updated 6/12/2005 8:17:04 PM ET 2005-06-13T00:17:04

Joan Kennedy has reached a settlement with her children that calls for two trustees to manage her estate, while a guardian supervises her personal affairs, a source close to the case said Sunday.

The settlement also calls for the former wife of U.S. Sen. Edward Kennedy to enter a program to treat her alcoholism, the source said on condition of anonymity.

Kennedy’s three children, including U.S. Rep. Patrick Kennedy, D-R.I., had been scheduled to appear in court Monday to ask a judge to appoint a permanent legal guardian to manage their mother’s finances and to make decisions about her health.

The hearing was canceled following the agreement on the settlement, said Patrick Kennedy’s spokeswoman, Robin Costello. She declined to provide any further details.

Joan Kennedy’s attorney also declined to comment on the settlement, but said his client will not have a permanent legal guardian managing her estate.

The anonymous source said the guardian ad litem will monitor Joan Kennedy’s finances and health and report to a judge, but will not have the power to make decisions for her. The source also said her estate — including a $6.4 million oceanfront home on Cape Cod — will be held in a trust and managed by two trustees.

Joan Kennedy, 68, has been arrested several times for drunken driving and gone through rehab repeatedly. In March, she was hospitalized with a concussion and a broken shoulder after a passer-by found her sprawled on a Boston sidewalk.

Kennedy didn’t contest her children’s bid for guardianship last July, when a judge ruled she was “incapable of taking care of herself by reason of mental illness.”

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