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California law provides a procedure to allow someone to handle his or her financial matters if a person becomes so incapacitated that the person is unable to feed or cloth himself or herself, or look after his or her financial affairs. This is a complex, costly, and time consuming process. Because the person is alive, the legislature has built in a number of safeguards to protect the person's rights.
Many times people say that their minister or physician recommended that the person act as "conservator" for a relative. In many cases the person is handling the relative's affairs without difficulty. The general recommendation is not to use a conservatorship unless it is absolutely necessary and there are no other alternatives available.
A conservator of the person is needed when the individual is unable to take care of his or her basic needs such as feeding himself or herself, clothing himself or herself, etc. A conservator of the estate is needed if the person is unable to manage his or her assets or resist fraud or undue influence.
Normally, the nearest relative, such as a spouse or child, has the first right to be conservator. A person can sign a document entitled "Nomination of Conservator," while he or she is still able, and nominate someone if a conservator of the person or estate is later required.
A bank trust department may be the conservator of the estate if the assets have a high value. The conservator of the estate receives an annual fee, subject to court approval, of up to 1% to 1.4% of the value of the assets per year. For example, a bank which is handling an estate of $2,300,000, may receive an annual fee of approximately $23,000.
Since an attorney is involved, there are legal fees for establishing the conservatorship and legal fees for the regular accounting required by the court. The costs can amount to $2,000 to $5,000 to establish the conservatorship and $2,000 to $10,000 per year for the legal work involved.
There are also court filing fees, investigator fees, appraisal fees, and numerous other legal costs.
A conservatorship is a legal action filed in the county superior court where the person (called a "conservatee") resides. A petition is prepared and lists the necessary information and the petition is set for hearing by the court approximately 60 days after it is filed. The proposed conservatee must either appear in court or have a physician declare that he or she is physically or mentally unable to appear. The court will also appoint an investigator to interview the proposed conservatee and to report back to the court.
In addition, a citation must be personally served on the individual, and certain other relatives, such as children, parents, and brothers and sisters, must be given notice of the court hearing. If the proposed conservatee indicates that he or she objects to the conservatorship, the court must appoint an attorney to represent the conservatee.
Once the conservator is appointed, an inventory must be filed with the court within 90 days of appointment listing the conservatorship assets and their current value. No assets can be purchased or sold without court approval. An accounting of all funds received and disbursed must be filed with the court one year after the appointment and every two years thereafter. Frequently, the conservator must post a surety bond with the court to guard against theft or errors.
The conservatorship continues until the person regains his or her capacity to manage assets or until his or her death. Younger people may recover but conservatorships for older people usually continue until death, when a probate is generally necessary.
Because of their costs and cumbersome nature, conservatorships should be undertaken only as the last resort. Unfortunately if the proposed conservatee had done no planning, such as establishing a living trust or executing a general durable power of attorney, a conservatorship proceeding may be required.
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