A person spends their life accumulating wealth and property so that he or she can provide a comfortable life for his or her family. However, the toll of age and disease may deteriorate someone to the point that they are unable to properly manage or look after the sum of their assets. This decline may cause a person to make poor financial decisions, miss critical payments or otherwise neglect the property to the extend that it becomes wasted or lost. Many decades of building a legacy can be destroyed in a fraction of that time. It may be necessary for that person to have a conservator appointed to him or her.
“The individual to be protected, a person who is interested in the individual’s estate, affairs, or welfare, including a parent, guardian, or custodian, or a person who would be adversely affected by lack of effective management of the individual’s property and business affairs may petition for a conservator’s appointment…” MCL 700.5404(1). This petition is filed in the probate court of the county that the individual can be found. A hearing must take place before the probate judge to determine if the individual actually has assets in need of protection and a conservator or some other protective order is necessary to protect them. MCL 700.5406(1).
“The court may appoint a conservator or make another protective order in relation to an individual’s estate and affairs if the court determines both of the following:”
- “The individual is unable to manage property and business affairs effectively for reasons such as mental illness, mental deficiency, physical illness or disability, chronic use of drugs, chronic intoxication, confinement, detention by a foreign power, or disappearance.” MCL 700.5401(3)(a).
- “The individual has property that will be wasted or dissipated unless proper management is provided, or money is needed for the individual’s support, care, and welfare or for those entitled to the individual’s support, and that protection is necessary to obtain or provide money.” MCL 700.5401(3)(b).
A conservator will not be appointed merely because an adult purposely dissipates and wastes assets or is bad with money. The Michigan Court of Appeals has struck down conservatorships in the following circumstances:
- In re Bittner Conservatorship, 312 Mich App 227; 879 NW2d 269 (2015) – Over objection of ward, the guardian ad litem, the court-appointed psychologist and a family member, the probate court appointed a conservator to the ward. The probate court appointed a conservator for Shirley based on psychologist’s finding that she had “poor registration and recall”, “poor arithmetic and quantitative skills”, “marginal judgment and low-average cognitive abilities”. Id at 236. The Michigan Court of Appeals disagreed and struck the conservatorship down. Under MCL 700.5401(1), the court “may appoint a conservator or make another protective order if the court determines that both of the following criteria are satisfied: (a) The individual is unable to manage property and business affairs effectively for reasons such as mental illness, mental deficiency, physical illness or disability, chronic use of drugs, chronic intoxication, confinement, detention by a foreign power, or disappearance; and (b) The individual has property that will be wasted or dissipated unless proper management is provided, or money is needed for the individual’s support, care, and welfare or for those entitled to the individual’s support, and that protection is necessary to obtain or provide money.” Id at 237. However, poor subtraction skills, relatively low cognitive-ability testing scores and inconsistent ineptitude in balancing a checkbook hardly renders a person mentally ill, mentally deficient or even incapable of making rational decisions regarding one’s bounty. Id at 239. The evidence substantiates that the ward pays her bills on time, lives within her means, satisfactorily manages her household. Id at 240. The probate court failed to make any findings regarding whether the individual’s property would be wasted or dissipated unless proper management is provided. Id at 240. In fact, the ward’s “grant of a durable power of attorney to her daughter confirms rather than negatives her ability to effectively manage her property and business affairs.” Id at 243. The probate court erred in finding that the evidence satisfied that a conservatorship was appropriate and the order appointing a conservatorship was reversed. Id at 243.
