A Conservatorship is a court proceeding where the court makes a determination that a person is incapacitated and can no longer manage his or her own financial affairs. Once this determination is made, the person lacking capacity is referred to as the Protected Person, and the court will appoint a person or entity called a Conservator to manage the financial affairs of the Protected Person.
THE PROCESS OF ESTABLISHING A CONSERVATORSHIP
Most commonly, the establishment of a Conservatorship usually starts with the realization that a loved one, often a grandparent or senior parent, can no longer manage his or her own financial affairs because of an impairment in the ability to receive, communicate, and evaluate information. The most common situation is an elderly person suffering from dementia, but can also apply to a minor child who is receiving an inheritance. Once it is believed that a person is incapacitated, third parties, such as banks and other financial institutions refuse to deal with that person and will require the establishment of a Conservatorship. Third parties do not want to incur any liability for improperly dealing with a person who does not have the capacity to make such decisions.
A Petition is filed by an interested person with the Court in order to request the establishment of a Conservatorship and appointment of a Conservator. The Petition must contain specific information required by the Hawai`i Revised Statutes regarding the Protected Person, and the proposed Conservator. In addition, the Petition will usually contain (i) a medical opinion regarding the Protected Person’s ability to handle his or her financial affairs (ii) a Schedule of Property, which shows the assets of the Protected Person, and (iii) a Proposed Budget listing the anticipated expenses and income of the Protected Person. The Court will assign a hearing date, usually 1 to 2 months after the filing of the Petition.
Once the Petition is filed, a copy of the Petition must be given to all interested persons, including the Protected Person, who will have an opportunity to respond or object. Usually, there are no objections, but it is not uncommon that objections are filed as to the capacity of the Protected Person and the identity of the proposed Conservator.
Prior to the hearing on the Petition, the court will appoint a person called the Kokua Kanawai, whose responsibility it is to interview the Protected Person, proposed Conservator, and any other interested persons, in addition to reviewing the Petition and other objections or responses filed in the proceeding, in order to provide the court with a recommendation as to whether the court should establish the Conservatorship due to the Protected Person’s incapacity, and whether the proposed Conservator is qualified to serve in that capacity. Although the court is not required to follow the recommendation of the Kokua Kanawai, that recommendation carries great weight.
At the hearing on the Petition, the court will consider all pleadings filed by any interested persons, and the recommendation of the Kokua Kanawai in reaching its decision. Once the court makes its determination that a Conservatorship should be established for the Protected Person, and appoints a Conservator, an Order memorializing the court’s decision must be drafted and submitted to the court for its approval and signature. This process can take an additional 1 to 2 months.
MANAGEMENT OF THE CONSERVATORSHIP ESTATE
Once the Order is approved and filed by the court, the Conservator is authorized to take necessary steps to manage the property of the Protected Person. One of the first steps the Conservator must take is to gather the assets of the Protected Person, and title those assets in the name of the Conservatorship. Once all assets are gathered, the Conservator must file an inventory with the Court, which shows all the assets and their respective values.
The Conservator must establish a checking account, and a savings account from which income and expenses for the Protected Person are made. It is imperative that the Conservator maintain good records of the transactions, and that the transactions conform to the approved budget, as the Conservator will usually have to account to the court for its transactions. Any uncertainties may be charged against the Conservator personally. The accounting period is stated in the Order creating the Conservatorship, and will usually require the Conservator to account on an annual basis. Therefore, the Conservator will be required to file a Petition for Approval of Accounts on an annual basis. The time-line for such a petition usually follows that of the initial petition for the establishment of a conservatorship.
During the course of the Conservatorship, if special expenditures not noted in the approved Budget are needed, a special Petition to Approve Special Expenditure will have to be filed. Again, the time-line for such a petition usually follows that of the initial petition.
A Conservatorship is a very time-consuming proceeding that does not end upon the establishment and appointment of a Conservator. A Conservatorship is an on-going proceeding that is subject to the supervision of the court. Proper planning, however, can avoid the need for a Conservatorship.
IS A CONSERVATORSHIP REQUIRED? ESTATE PLANNING GROUP CAN HELP
If a person still has testamentary capacity, and takes the necessary steps to create a comprehensive estate plan designed to address possible incapacity, a Conservatorship can be avoided by the use of a Trust and a Durable Power of Attorney, which is what our estate plans are designed to do.
However, there are certain situations in which a Conservatorship cannot be avoided, such as when an individual has already lost testamentary capacity, and his or her estate plan has not been properly drafted and implemented. In such a situation, Estate Planning Group has helped many families navigate through the complex Conservatorship process while always considering the best interest of the Protected Person, so that he or she may maintain the highest quality of life.