A few weeks ago, we shared a primer on guardianship. The subject can be a big deal: just last week, Britney Spears’ court appearance in an effort to extricate herself from unwanted control of her life by her conservator sparked a resurgence of the hashtag #FreeBritney.
Of course, most guardianships, while they involve some court proceedings, are far less dramatic. Entertainment-industry scandal aside, many people encounter a real need to become a ward whose interests are looked after by a guardian.
A guardian could be a family member, a friend, or a professional specializing in guardianship.1 But becoming a guardian is not something that should be entered into lightly. Prospective guardians must undergo a petition process in court because it transfers numerous rights from the ward to the guardian.
And it can be expensive. Guardianship should be considered a last resort to be used if other options, such as financial power of attorney, are not available or not advisable. Prepare yourself by learning more about the role’s responsibilities and the costs associated with the petition process, and your service as the ward’s guardian.
Terminology: Guardian vs. Conservator
Terminology in this area varies from state to state, with the terms guardian and conservator being used differently in different places. Here’s what we mean in this article.
What Is a Guardian?
A guardian is a court-appointed individual or organization responsible for the well-being of an individual who is legally, mentally, or physically incapable of personal care. Guardians can receive court-approved compensation and reimbursement for their services, although family members serving in this role often choose to forgo the payment.
A guardian typically must ensure their ward’s basic needs are met, such as appropriate housing, medical care, and, if applicable, education. Minor, day-to-day expenses are often under the guardian’s supervision. However, the exact requirements and responsibilities for becoming and serving as a guardian differ depending on the state.
What is a Conservator?
While a guardian is responsible for the ward’s personal well-being, a conservator focuses primarily on their financial matters. The conservator’s responsibilities often include managing assets and paying bills.2
These are not mutually exclusive roles. An individual can perform both responsibilities if approved by the court having jurisdiction.
Check Your Jurisdiction’s Terminology
These terms can be confusing because they’re used differently in different places. The state of Oregon uses these titles as described above: the guardian looks after the ward’s personal well-being, and the conservator looks after their financial matters. Ohio law, by contrast, refers to these roles as the guardian of the person and the guardian of the estate. And Connecticut goes the other way, using conservator of the person and conservator of the estate for the same functions.
Costs to Keep in Mind
Becoming responsible for the well-being of another individual is no small task. Courts require a petition process to determine whether an individual is incapable of self-care. This can involve a variety of steps and fees.
Cost #1: Filing Fees
The process to petition a court will differ state by state. Some jurisdictions will require a filing fee, while others will not.
Typically, close relatives must be notified of the petition, often requiring a formal delivery procedure and an additional fee.3 Be sure to check your state’s requirements to determine the total cost of filing the petition.
Cost #2: Attorney Fees
The appointment of a guardian or a conservator is a legal proceeding, most often requiring the services of a lawyer. Attorney fees can add up quickly, and not just from the initial appointment process. Once a guardian or conservator is appointed, they remain under the court’s jurisdiction. They often must make repeated reports to the court. These can require additional legal assistance, with all the accompanying costs (and further filing fees).
Cost #3: Medical Professional Fees
At least one medical examination is typically required to determine whether an individual is incapable of self-care. The cost of these examinations will depend on the number and types of examinations required by the court.
Cost #4: Bond
Once a conservatorship is established, some states require conservators to post a bond—an insurance policy that will protect the ward from financial wrongdoing by their conservator.
Who Pays for These Costs?
Payment of these fees is not the sole responsibility of the prospective guardian or conservator. While they may need to cover some expenses, certain fees may be paid by the incapacitated individual’s assets. However, this may depend on their total assets and financial condition. In certain cases, there are a few other payment options available.
Guardians of individuals with few or no assets can file a request for financial assistance during the petition process. This is not automatic and requires attorneys to file a request for this assistance.4
If guardianship is approved, Social Security funds may cover some of the petition and court process costs.
Guardianship can create some significant legal and financial challenges. If you’re considering pursuing guardianship, it’s crucial to understand your state’s requirements and prepare yourself financially. Be sure to understand the costs and fees, and always seek assistance when you’re unsure of what the law requires or what your next steps should be.
To learn more about what guardianship is, see our Primer on Guardianship.
Questions about the costs of becoming a guardian? Give us a call.
This content is developed from sources believed to be providing accurate information and is provided at least in part by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Original content of Practical Financial Planning, Inc. only is copyright © 2021by Practical Financial Planning, Inc.