How to Handle Member Accounts and Services for Legal Guardians or Conservators

Editor’s Note: The following article is contributed by law firm Farleigh Wada Witt.

Through the ups and downs of life, sometimes people need outside help to manage their affairs, financial or otherwise. In some cases, family members may find it necessary to have the court appoint someone with the official duty and power to help manage those affairs — namely a guardian or conservator. There are specific ways credit unions should handle accounts and services for a member subject to guardianship or conservatorship.

The duties of guardians and conservators differ substantially, but there are also some areas of overlap — financial matters being one of them. Generally speaking, a guardian is appointed to make decisions regarding an individual’s personal affairs, while a conservator is appointed to make decisions regarding an individual’s property or financial affairs. (These definitions are drawn from Washington’s newly enacted Uniform Guardianship, Conservatorship, and Other Protective Arrangements Act, RCW Ch. 11.130. Oregon and Idaho have their own guardianship and conservatorship statutes which are different from Washington’s but the same basic principles apply in all three states.) Although a guardian’s duties are primarily nonfinancial, those duties necessarily entail some financial activity and authority and therefore, interaction with their credit union.

Establishing Authority of Guardian or Conservator       

The process of establishing the authority of a guardian or conservator is similar to the probate process. When the court determines that a guardianship or conservatorship is necessary, it issues an order to that effect and then issues an order appointing a guardian or conservator, subject to the guardian or conservator’s satisfaction of applicable requirements, such as filing a bond. Once those requirements (if any) have been satisfied, the court issues letters of guardianship or conservatorship confirming that the person has satisfied the requirements and is authorized to act as such.

The guardianship and conservatorship statutes in Idaho, Oregon, and Washington all establish specific powers available to guardians and conservators. However, the statutes also authorize the court to limit those powers in a variety of ways. Thus, before allowing a guardian or conservator to take any action regarding a member’s accounts, the credit union should examine and retain a copy of the order appointing the guardian or conservator and the letters of guardianship or conservatorship.

When reviewing the order appointing the guardian or conservator and the letters confirming their service, the credit union should look for any specific limitations on the scope of the guardian’s or conservator’s powers and on the time period for which the guardian or conservator is appointed. In addition, the credit union should determine whether the order requires court approval for any specific actions or activities (such as expenditures over a certain amount).

Authority of Guardians and Conservators

Once the court has appointed a guardian or conservator, the credit union may provide that person with access to all information regarding the member’s accounts and services. In general, a guardian may be permitted to conduct transactions on deposit accounts unless the court has also appointed a conservator. (This is often necessary for the guardian to perform duties such as maintaining housing or medical care for the protected person.) If the court has appointed a conservator, they would generally be the party to handle all of the financial issues. A conservator may access and conduct transactions on the member’s accounts and services.

The statutes generally authorize a conservator to borrow on behalf of the conservatorship and grant a security interest in assets, but a guardian does not have this power (unless the court so orders).

Can Protected Persons Access Their Accounts?

Guardians and conservators are charged with the duty to protect and preserve the assets they manage for the benefit of the protected person. Once the credit union is aware that a guardian or conservator has been appointed, it should not permit access by the protected person. However, in some cases a guardian or conservator may allow the protected person to have some access to some funds in order to preserve and promote their independence. The credit union is entitled to follow the guardian’s or conservator’s directions in this regard; usually a separate account would be established for this purpose so that the guardian or conservator can limit the protected person’s ability to overspend, without allowing access to the “main” account.

Changes to Guardian/Conservator

Unlike a trust, which generally names successor trustees, the court does not generally name a successor guardian or conservator to step in if the original guardian or conservator dies or becomes incapacitated or otherwise unable to serve. When that happens, the court must issue an order appointing a new guardian or conservator and the credit union must review the order and the letters to verify their scope and limitations before permitting the new guardian or conservator to act. The death or incapacity of the guardian or conservator does not give the protected person the authority to access the guardianship or conservatorship account on their own behalf.

Changes to Protected Persons

If the protected person dies, the guardian or conservator has a duty to ensure that the funds are paid to the person entitled to act on behalf of the protected person’s estate. However, if a probate is initiated and a personal representative is appointed and asks the credit union for the funds, the credit union may pay the funds to the personal representative.

If the protected person no longer needs the protection of a guardian or conservator, they must obtain an order from the court terminating the guardianship or custodianship. Until the court terminates the guardianship or custodianship, the credit union must continue to follow the instructions of the guardian or conservator.

Serving members subject to a guardianship or conservatorship is part of the “People Helping People” philosophy credit unions are known for. Knowledge of the above principles can help credit unions provide that service most effectively.

For questions, please contact the legal experts at Farleigh Wada Witt.

Posted in Public Awareness.