A conservator appointed by the probate court to manage the property of a disabled person or minor is a fiduciary in the eyes of the law. This means that the conservator must act reasonably and prudently to safeguard the ward’s assets and always act in the best interest of the person to be protected. Self-dealing and mismanagement of assets is prohibited. “The court may remove a conservator for good cause, upon notice and hearing.” MCL 700.5414. “Upon the conservator’s… removal, the court may appoint another conservator”… that “succeeds to the title and powers of the predecessor.” Id. Any person interested in the ward’s welfare may petition the probate court to remove a conservator. MCL 700.5415(1)(d).
What constitutes “good cause” to remove a conservator? Courts have removed conservators from their roles in the following situations:
- In re Estate of Simmons, unpublished per curiam opinion of the Court of Appeals issued December 23, 2008 (Docket No, 281904) – The conservator was managing the assets of her son, a military veteran, and was responsible for handling the benefits he received from the Veterans Administration (VA). In 2005, the VA awarded $68,980.48 to the ward as past-due compensation and the conservator took the money for herself and claimed it on her annual account as an expense of the estate. The probate court properly removed her as conservator because she breached a duty to her son “to manage his estate in a prudent manner and without self-interest. She had no receipts or other documentation to show she incurred an amount totaling $68,980.48 for her son’s care which was far over and above and other amounts claimed in previous years. Since she could not account for the expense allegedly incurred, she was properly removed.
- In re Conservatorship of Austin, unpublished per curiam opinion of the Court of Appeals issued July 18, 2013 (Docket No, 308676) – The conservator was managing the benefits received from Social Security and private pension funds on behalf of the ward, her great-aunt. In her accounting, she failed to provide receipts for $26,000.00 in expenditures, failed to produce tax returns, failed to produce utility records to show her 1/6 share of the expenses, and failed to produce a prepaid funeral as previously ordered by the court. In addition, she came into conflict with every court-appointed guardian ad litem on the case that provided an investigation and report. Since the conservator could not account for the expenses allegedly incurred on the ward’s behalf, then she breached her fiduciary duty by removing funds from the estate. Therefore, the court had good cause to remove her.
However, the fact that not every cent is covered by a receipt, bill or timekeeping record does not, by itself, provide a basis to remove a conservator. In Conservatorship of Elaine Jaye, unpublished per curiam opinion of the Court of Appeals issued January 24, 2019 (Docket No. 342195), the petitioner (the son of the ward) attempted to remove the conservator (the daughter of the ward) when she failed to provide itemized records, the utilities were exorbitant, and the “care-giving” expenses paid to the conservator’s husband were not supported by proper documentation. The petitioner alleges that the conservator was pocketing the VA benefits and the husband was not actually providing care-taking services. The probate court disagreed and found that the expenditures for the ward’s support and care were “reasonably necessary” and nothing in the conservator’s accounting suggest that she acted in bad faith or outside the limits of the law. Although MCR 5.310(C)(2)(c) says “[a]ll accountings must be itemized”, the probate court did not err in finding that the designation “care-taking” was sufficient and that everything appeared to be “accounted for”. Since the conservator substantially complied with her duties, there was no basis to remove her from the role. She was competent, suitable and willing to serve as conservator.
Probate courts will remove conservators that willfully fail to comply with their statutory duties, convert assets from the estate, commingle funds with their own funds, or do not properly account for large or unreasonable expenditures. In addition, the probate court can assess a surcharge against the removed conservator to pay for attorney fees, court costs and repayment for the amounts that were converted or commingled. Finally, conservators are even subject to criminal prosecution for conversion or embezzlement that can result in jail or prison. The penalties for breach of fiduciary duty can be very severe.
Conservators are entitled to hire professionals to assist them in the performance of their duties, including attorneys, appraisers and accountants. These professionals can be employed at the expense of the ward’s estate. A skilled probate lawyer can be valuable to both conservators and interested persons alike. A conservator can benefit from sound legal advice to carry out their duties. A beneficiary who suspects that a conservator is breaching their fiduciary duties can benefit from legal representation to present legally admissible evidence and make persuasive arguments to the probate court to remove that person and prevent further harm. Don’t wait too long to fix the damage caused!
If you or a loved one have any questions about conservatorships or need legal representation, then do not hesitate to contact the experienced attorneys at Kershaw, Vititoe & Jedinak PLC for assistance today.