As defined by Michigan’s Estates and Protected Individuals Code (EPIC), a conservator is a person appointed by a court to manage a protected individual’s estate.
A conservator may be appointed in situations where an individual can no longer effectively manage their own finances or property. In such instances, a conservator takes on the responsibility of helping to manage some or all of the income, savings, and property of the individual, who is known as the protected person.
Conservators take on an incredibly important set of responsibilities, which can change and develop over time based on the needs of the protected person and the complexity of their assets and finances, known collectively as their estate.
As the Michigan Long Term Care Ombudsman Program puts it in its Handbook for Conservators of Adults:
Being a conservator is not a simple role, but one demanding responsibility, patience, ability to work with finances and sensitivity. There are a number of duties you owe to the person you have agreed to assist. There are also duties you owe to the court… How complicated serving as conservator will be, and how much time it will take, depend on a number of factors: the value of the property, the types of assets, the needs of the individual, whether there are dependents, and the extent of cooperation among family members.
It is important to note that the responsibilities of a conservator are different from those of a guardian — though the same person may be appointed to serve in both roles. Ultimately, guardians can be said to make personal decisions on behalf of the protected person, such as medical or housing decisions. In contrast, conservators make decisions and take action regarding property and finances.
Conservatorships must be established in the probate court. Even under the best of circumstances, these cases are often highly emotional, and the rules surrounding the appointment, removal, and duties of a conservator can be confusing. As you look deeper into conservatorships, it may prove important to consult with an experienced probate and conservatorship attorney, who can fight for your rights and the well-being of others.
Interested in learning more? Let’s explore the powers, duties, and responsibilities of a Michigan conservator in a bit more depth:
How Is a Conservator Appointed?
Generally speaking, a conservator is appointed in three main steps, as the Michigan Bar Association explains in a writing:
- A petitioner files with the courts to begin a proceeding.
- The court takes action to review the facts and ensure that proper procedures are followed, such as appointing a guardian ad litem to represent the subject of the petition.
- A hearing is held, at which the judge will determine if a conservatorship is required based on “clear and convincing evidence.” If so, the court will then appoint a conservator who is suitable and willing to serve.
When is a conservatorship necessary?
In Michigan, the court may appoint a conservator or make another protective order in situations where:
- The individual is unable to manage their 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.
- The individual has property that will be wasted or dissipated unless proper management is provided
- Protection is needed in order to obtain or provide money that is needed for the individual’s support, care, and welfare
- The individual is mentally competent but requests a conservator’s appointment due to age or physical infirmity
During a typical conservatorship proceeding, the court may have a guardian ad litem, physician, or mental health professional examine or evaluate the subject of the petition in order to consider whether there might be an appropriate alternative to conservatorship, or consider “limiting the scope and duration of the conservator’s authority” in situations where conservatorship is appropriate.
Broadly speaking, the court’s goal is to “encourage the development of maximum self-reliance and independence of a protected individual,” and “shall make protective orders only to the extent necessitated by the protected individual’s mental and adaptive limitations and other conditions warranting the procedure.”
This could result in the court narrowing the scope of the conservatorship by, say, authorizing the protected person to autonomously handle part of their money or property outside of the supervision of the conservator.
Who can petition for the creation of a conservatorship?
There are multiple parties who may petition for a conservator’s appointment, including:
- The individual to be protected
- An interested person in the individual’s estate, affairs, or welfare, such as a parent or guardian
- A person who might be adversely affected by a lack of effective management of the individual’s property or business affairs
A petition for conservatorship must explain the petitioner’s interest, explain why a conservator’s appointment is necessary, and state some crucial information, including
- the name, age, residence, and address of the individual to be protected
- the name and address of their guardian, if any
- the name and address of the nearest relative known to the petitioner
- 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
Who can be appointed as a conservator?
Under Michigan law, the court may appoint “an individual, a corporation authorized to exercise fiduciary powers, or a professional conservator” to serve as conservator of a protected individual’s estate.
Broadly speaking, consideration for appointment uses the following order of priority:
- A conservator, guardian of property, or similar fiduciary appointed or recognized by the appropriate court of another jurisdiction in which the protected individual resides
- An individual or corporation nominated by the protected individual if he or she is 14 years of age or older and of sufficient mental capacity to make an intelligent choice, including a nomination made in a durable power of attorney.
- The protected individual’s spouse.
- An adult child of the protected individual.
- A parent of the protected individual or a person nominated by the will of a deceased parent.
- A relative of the protected individual with whom he or she has resided for more than 6 months before the petition is filed.
- A person nominated by the person who is caring for or paying benefits to the protected individual.
A person named in the categories above may also designate a substitute to serve in their place, which transfers the priority to the named substitute. If multiple parties have equal priority, the court will select the person the court considers best qualified to serve. The court may also pass over a person having priority and appoint a person having a lower priority or no priority, if it deems that it is in the protected person’s best interest to do so.
Generally speaking, the court may require a conservator to furnish a bond “conditioned upon faithful discharge of all duties of the conservator’s trust according to law, with sureties as the court specifies.”
Conservators are entitled to reasonable compensation from the estate, if not otherwise compensated for services rendered.
When Does a Conservatorship End?
A conservatorship can be modified or terminated in a number of different circumstances. Generally speaking, the protected individual, the conservator, or another interested person can petition for a termination of the conservatorship at any time.
