Conservatorship vs Power of Attorney

When it comes to making decisions for someone who can’t manage their affairs, two legal arrangements often come into consideration: conservatorship and power of attorney. These two options serve similar purposes but differ significantly in how they’re established, the authority they grant, and when they’re most appropriate. Understanding the distinction between conservatorship and power of attorney is crucial for families facing difficult decisions about caring for loved ones who may have diminished capacity due to age, illness, or disability. While a power of attorney is voluntarily established by an individual before they lose capacity, a conservatorship is court-appointed after someone can no longer make sound decisions.

Making arrangements for a loved one whose abilities may be compromised should be done with the expert help of a financial advisor.

What Is a Power of Attorney?

Power of attorney is a legal assignment that you can make. It lets a third party stand in your shoes to make any legally binding or legally protected decisions. For example, say you assign someone financial power of attorney. This means that they can access your bank accounts, pay your bills, manage your debts, check your credit and otherwise act in your place when it comes to financial matters.

When someone holds your power of attorney, third parties will give them the same authority and access that you would have in person. This is an entirely voluntary assignment. You can give someone power of attorney by choice and can rescind it at any time. You can also specify the scope of a power of attorney assignment.

A general power of attorney means that someone has the authority to act in your place in virtually any matter. They can sign contracts on your behalf, make financial decisions and generally act as your proxy in almost all situations. For this reason, a general power of attorney is relatively rare. Instead, most people will assign a specific power of attorney.

A specific power of attorney means that someone has the authority to act in your place in a specific area, for a specific issue, for a specific amount of time or generally under any other conditions that you name. For example, you might give someone power of attorney to negotiate a specific contract for you. This means that they can sign a deal that binds you for that negotiation, but they couldn’t generally access your bank accounts. Or you could assign someone power of attorney while you are traveling and will be unreachable, but give an assignment that automatically ends on the date of your return.

The most common types of power of attorney are financial (assignments that deal with specific financial matters, or which generally give the power of attorney access to your banking and finances) and medical power of attorney (assignments which allow someone to make medical decisions on your behalf, generally while you are unconscious or otherwise incapacitated).

Someone with power of attorney cannot contradict or override your own decisions, but they can change your decisions at will. For this reason, it is rarely (if ever) a good idea to assign someone power of attorney when you will be available to make your own decisions. At best, that can lead to confusing, conflicted authority.

You do not need any formal process to assign a power of attorney. In most cases, you need only to sign a document specifying the assignment and have it officially notarized by a notary public. However, you cannot assign power of attorney if you cannot make legally binding decisions. For example, someone who is heavily medicated might not be considered competent to understand his own actions. In that case, a court might strike down any power of attorney that the person assigns as invalid.

You also cannot revoke a power of attorney assignment if you lack mental competence at the time, since once again, you will not have the ability to take legally binding actions of any kind. However, in practice, courts are generally less strict about the conditions under which someone can revoke power of attorney than assignment.

What Is Conservatorship?

A conservatorship is a legal assignment that a judge or hearing officer will make. In a conservatorship, the court will take away certain legal rights from one person, known as the “ward,” and assign them to a third party, known as the “conservator.” Like a power of attorney, a conservatorship covers the authority to make legally binding decisions.

However, a conservatorship can be significantly more sweeping. A conservator assumes the power to make personal, financial or medical decisions for their ward. For example, a conservator may assume the authority to manage his ward’s finances, sell his property and even tell his ward where to live.

Courts can assign either a general conservatorship or a specific one. In a general conservatorship, the conservator can make virtually any decision for the ward’s personal, medical and financial life. For this reason, general conservatorships are rarer, but not as rare as a general power of attorney. With a specific conservatorship, the court gives the conservator authority over specific aspects of the ward’s life.

For example, the court might assign a financial conservatorship, in which the conservator gets to make decisions about the ward’s money and property but not his medical or personal decisions. In either case, the conservator has a fiduciary obligation to the ward.

Unlike with a power of attorney, a ward cannot overrule the decisions made by the conservator. In most cases, the ward loses all authority to make these decisions at all. For example, in a financial conservatorship, only the conservator would have access to the ward’s money and financial decisions. The ward would have no authority in those matters and would need the conservator to sign off on any withdrawals, loans, payments or other transactions.

Judges will assign a conservatorship when they believe that the ward is no longer mentally competent to make their own decisions. Often, the judge will also need some sort of showing that this incompetence makes the ward a threat to themselves or others. In this case, “incompetence” has a specific legal context.

It means that the individual cannot understand the nature and quality of their actions. For example, an elderly person suffering from dementia or an individual suffering from severe mental illness may be considered legally incompetent. It is not enough for someone to make decisions that appear (or even are) misguided in the opinion of third parties.

A ward cannot rescind a conservatorship. It can only be ended by court order, which means that the ward must file a formal legal challenge with a hearing. At the hearing, the ward must prove that circumstances have changed and they are no longer incompetent. Absent this proof, the conservatorship remains in place indefinitely.

Can You Use Both a Conservatorship and a Power of Attorney?

Yes, conservatorships and powers of attorney can sometimes be used together, though they serve different purposes and are activated under different circumstances. A power of attorney allows someone to make decisions on another person’s behalf while they’re still competent but perhaps unable or unwilling to handle certain matters. Meanwhile, a conservatorship is court-appointed oversight that typically comes into play when someone can no longer make sound decisions for themselves.

There are situations where both legal arrangements might be appropriate. For instance, someone might establish a power of attorney while they’re healthy, but if their condition deteriorates beyond what the power of attorney covers, a conservatorship might become necessary. The power of attorney might continue to handle certain matters while the conservatorship addresses others, particularly if the power of attorney was designed to remain effective even after incapacity.

It’s important to understand that a conservatorship can potentially override a power of attorney. Since conservatorships are court-supervised, they generally take precedence in cases of conflict. However, courts often respect previously established powers of attorney if they adequately address the person’s needs and were created when the individual was competent to make such decisions.

Working with a financial advisor who specializes in estate planning can help you determine whether you need both a conservatorship and a power of attorney. They can guide you through creating comprehensive legal protections that work together rather than conflict. The goal should always be to ensure your wishes are respected while providing the appropriate level of protection based on your specific circumstances.

Bottom Line

A power of attorney offers a proactive approach, allowing individuals to designate someone they trust while they still have capacity. Conservatorships, on the other hand, provide court-supervised protection when someone can no longer make decisions and hasn’t established alternatives. The right choice depends on your specific situation, timing and the level of oversight needed. For most people, establishing a power of attorney early is the preferred option, as it respects personal autonomy and avoids court intervention.

Tips on Estate Planning

Everyone can use some help making good decisions from time to time, and that’s particularly true in the complex world of finance. That’s where a financial advisor comes in. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you prefer to go it alone, use SmartAsset’s asset allocation calculator to determine how to best split your money between stocks, bonds and cash. The calculator bases its recommendation on your risk profile and offers a breakdown of each asset class.