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Power of Attorney, Conservatorship, and Guardianship: Protective Arrangements for Adults and How they Work

Power of Attorney, Conservatorship, and Guardianship: Protective Arrangements for Adults and How they Work

The Basics: What is the Difference between Power of Attorney, Conservatorship, and Guardianship?

By Andrew M. Grenell, Esq.

Powers of attorney, conservatorships, and guardianships are similar in terms of what they accomplish. At their core, they provide individuals with a legal way to handle the affairs of another individual. They are so similar that some people use the terms interchangeably. In reality, they are three very different mechanisms that sit on a spectrum from the private and voluntary authority a power of attorney conveys all the way to the judicially scrutinized and involuntary authority a guardianship conveys. The best way to begin is to briefly explain what these three different concepts are:

1. Power of Attorney

Power of Attorney (often referred to as a “POA”) refers broadly to types of private arrangements, generally unsupervised by a court, where any competent person (the “principal”) expressly authorizes another person (an “agent”) to act on the principal’s behalf. A POA can be extremely narrow, such as authorizing an agent to sign documents on the principal’s behalf for a single transaction or a finite amount of time, or extremely broad, authorizing an agent to handle all of a principal’s affairs indefinitely. When a POA is referred to as a “durable” POA, that means the authority the principal grants the agent will continue even if the principal later becomes incompetent or incapacitated. If a POA is not durable, the authority it grants automatically ends if the principal becomes incompetent or incapacitated.

2. Conservatorship

While conservatorships have elements in common with both powers of attorney and guardianships, there are a number of important differences. In a conservatorship, a competent person (a “conservatee”) or another interested person is entitled under certain circumstances to ask the Superior Court to appoint someone (a “conservator”) to manage the proposed conservatee’s property and financial affairs. In New Jersey, a conservator cannot be forced upon a person. Rather, it is a voluntary action that must be undertaken or consented to by a mentally competent individual. Conservators must satisfy certain requirements to serve as a conservator, and, after a conservator is appointed, they are supervised by the Superior Court and the county surrogate.

3. Guardianship

While powers of attorney and conservatorships are sought by or for a person who is competent but needs help managing their affairs, in a guardianship, the Superior Court can appoint a guardian to manage a person’s affairs without that person’s consent. In a guardianship, an interested person, usually a close friend or a family member, asks the court to appoint themselves or some other person or entity as a guardian to manage the affairs of an adult who is demonstrably incompetent or incapacitated (an “Alleged Incapacitated Person” or an “AIP”). Since the person at issue in a guardianship action is alleged to be incapacitated, they are presumably unable to either execute a power of attorney or consent to a conservatorship. Additionally, while powers of attorney and conservatorships are generally limited to power and authority over a person’s property and financial affairs, a guardianship is far broader and can extend to all aspects of an incapacitated person’s life, including but not limited to: healthcare decisions, living arrangements, and aspects of daily life such as leisure and socialization.

Conservatorship Proceedings

POAs can be executed privately by and among any consenting adults without court approval and with little to no oversight. Unlike POAs, in New Jersey, conservatorships and guardianships can only be put into place by a Judge of the Superior Court. Only those who satisfy the legal need for a conservator or guardian will have one appointed to them, and only those who satisfy the legal qualifications will be appointed.

In New Jersey, a person is only eligible for a conservatorship if: 1) they are competent and not incapacitated; and 2) due to age, illness, or physical infirmity, cannot care for or manage their property and/or other financial affairs. In other words, unlike a POA, which can be executed by any competent adult for virtually any reason, a conservatorship will only be created if the conservatee, although otherwise competent, cannot handle their own affairs.

In New Jersey, the conservatorship process begins with a civil action that is filed with the appropriate county surrogate who will assign the matter to a Superior Court judge. At that time, if the Court deems it appropriate or necessary, the Court has the option to appoint an attorney to represent the proposed conservatee and advocate for their interests. As long as the conservatee consents to have a conservator appointed and all other legal and procedural requirements are satisfied, the Court will likely appoint a conservator. The conservator will generally be, in order, either: 1) the person or institution the conservatee requests, 2) the conservatee’s spouse, 3) the conservatee’s adult children, 4) the conservatee’s closest next of kin, or 5) some other eligible person or institution the Court deems suitable.

Whoever is appointed as conservator will generally be obligated to secure and post a bond equivalent to the value of the conservatee’s property and assets over which the conservator is granted control. This is required to protect the conservatee against a conservator’s fraud, waste, theft, or abuse. Additionally, conservators are subject to the Superior Court’s and county surrogate’s continued oversight. While serving, at a minimum, conservators are required to file an annual informal report and accounting of their activities. The Superior Court has the power to order more frequent and/or more detailed accountings if deemed necessary or appropriate.