- In re Townsend Conservatorship, 293 Mich App 182; 809 NW2d 424 (2011) – Petitioner filed a petition for an appointment of a conservator over his mother on basis that, after his father’s death, the estate lost over $500,000 from his siblings’ gratuitous spending of her assets. His mother admitted that she loaned or gave money to her children and grandchildren and was in significant debt, but she had near-perfect scores on a mental status exam. The probate court found that property would be wasted or dissipated unless proper management was provided and that Townsend was a ‘vulnerable adult’ because she could not manage her own affairs, so a conservator was appointed. An appeal ensued and the Michigan Court of Appeals struck the conservatorship down. MCL 700.5401(3)(a) specifically identifies eight conditions that may affect an individual’s ability to manage his or her property and business affairs effectively: ” mental illness, mental deficiency, physical illness or disability, chronic use of drugs, chronic intoxication, confinement, detention by a foreign power, or disappearance.” Id at 188. However, since the statute says “for reasons such as”, the appointment of a conservator for an individual may be appropriate even if the individual does not suffer from one of the conditions listed in MCL 700.5401(3)(a). Id at 188. However, “any circumstance not listed in MCL 700.5401(3)(a) that prohibits an individual from effectively managing his or her property and business affairs must be of a similar nature and quality as the eight conditions listed in the statute to justify the appointment of a conservator.” Id at 189. The probate court found that Townsend was a vulnerable adult because of her inability to say no to giving money to any child or grandchild who asked. Id at 189. “But even assuming that the evidence supported a finding of exploitation, the evidence did not show that Townsend was vulnerable because, as found by the probate court, she did not have a mental or physical impairment and there was no evidence from which to conclude that her inability to say no was related to her age.” Id at 191. Therefore, there are no grounds to find that Townsend is a vulnerable adult as defined by statute. Id at 191.
Regarding children, “[t]he court may appoint a conservator or make another protective order in relation to a minor’s estate and affairs if the court determines that the minor owns money or property that requires management or protection that cannot otherwise be provided, has or may have business affairs that may be jeopardized or prevented by minority, or needs money for support and education and that protection is necessary or desirable to obtain or provide money.” MCL 700.5401(2). A typical situation where this is necessary is when the child receives a large inheritance but lacks the age-appropriate skills to manage it.
Regarding the elderly, “[t]he court may appoint a conservator in relation to the estate and affairs of an individual who is mentally competent, but due to age or physical infirmity is unable to manage his or her property and affairs effectively and who, recognizing this disability, requests a conservator’s appointment.” MCL 700.5401(4). The elderly ward’s consent is required unless the petitioner can demonstrate proof of mental illness, mental deficiency, physical illness or disability, chronic use of drugs, chronic intoxication, confinement, detention by a foreign power, or disappearance as required in MCL 700.5401(3)(a).
The Michigan legislature recognizes that the appointment of a conservator will significantly curtail the rights of the person to be protected (the “ward”) to use or manage his or her property. The conservator can convey or sell property without the ward’s consent (provided it is in the best interest of the ward). Nothing is worse than a greedy or self-interest person having access to someone’s money. Despite efforts to avoid it, unqualified individuals can and do get appointed as conservators and ultimately deplete the assets of the estate for their own benefit. To protect the individual from a wrongfully granted conservatorship, there are a number of legal safeguards put in place:
- Alternatives To Conservatorship: A petition for conservatorship must set forth “a general statement of the individual’s property with an estimate of the value of the property, including compensation, insurance, a pension, or an allowance to which the individual is entitled; and the reason why a conservator’s appointment or another protective order is necessary.” MCL 700.5404(2). This requires a disclosure from the petitioner whether the property is jointly owned by another, whether the property is held in trust and managed by a successor trustee, or whether the individual executed a durable power of attorney and his estate is managed by an attorney-in-fact.
- Guardian Ad Litem: “Unless the individual to be protected has chosen counsel, or is mentally competent but aged or physically infirm, the court shall appoint a guardian ad litem to represent the person in the proceeding.” MCL 700.5406(2). A guardian ad litem must meet with the individual and report to the court whether there is an appropriate alternative to a conservatorship and, if a conservatorship is appropriate, consider the desirability of limiting the scope and duration of the conservator’s authority. MCL 700.5406(3).
- Opinion of Physician or Mental Health Professional: “If the alleged disability is mental illness, mental deficiency, physical illness or disability, chronic use of drugs, or chronic intoxication, the court may direct that the individual alleged to need protection be examined by a physician or mental health professional appointed by the court, preferably a physician or mental health professional who is not connected with an institution in which the individual is a patient or is detained. The individual alleged to need protection has the right to secure an independent evaluation at his or her own expense.” MCL 700.5406(2). These factors are invaluable for the court in determining whether an individual is in need of protection.
