Schmidt & Sikes, P.C.

Support and protection for those who need it most.

March 23rd, 2015 by Marilyn J. Schmidt, Esq.

Protecting the Finances of Your Loved One

There are a number of events that might give you concern about your loved one’s ability to manage his/her own finances. Perhaps she is donating money to charity or gifting things to family or friends that one cannot really afford to give away. Perhaps the bills are piling up, unpaid, or utilities are being shut off. Perhaps he tells you about an unsolicited phone call, that you immediately recognize as a scam, because he is now planning to send cash to the caller.

There are also a number of solutions to these problems. Your local elder protective agency probably has a money management program to help an Elder pay the bills and balance the checkbook. The Social Security Administration can appoint someone else as the representative payee for the monthly check, as long as it determines the appointment to be in the best interest of the client. Often, the loved one has appointed, or can appoint, someone to function as their agent, under a durable power of attorney instrument, to have authority to manage her finances. Of course, most of these steps involve the cooperation of the loved one.

So, if the loved one doesn’t cooperate with these steps, or if the Social Security check is not the only income/asset in play, you may need to think about pursuing conservatorship. A conservator can be appointed by the probate court if the individual has a disability that is preventing them from meeting their own basic financial needs. After the appointment, bank accounts and investment accounts are changed to read, for example, “Adam Adams, as conservator for Betty Boop.” The money is still owned by Betty Boop, but Adam Adams has a fiduciary duty to protect it and manage it on her behalf, and has to account for his financial transactions to the court. Betty is no longer able to access those accounts. And if she does enter into a financial contract, such as over-paying for a used car, the Conservator can nullify the contract.

Before the Court appoints someone as conservator over the assets of another individual, it will run a criminal records check to make sure that the candidate is an honest person. For example, a conviction for burglary would likely bar the appointment. The Court will also require the conservator to post a bond – a commitment by two friends or a contract by an insurance company to pay back a set amount (the value of the liquid estate) if the conservator is guilty of misfeasance (negligence) or malfeasance (theft). The Court will also require the conservator to file an inventory of the assets of the estate, and annual accounts showing the financial transactions that she has done.

Needless to say, the pursuit of conservatorship is more costly, in terms of filing fees, bond fees, and attorney’s fees, than the other mechanism. However the statute does allow for the costs of the proceeding to be borne by the estate of the protected individual. The conservator actually assumes no financial responsibility for these costs. Nor does he assume personal financial responsibility for the care of the protected person. He merely assumes the responsibility to make investments and expenditures in the best interest of the protected person.