Conservatorship Definition, How It Works, Types, Alternatives

What Is a Conservatorship?

Conservatorship is a legal status in which a court appoints a person to manage the financial and personal affairs of a minor or incapacitated person.

A conservator may also serve as a guardian who is responsible for establishing and monitoring the physical care of the individual and managing their living arrangements.

How a Conservatorship Works

Conservatorship generally refers to the designation of a conservator by a court to manage the financial and personal affairs of an incapacitated or incompetent individual, minor, or older adult with limited capacity. In general, a conservatorship and a guardianship are different, but the same person can serve in both roles. A guardianship generally entails the appointment of a person to oversee the physical and medical care of an individual with limited capacity.

Conservatorships can be general or limited. Under a general conservatorship, a conservatee—the person under the conservatorship—typically has little to no decision-making powers. A limited conservatorship allows the conservatee to keep a majority of control over their financial and personal affairs, with the exception of what the court orders the conservator to oversee.

The terminology of conservatorships can vary in different jurisdictions. In some jurisdictions and states, a conservatorship is referred to as a guardianship, and conservators are sometimes called trustees. In California, both roles are called conservatorship, with the guardian role termed "conservator of the person" and the financial role called "conservator of the estate."

Types of Conservatorship

There are two ways to establish a conservatorship, depending on whether it's for an individual, corporation, or organization.

Individuals

A court order will establish a conservatorship for an individual who is a minor or a person with physical or intellectual disabilities. Individuals needing conservatorship may include people who are suicidal or who struggle with psychosis, dementia, or intellectual disabilities that render the person unable to make legal, financial, and medical decisions on their own behalf.

Elderly individuals—specifically those with Alzheimer's or dementia—are also included among individuals who may fall under a conservatorship. For conservatorships of individuals, mental capacity must be determined by a psychiatrist, psychologist, or physician with extensive experience and training to diagnose conditions like dementia. Every diagnosis or determination must be documented and verified before a conservatorship over an individual can be ordered.

In some cases, the person subject to the conservatorship can sue to have it removed at a later date if they believe it is no longer necessary. A high-profile example is the conservatorship of pop star Britney Spears. In June 2021, she asked a court to end a 13-year conservatorship overseen by her father and a lawyer, which was put in place after she had some very public mental breakdowns. Under the conservatorship, Spears lost control of financial decisions as well as many personal decisions. A judge ruled to end the conservatorship in November 2021.

Organizations and Corporations

A statutory or regulating authority creates a conservatorship for an organization or corporation. In the case of government control of private organizations or corporations, conservatorship entails authority that is temporary.

One example is the conservatorship of Fannie Mae (FNMA) and Freddie Mac (FHLMC). The Federal Housing Finance Agency (FHFA) acts as a conservator for these two agencies. The conservatorships, established during the financial crisis of 2008, allowed government intervention in the agencies' management in response to financial pressures from the deterioration of the housing market. In recent years, steps have been taken to transition Fannie Mae and Freddie Mac out of conservatorship.