What a conservator can and cannot spend money on comes down to a simple test with hard edges: estate funds can cover anything that directly supports the conservatee’s health, housing, daily life, taxes, and the reasonable costs of running the conservatorship itself, but they cannot be used for the conservator’s own benefit, for gifts or loans, for speculative investments, or for major transactions the court hasn’t approved. Every dollar has to be reasonable, documented, and consistent with the life the conservatee was living before.
What the Estate Can Pay For
The clearest category is day-to-day living. Courts expect the conservator to maintain the conservatee’s accustomed standard of living as long as the estate can support it, rather than cutting costs to the bone. If the person lived comfortably, ate well, and had an active social life before the conservatorship, that pattern should continue.
Housing is usually the biggest line item. The estate pays mortgage or rent, property taxes, homeowner’s or renter’s insurance, utilities, and routine maintenance. A leaking roof or a broken furnace is a necessary repair. A kitchen remodel generally is not, unless the court approves it.
Beyond housing, the estate covers groceries and prepared meals, clothing, toiletries, personal grooming, and transportation such as car insurance, gas, or ride services. Recreation and hobbies the conservatee enjoys count too. Subscriptions, community events, travel to visit family — if the person did it before and the estate can afford it, it stays. The test is whether the expense genuinely serves the conservatee rather than someone else’s convenience.
Healthcare
Medical spending is often the second-largest category, and conservators have broad authority here because needs are unpredictable. Permissible healthcare costs include doctor visits, hospital bills, health insurance premiums, prescription medications, dental and vision care, mental health treatment, and equipment such as wheelchairs or hearing aids.
For conservatees who need ongoing help, the estate can pay for in-home caregivers, assisted living, or nursing home fees. Before draining the estate for long-term care, a careful conservator checks what the conservatee qualifies for through Medicare, Medicaid, or veterans’ benefits. Most states expect public benefits to be used where available rather than depleting estate funds unnecessarily.
Professional Fees and the Conservator’s Own Compensation
Running a conservatorship generates its own costs, and those costs come out of the estate. Families often overlook this when estimating where the money will go.
Most states allow conservators to receive reasonable compensation for their time. Courts look at the size and complexity of the estate, hours spent, skill required, and benefit to the conservatee. A family member serving as conservator can request payment, usually less than a professional fiduciary would charge. Professional conservators bill hourly rates that vary by region and estate complexity.
Attorney fees for the initial petition, annual accountings, court hearings, and contested matters are paid from the estate, subject to court review for reasonableness. Accountants, financial advisors, property managers, and tax preparers are reimbursable when their services are genuinely necessary. Most courts also require a surety bond, which protects the conservatee if funds are mishandled; the annual premium is paid by the estate and is generally tied to asset value plus anticipated income.
A conservator who pays something out of pocket on the conservatee’s behalf can seek reimbursement through the accounting process. Keep receipts showing date, amount, payee, and purpose. Cash payments with no paper trail are where disputes start.
Taxes
For tax purposes, a conservator steps into the conservatee’s shoes. The IRS treats the conservator as the taxpayer, which means filing all required returns and paying any tax due on the conservatee’s behalf.1Internal Revenue Service. Instructions for Form 56 – Notice Concerning Fiduciary Relationship That includes federal and state income tax and, where applicable, property tax and any estate-related returns.
The first step after appointment is filing IRS Form 56, which formally notifies the IRS of the fiduciary relationship.1Internal Revenue Service. Instructions for Form 56 – Notice Concerning Fiduciary Relationship From then on, the conservator signs the conservatee’s returns in their own name on the conservatee’s behalf.2Internal Revenue Service. Return Signature Preparation fees, estimated tax payments, and any back taxes owed are legitimate estate expenditures. Missed deadlines produce penalties that come out of the estate, so this obligation deserves the same attention as any medical bill.
What Requires Court Approval First
Routine expenses the conservator handles independently. Larger or unusual transactions generally need a court order before the conservator acts. Specifics vary by state, but the common thread is any transaction involving a significant asset, an unusual commitment, or a potential conflict of interest.