Guardianship Proceedings

Since guardianships can be imposed on a person involuntarily, it can result in a person being declared legally incompetent and can potentially strip a person of control over their lives. Thankfully, there are a number of additional safeguards built into the process before determining an individual legally incompetent.

As in a conservatorship, the guardianship process begins with a civil action filed with the appropriate county surrogate who assigns the matter to a Superior Court judge. Among other affidavits and information, the first filing in a guardianship action must typically be supported by the affidavits of two physicians or appropriate mental health care professionals who can testify that the AIP is incapacitated and unable to manage their own affairs. Once received and accepted by the Superior Court, the Court will schedule a guardianship hearing and will appoint the AIP their own attorney. The AIP’s attorney will be expected to review the AIP’s medical records, interview the AIP and proposed guardian(s), and submit a written report and recommendation to the Court about what they believe is in the AIP’s best interest. During a guardianship hearing, the Court will consider any testimony, affidavits, and the AIP’s attorney’s recommendations. With that information, the Court will decide whether the AIP should be declared incompetent and, if so, who should be appointed to act as guardian.

It should be noted that an AIP does have the opportunity to oppose being declared incompetent. AIPs are entitled to demand that a jury trial determine whether or not they are incompetent. The AIP can demand a jury trial themselves, through their court-appointed attorney, or through a privately retained attorney of the AIP’s choosing.

Guardians themselves are divided into two categories in New Jersey: the guardian of the person and the guardian of the estate. Broadly speaking, the guardian of the person is responsible for caring for an incapacitated person’s physical and mental well-being, ensuring their needs are met, and making medical decisions on their behalf. The guardian of the estate is generally responsible for an incapacitated person’s assets, property, and other financial affairs. The same person or people can serve as both guardian(s) of the person and the guardian(s) of the estate, but it is possible for these roles to be divided among two or more people or institutions. It is also possible for a court to determine an alleged incapacitated person is only in need of a guardian of their person or a guardian of their estate, rather than both.

While there are a few exceptions, a guardian of the estate, much like a conservator, will be required to secure and post a bond with the Court equivalent to the value of the incapacitated person’s property and assets over which the guardian of the estate is granted control. As in a conservatorship, this is required to protect the incapacitated person against a guardian’s fraud, waste, theft, or abuse.

Although a guardian can have enormous power and authority to handle an incapacitated person’s affairs, the Superior Court has the power to limit the areas in which a guardian will have authority (a “limited guardianship”). Even in cases where a guardian is granted total authority (a “plenary guardianship”), the appointed guardians are still subject to the Superior Court’s and county surrogate’s supervision. Guardians of the estate must file annual reports concerning financial activity. Guardians of the person must file annual reports concerning the incapacitated person’s health and well-being. Additionally, certain actions, such as selling an incapacitated person’s real estate, requires filing a separate application to obtain the Superior Court’s permission and approval of any proposed sale terms.

The Bottom Line: Which Protective Arrangement is Appropriate?

Which protective arrangement is appropriate will depend entirely on each matter’s individual facts and circumstances. If an individual is of sound mind, has someone they can trust to manage their affairs faithfully and honestly, and wants to be proactive about planning for the unthinkable, a durable power of attorney is an excellent way for that individual to ensure their financial affairs are properly managed while avoiding the involvement of courts, incurring legal fees, and imposing bonding and reporting requirements.

Sometimes, however, we do not plan ahead, or the unexpected happens. A conservatorship may be appropriate if a family member suffers an accident that leaves them of sound mind, but physically incapable of managing their finances. Another example of when a conservatorship might be appropriate would be if a friend suffers from mental illness that leaves them lucid and competent sometimes but unpredictably and temporarily unable to manage their affairs other times.

A guardianship may be appropriate if an elderly friend or family member becomes unable to manage their affairs due to advanced dementia or Alzheimer’s disease. Another common scenario when guardianship may be appropriate is when a minor child with developmental disabilities reaches or is about to reach adulthood. Once a child with a developmental disability turns 18 years old, they are considered adults free to manage their own affairs in the eyes of the law. Due to their developmental disability, the child could very well be incompetent and thus unable to execute a durable power of attorney or consent to a conservatorship. As such, parents may lose their ability to manage their developmentally disabled child’s affairs without a court declaring the child incapacitated and appointing their parents as guardians.

Schedule an Initial Consultation with an FSKS Attorney

Every person’s situation and story is unique and may require a different strategy depending on the exact facts and circumstances. At FSKS, our attorneys are here, ready to listen, help you choose the best solution, and navigate the legal process to achieve that goal. If you have any questions about or require assistance with powers of attorney, conservatorships, or guardianships, please contact Andrew M. Grenell, Esq. at (973) 538-4700.