Attorney for Asset Management

A durable power of attorney is a document in which the individual can delegate to an agent the power to make financial transactions on his behalf if he is unable to do so himself. However, the individual must be competent to execute a durable power of attorney, and the agent acting under the durable power of attorney is not subject to regular court review of his or her actions.

Health Care Directive

An individual can nominate an agent to make health care decisions on his behalf in a health care directive. These health care decisions can include the decision to withdraw or continue life support systems. The individual can also give specific instructions as to health care in the directive. As with a living trust and durable power of attorney for asset management, a person must be competent to execute a health care directive.

Joint Tenancy Property

While the joint tenant may make decisions regarding the property that is held in joint tenancy, there are significant risks that make this form of ownership a poor choice for the purposes of asset management. In particular, in a joint bank account, a joint tenancy allows either joint tenant to access the funds; thus one joint tenant can withdraw all the joint tenancy funds. Further, there can be adverse tax and estate planning consequences as a result of creating a joint tenancy.