Actions that typically require advance approval:
- Selling, mortgaging, or transferring real estate. The conservatee’s home is usually the most valuable and emotionally significant asset, and courts want to confirm the move is necessary.
- Making gifts or charitable donations. Even where the conservatee had a long history of giving, the conservator cannot continue that pattern without explicit permission.
- Changing the conservatee’s residence, particularly moves to institutional care.
- Entering long-term contracts, including leases and service agreements that bind the estate over time.
- Buying insurance or annuity products, which lock up funds and may carry surrender penalties.
When in doubt about a non-routine expense, a conservator can petition the court for guidance. A pre-approved transaction is much harder to challenge later.
What a Conservator Cannot Spend Money On
The prohibitions exist to prevent the most common forms of abuse. The biggest is self-dealing: using the conservatee’s assets for the conservator’s own benefit. Paying personal bills from the estate, buying property for yourself with estate funds, making loans to yourself or family members, or directing estate business to companies you have a financial interest in all qualify. Intent to pay the money back doesn’t matter. The prohibition is categorical.
Lending estate funds to anyone is off-limits, whether the borrower is a friend, a relative, or a business associate. The job is to preserve and protect the estate, not to act as a bank.
Investment choices are constrained by the prudent investor standard, which most states have adopted in some form. It requires the conservator to consider the portfolio’s overall risk and return rather than gambling on a single bet. Nothing limits conservators to savings accounts, but speculative positions in volatile stocks, cryptocurrency, startup businesses, or other high-risk ventures are likely to be found improper. The money should be invested conservatively relative to the conservatee’s age, needs, and timeline, with diversification across asset types.
One hard boundary that catches people off guard: a conservator cannot create or change a will on the conservatee’s behalf. The power to make a will is personal and does not transfer to a conservator under any circumstances. Modifying beneficiary designations on life insurance or retirement accounts typically requires court approval as well.
The conservatee’s money also has to be kept separate. Estate assets belong in accounts clearly identified as the conservatorship’s, never mixed with the conservator’s personal funds.3United States Air Force Academy Legal Office. So Now You Are A Conservator Even temporary commingling can trigger a court inquiry and possible removal.
How Spending Gets Checked
Courts don’t hand over control of a vulnerable person’s finances and walk away. Oversight begins with an initial inventory of all the conservatee’s assets, typically due within 90 days of appointment. That inventory sets the baseline against which future spending is measured.
After that, most courts require detailed annual accountings. The report shows every dollar in and every dollar out, with supporting bank statements and receipts. It isn’t a summary or an estimate. It’s a transaction-by-transaction record. Courts compare the activity against the conservatee’s known needs and the size of the estate. Unexplained withdrawals, spending that doesn’t match the conservatee’s lifestyle, or missing documentation will draw scrutiny.
Some courts also ask for a proposed budget at the outset, laying out anticipated expenses by category. A court-approved budget gives the conservator clearer authority for routine spending and makes annual accountings easier to prepare.
What Happens If You Get It Wrong
A conservator who misuses funds faces layered consequences. The most immediate is a surcharge action: the court orders the conservator to repay the estate from personal funds for any amount improperly spent, lost through negligence, or unaccounted for. The surety bond exists precisely for situations where the conservator can’t pay.
Beyond financial liability, the court can remove the conservator and appoint a successor. Removal is disruptive and expensive for the estate because it triggers new proceedings, a fresh inventory, and attorney fees for both the outgoing and incoming conservator.
When misconduct crosses from negligence into intentional theft or exploitation, criminal charges become a real possibility. Every state has laws targeting financial exploitation of vulnerable adults, and misusing a conservatorship to steal assets falls squarely within those statutes.4U.S. Department of Justice. Elder Abuse and Elder Financial Exploitation Statutes Depending on the amount and the state, charges range from misdemeanors to serious felonies carrying years in prison. Family members, social workers, and court investigators can report suspected abuse to trigger an investigation at any point during the conservatorship.