If your elderly parents have diminished mental capacity that is compromising their safety, you can take legal steps to protect them from being scammed. An estate-planning attorney can help move your parents’ money into a revocable living trust or draft a financial power of attorney (POA) that gives you authority to manage their financial affairs. The catch: Your parents have to agree to these legal arrangements, and they may still have access to some or all of their money. Your parents also retain the right to change or revoke the trust or POA at any time.
Very last resort: Consider a conservatorship (in some states a guardianship of the property or curatorship of the property), which can give you complete control over a parent’s finances. This legal arrangement may be warranted if your parents refuse all help or protection…show signs of very significant cognitive decline…and/or put themselves into extreme financial jeopardy. There have been several high-profile cases in which families have gotten conservatorships for elders including actress Zsa Zsa Gabor and radio and TV personality Casey Kasem
How it works: Conservatorships are governed by state law, so specific terms, requirements and procedures vary from state to state. You hire an eldercare attorney to petition an applicable court, usually the probate court in the county or parish where your parent resides. A hearing will likely be held to present evidence and determine if your parents lack the mental capacity to manage their own finances. (Note: If you petition to take over all decision-making for your parents, including housing, health care and personal care, it is typically referred to as a guardianship of the person, which is separate from a conservatorship or guardianship of the property). The court typically appoints an impartial attorney (separate from the one you have hired) as an ad litem to advocate for your parents and to ensure their rights are protected. The probate judge reviews medical documentation and witness testimonies and may order an independent psychological evaluation to reach a determination. The judge will also decide if you or someone else should be appointed conservator or if a professional fiduciary such as a bank or trust company is warranted. Conservators are required to file reports to the court on a regular basis, documenting all receipts and expenditures of conservatorship assets. To find an eldercare attorney in your area, go to the website of the National Academy of Elder Law Attorneys at NAELA.org/findlawyer.
Drawbacks to a conservatorship…
High costs. Expect to pay $5,000 to $10,000 or more in attorney and court fees depending on the complexity of the case and if your parents or another interested person contest the matter. If a conservator is appointed, your parents’ estate will be responsible for paying the fees for the conservator’s time and services.
Potential for deep family rifts. Conservatorships strip away a person’s power and basic rights to make their own financial choices. This may cause conflict with family members and friends who support your parent’s continued independence and/or object to airing private matters in court.
