Conservators (or Trustees for Incapacitated Veterans)
Conservatorship for an incapacitated adult is a very difficult fiduciary relationship and presents special problems of accounting for the care and maintenance of the incapacitated. Conservatorship is generally required because there is no power of attorney which the incapacitated executed so no authority exists for anyone to act on behalf of the incapacitated.
The appointment of a conservator requires a Court proceeding and the services of an elder law attorney is almost always required due to the required filings and Court hearing which will determine if the appointment is proper.
Guardianship of an incapacitated adult involves responsibility for the personal care decisions which have to be made on behalf of the incapacitated, which includes issues such as residential placement and medical care. The Guardian for an incapacitated adult does not report to the Commissioner of Accounts but does report annually to the Henrico County Department of Social Services.
Conservatorship for an incapacitated adult involves the responsibility for the management of the incapacitated adult’s assets and finances. Since the incapacitated adult generally is unable to make decisions regarding, and is unable to pay, day to day financial obligations, the conservator has this responsibility. The Conservator is required to report each any every financial transaction conducted on behalf of the incapacitated adult to the Office of the Commissioner of Accounts.
NOTE: If a veteran is determined to be incapacitated by the Veterans Administration, a “Trustee” can be appointed by the circuit court to serve in the same capacity as a conservator, the primary difference being the title of the fiduciary–Trustee vs. Conservator. As used herein the term “conservator” includes a “trustee” for a veteran.
Extreme care should be taken to comply with the terms of the Order of Appointment. This order will generally specify the powers that the conservator has been granted by the Court. Often the order limits the powers of the conservator, especially with regard to real estate.
The conservator will be required to file an inventory and penny for penny annual accounts reporting what has been done with the assets of the incapacitated. Therefore, meticulous record keeping is mandatory. Bank statements, copies of cancelled checks and invoices for each and every disbursement will have to be presented to the Commissioner’s office with each account to be audited. No cash transactions should occur as you cannot properly account for such transactions. No bill should be paid without an invoice. All bills should be paid from a conservatoship bank account opened under the incapacitated adult’s social security number.
Unless the Order of Appointment allows for the incapacitated to retain partial control over his assets, care should be taken to insure that the incapacitated cannot exercise control over his assets without your approval. Part of your job as conservator is to prevent the loss of estate assets by actions of the incapacitated as well as protecting the assets from being taken by unscrupulous individuals who prey on the weaknesses of the elderly and incapacitated.
The information given to you at the time of qualification is very informative, however there may be occasions when the services of an elder law attorney are needed to give you guidance and direction in the actions you are required to take as conservator. Do not hesitate to consult with such an attorney if you need guidance in carrying out your responsibilities. Likewise the engagement of a CPA may be necessary in preparing tax returns or in obtaining financial advice.
Remember that the goal of the conservatorship is to conserve the assets of the incapacitated and not to put them at risk in speculative or risky investments:
1. Very conservative fully diversified investments and federally insured bank accounts should be considered;
2. Self dealing in the assets of the incapacitated is absolutely prohibited;
3. No loans may be made to anyone;
4. Gifting of money from the estate of the incapacitated is prohibited unless authorized by the Court in its Order of Appointment, or made in strict compliance with the Virginia Code, which should be consulted before any gifting.
If the incapacitated is restored to capacity, a petition for termination of the guardianship and/or conservatorship should be made to the Henrico Circuit Court.
Upon the death of the incapacitated the powers of the conservator immediately terminate. However, the conservator still has the responsibility to preserve and protect the assets for delivery to the properly appointed personal representative of the decedent’s estate. A final account as conservator must be filed upon deliver of the assets to the executor or administrator of the estate.