The court may also remove a conservator for good cause upon notice and hearing, or accept a conservator’s resignation. A conservatorship also terminates upon the death of the conservator. Upon the conservator’s death, resignation, or removal, the court may appoint another conservator, who succeeds to the title and powers of their predecessor.
What Are the General Powers, Duties, and Responsibilities of a Conservator?
As EPIC puts it:
“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.”
More specifically, the conservator is responsible for a number of specific duties and responsibilities, including:
Maintaining Inventory and Records
Very shortly after appointment, a conservator is required to prepare and file a complete inventory of the estate subject to the conservatorship, and provide a copy to the protected individual and other interested persons. Conservators are expected to keep suitable records of their activities relating to the administration of the protected individual’s estate, and be ready to exhibit those records upon request from an interested person.
Providing Regular Accounts
A conservator is expected to account to the court at least once per year, upon resignation or removal, and at other times as directed by the court. A conservator may also be asked to submit to a “physical check of the estate to be made in any manner the court specifies.”
Acting In the Best Interests of the Estate
A conservator is a fiduciary, meaning that they have a duty to act with undivided loyalty, impartiality, care, and prudence. Fiduciaries are expected to keep assets held in the fiduciary capacity separate from their own, and conform to the Michigan prudent investor rule.
For conservators, this means taking actions that are in the best interest of the protected individual, while avoiding self-dealing and conflicts of interest.
Generally speaking, EPIC states that “a sale, encumbrance, or other transaction involving the investment or management of estate property in which the conservator has a substantial beneficial interest or that is otherwise affected by a substantial conflict between the conservator’s fiduciary and personal interests, is voidable” unless:
- The transaction is approved by the court after notice
- The transaction involves a contract entered into or claim acquired by the conservator before the person became or contemplated becoming conservator.
- The transaction is otherwise permitted by statute.
Administering the Protected Individual’s Estate
The conservator is conferred a broad array of powers in order to administer the protected individual’s estate, including but not limited to:
- Collecting, holding, or retaining estate property
- Receiving an addition to the estate
- Continuing or participating in the operation of a business or other enterprise. Consenting to the reorganization, consolidation, merger, dissolution, or liquidation of a corporation or other business enterprise.
- Investing or reinvesting estate property, in accordance with the Michigan prudent investor rule.
- Depositing estate money in a state or federally insured financial institution
- Acquiring, disposing of, developing, or managing estate property, including land in another state. This includes making an ordinary or extraordinary repair or alteration in a building or other structure, demolishing an improvement, or razing an existing or erect a new party wall or building.
- Voting a security, in person or by general or limited proxy. Selling or exercising stock subscription or conversion rights.
- Insuring estate property against damage or loss
- Borrowing money to be repaid from estate property or otherwise.
- Advancing money for the protection of the estate or the protected individual, and for all expenses, losses, or liabilities sustained in the estate’s administration or because of the holding or ownership of estate property.
- Paying or contesting a claim; settling a claim by or against the estate or the protected individual by compromise, arbitration
- Paying taxes, assessments, compensation, or other expense incurred in the estate’s collection, care, administration, and protection.
- Employing a person, including an auditor, investment advisor, attorney, or agent, to advise or assist in the performance of an administrative duty
Broadly speaking, conservators also have distributive powers, and may expend or distribute estate income or principal “for the support, education, care, or benefit of the protected individual or the protected individual’s dependents” based on factors such as the recommendation of a guardian, the size of the estate, and the accustomed standard of living of the protected individual and their dependents.
In certain situations, a conservator for a protected individual other than a minor also has the power to make a gift to charity or another object, as the protected individual might have been expected to make, as long as they stay below a certain threshold.
The conservator is also expected to take action in the event of the death of the protected individual — including delivering their will to the court, informing the personal representative named in the will of the delivery, and retaining the estate to be delivered to a duly appointed personal representative.
The court may also limit the powers of a conservator. The court also has powers over the protected individual and their estate and business affairs, which it may exercise directly, or through a conservator. Finally, the court may exercise or approve certain actions only after a hearing to determine whether it is in the protected individual’s best interest — such as renouncing or disclaiming an interest, or changing a beneficiary under an insurance and annuity policy.
Have Any More Questions About Conservatorships in Michigan?
If you are ever in a position where you must consider conservatorship for a loved one, it’s important to be prepared. Our probate attorney Dean Patrick understands the ins and outs of the complex Michigan probate court system, and can provide expertise and assistance with matters including:
- Establishing, terminating, modifying, or contesting a conservatorship
- Defending your current position as conservator
- Removing an acting conservator who has failed in their duties
- Filing conservatorship accounts
If you have further legal questions or are looking for representation as you navigate Michigan’s tricky probate court system, don’t hesitate to call our Southfield, Michigan office at (833) 469-4897 to set up your consultation initial consultation. You may also click here to get in touch online.
Conservatorship matters are emotional and difficult, and the Michigan probate courts can be tricky; it’s important that you take steps to receive the expert legal advice you and your loved ones deserve. At the Patrick & Associates, PLLC., we will work hard to accomplish your goals, while handling your matter with professionalism and expertise. Mr. Patrick can help you navigate through all the legalities and formalities, so that you can rest assured that you and your loved ones will be taken care of whatever life brings.
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