Trusts and conservatorships are both versatile tools in estate planning. Both have their uses, depending on your circumstances, and both can be used in conjunction with one another, or as alternatives to each other. Which is right for your situation (or that of someone you know)? It helps to understand the difference between trusts and conservatorships, how each work, and how they can help protect your assets.
What is a Conservatorship?
Conservatorships are formed when a court appoints a person, usually a family member or close friend, to manage the finances for another person who is unable to do so themselves. Conservators act as fiduciaries who can manage a person’s investments, assets, and day-to-day spending, on top of managing an estate (which can include paying lawful debts, collecting debts owed to the estate, and managing investments). The powers given to a conservator can vary based on the agreement set up with the court, but most conservators are able to act on behalf of the person subject to the conservatorship when it comes to paying bills and managing certain financial decisions.
Conservatorships are generally used in circumstances where you have a minor or incapacitated adult who is unable to manage their own finances and assets. It’s a form of protection that can be useful should a person become injured, incapacitated, or otherwise unable to act on their own behalf.
What are Trusts?
Trusts are fiduciary agreements that allow third parties or people to hold onto assets for another person, often distributing those assets at an agreed upon time, intervals, etc. There are many different types of trusts, some with very specific use cases, but they are often used to control a person’s assets after they pass away. They can help bypass probate and ensure that assets get into the hands of beneficiaries when they are intended to. They can also be used to shield assets and allow a person to continue to receive government assistance.
What’s the Major Difference?
The difference between a trust and a conservatorship comes down to what the person who manages the assets can do. A trustee can only manage and distribute the assets contained within a specific trust, while a conservator can manage the assets of an estate based on the powers given to them by the court when setting up the conservatorship.
Trusts are also generally created when a person can still manage their own funds. It’s not uncommon for a person to establish a trust, name themself as the sole trustee and beneficiary, and then name a successor trustee who can take over management of the trust should they pass away or become incapacitated.
Can Both Conservatorships and Trusts Be Used at the Same Time?
Yes, you can set up a trust and a conservatorship alongside one another, but it’s best to consult with an estate planning or probate attorney to decide what’s best for your specific circumstances. In either case, the courts can require that a surety bond be obtained before a trust or conservatorship can be established. Each bond has its own use case, and we can help you go through the process easily so that your estate planning can move forward without any delay.
If you need any type of fiduciary bonds for your estate planning, get in touch with the experts at The Patrick J. Thomas Agency today.
Disclaimer: this is for informational purposes only and is not intended to be legal advice. If you need legal counsel, please contact an attorney directly.