How Conservatorships Can Help Prevent Financial Exploitation

Due to a variety of factors, including cognitive decline and isolation, elderly adults are particularly vulnerable to financial exploitation and abuse. These wrongful acts involve taking advantage of someone else’s financial resources without their consent. Critically, a conservatorship can be a vital tool to prevent financial exploitation — and help ensure the protected person’s assets are safeguarded from wrongdoers.

What are Signs of Financial Exploitation?

Financial exploitation is the wrongful or illegal use of someone else’s money or assets through deception, undue influence, or coercion for the perpetrator’s personal gain. It can occur in a variety of ways, including taking valuables without permission, pressuring someone into giving up their assets, and manipulating a person into making certain financial decisions. While financial exploitation can happen to anyone, the elderly are most often targeted. Not only are older adults likely to have more financial resources than those who are younger, but age-related conditions such as dementia and mental impairment can make it more difficult for them to make sound financial decisions.

Common signs of financial exploitation of an elderly person can include the following:

• Unpaid bills
• Unusual banking activity
• New names added to accounts
• Checks made out to “cash”
• Large ATM withdrawals
• Increasing credit card balance
• Forged signatures on checks
• Changes to estate planning documents
• Unexplained asset transfers

Importantly, the wrongdoer doesn’t always have to be a stranger. In fact, the perpetrator of financial exploitation is often a family member, friend, or caretaker who takes advantage of the elderly person’s trust and vulnerability.

How Can a Conservatorship Help Prevent Financial Exploitation?

Not to be confused with a guardianship — in which an individual is appointed by the court to ensure the health, welfare, and safety of the protected person — a conservatorship gives someone else the legal authority to make financial decisions on behalf of an incapacitated person. A conservator can be granted the power to sign checks, pay bills, access bank accounts, handle business matters, and manage various other financial aspects of the protected person’s life. Not only can a trustworthy conservator ensure that the protected person’s assets are safe, but they can also be instrumental in shielding them from unscrupulous individuals.

Specifically, a conservatorship can help prevent financial exploitation by offering the following protections:

• Financial decision-making authority — Conservators are granted the authority to make decisions on behalf of the protected person in accordance with their wishes and preferences.
• Prudent management of assets — Conservators are required to handle the protected person’s assets responsibly and manage their assets prudently.
• Court oversight — A conservatorship is subject to ongoing court monitoring and oversight. Annual reports must be filed listing the protected person’s property and any assets disbursed. This can help to prevent financial exploitation, detect any financial mismanagement, and allow for intervention if necessary.
• Fiduciary duty — A conservator has a fiduciary duty to act in the protected person’s best interests.
• Accountability — A conservator is legally accountable to both the protected person and the court for their decisions. They must maintain accurate records and report to the court regarding their actions. If a conservator fails to act in the best interests of the protected person, they can be held liable.

Due to the court’s involvement and requirement of transparency, a person in need of a conservatorship is also protected from financial abuse by the conservator themselves. In the event financial exploitation by the conservator is suspected, the protected person’s family can petition the court to investigate the misconduct.

How is a Conservatorship Established?

A conservatorship is established by petitioning the court to appoint someone to handle an incapacitated person’s financial matters. While any person with an interest may file a petition, the court must find that the individual is legally incapacitated and cannot make sound financial decisions. If the court finds that a conservatorship is necessary, and there is no appropriate alternative, it will determine the extent of the conservator’s powers. Notably, if an adult voluntarily petitions the court for a conservatorship or consents to the appointment of a conservator, a finding of incapacity is not necessary.

By law, a court must consider the least restrictive means before establishing a conservatorship. Critically, there are a number of measures an individual can implement before the need for a conservatorship arises. Powers of attorney and living trusts can help avoid conservatorships by designating a person they wish to manage an individual’s financial affairs if they no longer have the capacity to do so. These tools can also ensure that the individual’s financial matters are handled in accordance with their wishes.

Contact an Experienced Minnesota Conservatorship Attorney

Conservatorships can be complex. Whether you are establishing a conservatorship or contesting one, it’s essential to have an experienced attorney who can guide you through the legal process. At Dave Burns Law Office, I provide reliable representation and compassionate counsel for Minnesota conservatorship proceedings.

If you are facing a conservatorship matter, I welcome you to contact me at (612) 677-8351 or by emailing dave@daveburnslaw.com. I assist clients throughout the Twin Cities metro area and am available to meet with clients in both Minneapolis and St. Paul.