- Procedural Due Process: “The individual to be protected is entitled to be present at the hearing in person. If the individual wishes to be present at the hearing, all practical steps must be taken to ensure the individual’s presence including, if necessary, moving the site of the hearing. The individual is entitled to be represented by counsel, to present evidence, to cross-examine witnesses, including a court-appointed physician or other qualified person and a visitor, and to trial by jury.” MCL 700.5406(5).
- Protective Order: If the court finds by clear and convincing evidence that an individual has property in need of protection but believes that the appointment of a conservator is overkill, the court may issues orders regarding the following:
- “[A]uthorize, direct, or ratify a transaction necessary or desirable to achieve a security, service, or care arrangement meeting the protected individual’s foreseeable needs.” MCL 700.5408(1).
- “[A]uthorize, direct, or ratify a contract, trust, or other transaction relating to the protected individual’s property and business affairs if the court determines that the transaction is in the protected individual’s best interests.” MCL 700.5408(2).
- “[A]ppoint a special conservator to assist in the accomplishment of a protective arrangement or other transaction authorized under this section. The special conservator has the authority conferred by the order and serves until discharged by order after reporting to the court on all matters done under the appointment order.” MCL 700.5408(3).
A conservator does not have the power to make decisions regarding the care and comfort of the individual such as where to live, consenting to medical treatment, or controlling daily programming or education. Those powers are reserved for a legal guardian appointed by law and is subject to a separate petition and separate filing to the probate court. The same person does not have to be the conservator and guardian.
The conservator has a duty to keep suitable records and file a complete inventory of the estate with the probate court within 56 days after the appointment (and serve a copy of the inventory upon all interested persons). MCL 700.5417. Additionally, a conservator must file an accounting with the court regarding the estate at least once per year (and serve a copy of the accounting upon all interested persons). MCL 700.5418. An interested person has a right to object to the accounting and request a hearing with the probate court.
“In relation to powers conferred by this part or implicit in the title acquired by virtue of the proceeding, a conservator shall act as a fiduciary and observe the standard of care applicable to a trustee.” MCL 700.5416. The conservator has the following powers and duties regarding distributions from the estate:
- “The conservator shall consider a recommendation relating to the appropriate standard of support, education, and benefit for the protected individual or a dependent made by a parent or guardian, if any. The conservator shall not be surcharged for money paid to a person or organization furnishing support, education, or care to the protected individual or a dependent in compliance with the recommendation of the protected individual’s parent or guardian unless the conservator knows that the parent or guardian derives personal financial benefit from that payment, including a benefit by relief from a personal duty of support, or that the recommendation is clearly not in the protected individual’s best interests.” MCL 700.5425(a).
- “The conservator shall expend or distribute money reasonably necessary for the support, education, care, or benefit of the protected individual or a dependent with due regard to all of the following (MCL 700.5425(b)):
- “(i) The estate size, the conservatorship’s probable duration, and the likelihood that the protected individual, at some future time, may be fully able to be wholly self-sufficient and able to manage business affairs and the estate.”
- “(ii) The accustomed standard of living of the protected individual and the dependents.”
- “(iii) Other money or sources used for the protected individual’s support.”
- “The conservator may expend estate money for the support of an individual legally dependent on the protected individual and others who are members of the protected individual’s household who are unable to support themselves and who are in need of support.” MCL 700.5425(c).
- “The conservator may pay money to be expended under this section to any person, including the protected individual, to reimburse for an expenditure that the conservator might have made or in advance for a service to be rendered to the protected individual, if it is reasonable to expect the service will be performed and an advance payment is customary or reasonably necessary under the circumstances.” MCL 700.5425(d).
Applying for a conservatorship for a love one can be a trying time. The individual may resent the attempts of others to control his or her money and property and will legally contest the petition. Other family members may perceive that you are trying to take advantage of a vulnerable adult and can challenge your petition. The judge may find that the individual would not waste or dissipate their property despite evidence to the contrary. To get around these obstacles, the guidance and skill of a probate lawyer can be invaluable. Our law firm has years of experience handling conservatorship cases for wards and conservators alike.
If you need assistance with your conservatorship matter or have questions regarding whether it is appropriate for your situation, do not hesitate to contact the attorneys at Kershaw, Vititoe & Jedinak PLC.