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Stewart C.W. Weiner

A Conservatorship May Be of Enormous Assistance in Protecting the Finances of Your Loved Ones

By Stewart C.W. Weiner 

In the State of Michigan, our population is growing older. As part of the aging process, families, close friends and relatives, whether they recognize it or not, owe their loved ones the responsibility to objectively evaluate whether their family members have the capacity to care for themselves physically, mentally and emotionally. During those delicate times when an individual may be unable to properly physically care for oneself, family members may need to consider whether a guardian should be appointed. The guardian’s job is to care for an individual who is incapable of caring for oneself. Often, an individual who is unable to care for oneself physically also may need assistance in attending to financial matters. 

This article does not delve into the issue of guardianships but instead addresses the related issue of conservatorships. When an individual is unable to tend to or manage one’s financial matters, that individual may need to appoint a conservator, or the individuals who care for him/her may need to consider petitioning a court for the appointment of a conservator. 

The issue of the appropriateness of appointing a conservator does not exclusively pertain to the elderly. The analysis equally applies to adults who are developmentally disabled, individuals who have suffered from accidents that impact their ability to make decisions, i.e. brain injuries and many other types of related medical or mental health situations, and spendthrifts. 

For individuals who have proactively engaged in estate planning, an essential component of an estate plan is the inclusion of a durable power of attorney. The durable power of attorney is an undervalued but powerful document that requires considerable thought and care in the selection of the person ultimately designated as the attorney-in-fact. The appointed individual should ideally possess a great degree of integrity, honesty, and trustworthiness and be capable of exercising good judgment, as this person will be called upon to act in the place of the individual who made the appointment when the situation arises. The durable power of attorney provides the power to act whenever necessary or may be limited to only certain matters or situations as detailed in the power of attorney document. 

As part of the aging process, the transition from being deemed competent to incapacitated can be a slippery slope that can easily be missed. Consider those loved ones you know who suffer from dementia or frequent forgetfulness. When either recognized or diagnosed that your loved one’s capacity may be at issue, an initial discussion concerning a conservatorship may be appropriate among those who are entrusted with caring for the individual. Being proactive can be extremely beneficial in alerting the family to the problem and obtaining consensus in the decision that will ultimately need to be made. 

Sometimes, the impacted individual may take the initiative, recognize their limitations and voluntarily agree that a conservatorship is in their best interest. In such cases the process of appointing a conservator is straightforward. A petition to establish a conservatorship is prepared and filed in the appropriate probate court and the appointment of the conservator is made by the court following a hearing in a relatively straightforward matter. 

A more difficult and problematic issue arises when the protected person believes that he/she is competent and opposes those family members who believe otherwise. This scenario is akin to taking a parent’s car keys. It’s a matter that requires careful sensitivity and navigation. When this scenario arises, an evaluation by a professional, either a neurologist, a psychologist, a psychiatrist or other elder care medical professional is recommended. If the professionals (at least two) agree that the protected individual lacks the capacity to take care of their financial matters, a petition for a conservatorship may be filed in the county where the individual resides, similar to the voluntary petition to establish a conservatorship. However, upon the filing of a petition, the court will usually appoint a guardian ad litem, generally a professional who reports to the court, to independently evaluate and investigate the alleged person to be protected and make a recommendation as to whether or not they would benefit from an appointment of a conservator. The protected has the right to formally object to the appointment of a conservator at a hearing. Occasionally, there may be disagreement within the family as to whether the individual is in fact incapacitated. Open, honest, sensitive and thorough communication is critical in these situations. A disagreement as to capacity when the alleged protected person believes that he/she is still competent and able to competently handle one’s financial affairs can lead to dysfunction and acrimony within the family. But the reality is that this issue, albeit very difficult, often cannot be avoided. 

Once the conservator is appointed by the court and signs an acceptance of appointment, the conservator is required to perform various obligations for the benefit of the protected person. A fiduciary bond may be required of the conservator to ensure that the assets are adequately protected. The assigned judge will determine if a bond is necessary and if so, the amount of the bond. An initial inventory of the assets of the protected person, i.e. stocks, bonds, real property, savings and checking accounts, etc. must be filed with the probate court. Each year, the conservator must file an accounting with the court, reflecting all income and revenue that has been received by the conservator, sometimes referred to as receipts, together with all expenses or disbursements that have been made. Receipts must be available for court review when requested. The annual accounting must be provided to the protected person as well as all interested parties identified in the initial petition. The conservator owes a duty to the protected person to manage the assets prudently. The assets should be held in a separate conservatorship account(s) and not commingled with other funds or assets. The conservator is entitled to reasonable compensation for performing the services, subject to court approval. The accountings may be challenged by the interested parties or the protected person, so providing detailed reports is very important. The conservatorship will continue until such time as a decision is made that the protected person no longer requires a conservatorship. At that time, a petition to terminate the conservatorship is filed. As part of the process to terminate the conservatorship, a final accounting must be prepared, filed and approved by the court. 

If this issue resonates with you or may pertain to you, your family or loved ones, we are here to help answer your questions and assist you in navigating this delicate process. 

I can be reached at sweiner@maddinhauser.com or 248-827-1890, or you can contact any attorney in Maddin Hauser’s Estate Planning and Probate Group.

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