Self-Dealing Is Presumed Invalid
When someone manages another person's finances, the temptation for self-dealing is real. Arizona law addresses this head-on. Any sale or encumbrance of the protected person's property that benefits the conservator personally is voidable, meaning the court can undo it.
Any sale or encumbrance to a conservator, his spouse, agent or attorney, or any corporation or trust in which he has a substantial beneficial interest, or any transaction which is affected by a substantial conflict of interest is voidable unless the transaction is approved by the court after notice to interested persons and others as directed by the court.
A.R.S. § 14-5422The rule is broad. It covers direct transactions with the conservator, transactions with the conservator's spouse, agent, or attorney, and deals with any entity where the conservator has a substantial beneficial interest. It also catches any transaction "affected by a substantial conflict of interest," which gives courts flexibility to address creative arrangements that technically avoid the named categories.
The Only Exception: Court Approval
The statute does leave one path open. If the conservator believes a transaction with a conflict of interest is genuinely in the protected person's best interest, they can petition the court for approval. The court must provide notice to all interested persons and hold a hearing before approving the transaction.
This is not a rubber stamp. Courts scrutinize these requests carefully, and the conservator carries the burden of showing the transaction is fair and beneficial to the protected person. For families involved in a conservatorship, this rule provides an important safeguard. If you suspect a conservator is engaging in self-dealing, consulting with a partner attorney about the situation is a practical first step.
