Conservatorship vs. Power of Attorney

Estate planning is an important consideration for everyone, not just the elderly. The reason why is that estate planning is not merely concerned with what happens when you die but what happens when you become incapacitated — which could occur at any time. Two of the most effective tools for planning for incapacity are powers of attorney and conservatorships. They both accomplish similar things, but there are significant legal differences and significant differences in costs, between the two that you should be aware of. If you’re ready to start planning for your potential incapacity, a California estate planning attorney can help you draft a plan that works for you.

Power of Attorney

A power of attorney is an agreement between two people whereby one person (the agent) is authorized by another person (the principal) to make certain decisions for the other person. These agreements are revocable at any time (so long as the principal is not incapacitated). A power of attorney is executed before the principal becomes incapacitated. It is also not necessary to involve the courts in the creation of a power of attorney; instead, it is simply a written agreement signed by the parties in the presence of a notary. A power of attorney is always best to have early in your life so you don’t have to confront the difficulty of a conservatorship, as discussed below. For more information about drafting an effective power of attorney document, please contact a California estate planning attorney.

Parties to a Power of Attorney

The parties to a power of attorney are the principal and the agent. The principal can be anyone over the age of 18 who has the legal capacity to enter into a contract. In most cases, the principal initiates the power of attorney process by asking the agent to serve in that role. The agent may be any person who is competent to act as an agent but typically is a member of the principal’s family or a close friend.

Types of Power of Attorney

There are three primary types of power of attorney:

• General power of attorney: The broadest form of power of attorney, a general power of attorney grants the agent the same authority to make financial decisions on behalf of the principal as the principal themselves
• Limited power of attorney: A narrower form of power of attorney, a limited power of attorney grants the agent limited authority to make financial decisions for the agent. For example, a limited power of attorney may authorize the agent only to make decisions about the principal’s investment accounts.
• Medical power of attorney: A medical power of attorney grants the agent authority to make medical decisions for the principal in the invent that they become incapacitated, including end-of-life decisions. In California, medical powers of attorney are called “Advance Health Care Directives.”

When Power of Attorney Becomes Effective

Power of attorney can go into effect at a time of the principal’s choosing. A durable power of attorney becomes effective immediately when it is signed and remains in effect even after the principal becomes incapacitated. A non-durable power of attorney becomes effective immediately when it is signed but ends when the principal becomes incapacitated. A springing power of attorney becomes effective only when the principal becomes incapacitated. 

Conservatorships

Unlike privately arranged powers of attorney, conservatorships are long, expensive legal proceedings whereby a court evaluates the mental and physical fitness of an adult who is alleged to be incapacitated or otherwise unable to care for themselves. If the court finds that the adult is legally incapacitated, the court may appoint a conservator to manage the affairs of the incapacitated adult (now known as the “conservatee”). Conservatorship proceedings begin after the person at issue becomes incapacitated (or is alleged to be incapacitated). We do not recommend conservatorships except as a last resort as they take a long time, involve large court fees and legal expenses, and involve continuing fees both for the conservator and additional court fees for annual accountings.

The Conservator 

The conservator in a conservatorship typically is a family member or close friend of the conservatee and may or may not be the person who files the petition for the appointment of a conservator. If there are no family members or close friends willing or able to act as the conservator, the court may appoint a professional conservator. California courts typically appoint conservators in the following order of preference (assuming each party is qualified to serve as a conservator):

• The conservatee’s choice
• The prior conservator’s choice
• The conservatee’s spouse or domestic partner
• The conservatee’s adult child
• The conservatee’s parent
• The conservatee’s sibling

The conservator’s role generally is to see to the health, safety, and welfare of the incapacitated adult.

The Conservatee

The conservatee is the individual who has been deemed legally incapacitated and for whom assistance with the activities of daily living is necessary. This can encompass a broad class of individuals, but some of the most common circumstances that necessitate conservatorships include:

• Dementia and Alzheimer’s disease
• Developmental disabilities
• Drug addiction
• Severe mental illness
• Incapacity due to accident or illness

Conservatees typically are unable to provide for their own health, food, clothing, and shelter and are unable to manage their own finances and resist fraud, undue influence, or other types of financial elder abuse.

Types of Conservatorships

There are two major types of conservatorships in California: conservatorship of the person and conservatorship of the estate. A conservatorship of the person allows the conservator to manage the conservatee’s medical and personal care decisions, including food, housing, and hygiene. Conservatorship of the estate allows the conservator to manage the conservatee’s finances. A single conservator can be a conservator of both the person and the estate. 

So Which Is Better?

Conservatorships and power of attorney are similar; they both provide for the care and maintenance of incapacitated adults. The role of the conservatee is analogous to the role of principal, while the role of a conservator is analogous to the role of the agent. Both conservators and agents typically have the authority to make a wide range of important financial and medical decisions for conservatees and principals. But that is where the favorable similarities end. Generally, power of attorney agreements are preferable to conservatorships, as they are cheaper, easier to execute, and do not require the involvement of the courts. They also allow the principal total control over their terms, which is not the case with conservatorships. For those reasons, conservatorships should be used only in cases where there is no power of attorney in place.

Contact a California Estate Planning Attorney for Further Information

For more information about conservatorships and power of attorney, please contact a California estate planning attorney at the Evans Law Firm, Inc., by using our online form or calling us at 415-441-8669 or toll-free at 1-888-50EVANS (888-503-8267).