Written by A. H. “Dusty” Branson and published by the Atlanta Bar Association.
First posted by James Jones, Thursday, May 26, 2016

Many individuals suffer from varying degrees of cognitive dysfunction during their later years. One avenue to address this is a court appointed conservatorship. This is time-consuming, cumbersome, and unnecessarily expensive. It should be a last resort. A Probate Court has discretion over appointment of a conservator regardless of who petitions the court for a conservatorship or whom the petitioner requests as conservator.

The court is to consider the list of preferred conservators provided by law. Although a family member is listed first, he or she may not to be named for many reasons, particularly if there is a conflict of interest. Something as simple as the requested conservator and the ward having a joint bank account can disqualify the conservator named in the petition. The court may move down the list of preferred individuals to a court-appointed attorney with whom the court may have a pre-existing relationship. Georgia Law permits the conservator to collect annual fees up to six percent or more from a ward’s funds.

Conservators who are attorneys can also bill for legal services they provide on behalf of the ward. Moreover, the sale of assets to produce liquidity to meet expenses of the ward requires court approval resulting in more time and expense. This can prove particularly cumbersome when the ward’s real estate is the subject of the sale. It can result in extensive delays that may be unacceptable to the buyer and generate additional fees to the conservator. The conservator, if not covered by the court’s blanket bond, must purchase a bond to protect the value of the ward’s funds for all but the ward’s real property. Conservators must also maintain meticulous records of income and expenditures to report to the court at least annually, or more often if the court so directs.

Powers-of-attorney, once a practical tool to manage an incapacitated adult’s personal financial affairs, may not be effective. Financial institutions occasionally refuse to accept the document because the principal could have revoked the authority of the attorney-in-fact without the institution’s knowledge leaving the institution with ultimate liability if the agent commits a fraudulent transaction.

A solution to this is to use the institution’s form to name a trusted individual to sign checks drawn on the account for the benefit of the account holder. It is never a good idea to establish a joint account for convenience of paying the impaired individual’s expenses unless it is intended that the surviving person have the proceeds of the account upon the death of the other account holder. The law books are filled with cases wherein the person added as a joint account owner uses the funds for his or her personal use and/or claims the proceeds upon death of the depositing account holder. Listing an adult child as the joint account holder can be problematic, frequently causing friction among siblings.

A thoughtfully drafted revocable trust is frequently the optimal solution to manage the assets and provide the authority to address the financial needs of an aging adult. If a “living trust” is created, it is essential that the estate planning attorney work with the clients to ensure that title to all their assets, e.g., real property, individual investments, investment accounts, annuities, and life insurance policies belonging to the grantors are transferred to the trust. It is unwise to provide instructions to the grantors and depend upon them to transfer title to the assets. They rarely transfer all the assets, and often assets are not transferred correctly. The trust can be named as the beneficiary for assets whose title cannot be changed.

The grantors are usually named as their own trustees with trusted family members or friends stepping into the role if the survivor of the trustees becomes incapacitated. A bank or other trust institution may also be named as the successor. If a court declares the grantors or the surviving grantor incompetent, the document should be drafted to suspend certain grantor powers.

Suspension or termination of the grantor’s authority to revoke the trust or to remove property from the trust makes it effectively irrevocable. The conservator cannot then gain control over the trust assets. Instead, the successor trustee will continue to administer the assets as directed in the trust document. The trust can also be drafted to distribute to, or continue to hold remaining assets for future beneficiaries eliminating the need for probate of the trust assets.

A. H. “Dusty” Branson is an estate planning and probate attorney located in Buckhead. Learn more by visiting his website at BransonLawAtlanta.com