Conservatorships Blog
Kalamazoo Estate Planning - Conservatorships Law Blog

Guardianship and Conservatorships:

Posted December 2, 2018

Petitioning the Probate Court for a guardianship or conservatorship should be the last option to be used rather than the first. This note will therefore explore some of the alternatives to appointing a guardian or conservator. These options are designed to be less intrusive on the life of the disabled person and less expensive than court proceedings.

Section 5103 of the Estates and Protected Individuals Code (EPIC) provides for the delegation of power by a parent or guardian. This section may be used by the parent of a minor, guardian of a minor, or the guardian of a legally incapacitated individual. It is very useful in situations when a parent or guardian is temporarily absent from the ward. For example, this method may be used when a child goes away to camp or on a trip or where the guardian of an adult goes on vacation and the disabled person remains in the home community. The power regarding care, custody or property of a minor child or disabled person may be delegated by a properly executed power of attorney. The duration of such delegation cannot exceed 6 months. If a guardian for a minor or legally incapacitated individual delegates any power under this section, the guardian shall notify the court within 7 days after execution of the power of attorney, and provide the court the name, address, and telephone number of the attorney-in-fact.

A conservatorship and, in many cases, a guardianship may be avoided by the disabled person executing a durable power of attorney appointing another person called an attorney-in-fact to handle their financial affairs and to make other decisions for them. A durable power of attorney differs from an ordinary power of attorney because it survives the incapacity of the principal. The document, to be a durable power of attorney, must contain the words "This power of attorney shall not be affected by disability of the principal," or "This power of attorney shall become effective upon the disability of the principal," or similar words showing the intent of the principal that the authority conferred shall be exercisable notwithstanding his or her disability, the authority of the attorney-in-fact or agent is exercisable by him or her as provided in the power on behalf of the principal notwithstanding later disability or incapacity of the principal or later uncertainty as to whether the principal is dead or alive. For this alternative to be available, the principal must be able to execute the power of attorney while still competent and able to understand what he or she is signing. If the document was validly executed, the attorney in fact may handle the principal's affairs after the principal is no longer able to do so. An attorney in fact may also act for the principal when the principal is under no disability if the documents authorize such actions. An attorney in fact may not act after they learn of the principal's death. From that point, only a personal representative has the authority to act for the deceased.

The EPIC now provides in sections 5506 to 5513 for the designation of a patient advocate. This is accomplished by a special type of power of attorney. The patient advocate is authorized to make medical decisions concerning the principal when the principal is unable to do so. This section contains numerous protections against the patient advocate abusing this authority. If properly appointed, the patient advocate can do such things as tell the doctors not to use artificial life support or to disconnect the principal from such supports. An attorney should be consulted when this document is drafted.


Request for Funds:

Posted November 19, 2018

The Court strictly follows the policy that it is the legal responsibility of the Conservator to preserve the minor's money until the minor attains age 18 and to only spend money for the child's necessities if the Conservator could not otherwise obtain through parents or spend as a parent. This policy applies to using and investing money in restricted bank accounts or securities guaranteed by the federal government as stated on the restrictions on the Letters of Conservatorship. There always must be approval of annual accounts of Conservatorship where unrestricted monies are involved.

The Court will only sign orders to withdraw restricted funds and accumulated interest and dividends in conformance with this written policy. It is the Conservator's responsibility to only spend money in accordance with this policy and ask for Orders for any exceptions. No expenditure will be allowed unless it directly benefits the child. No expenditure will be allowed if the expenditure relieves a parental obligation that could otherwise be met. Exceptions include unusual circumstances, which create an exceptional burden on the family such as very large medical or educational expenses. All such exceptions of restricted funds require a Court Order.


MCL 700.1503 Portfolio Strategy; Risk and Return Objectives:

Posted October 10, 2018

A fiduciary's investment and management decisions with respect to individual assets shall be evaluated not in isolation, but rather in the context of the fiduciary estate portfolio as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the fiduciary estate. Among circumstances that a fiduciary must consider in investing and managing fiduciary assets are all of the following that are relevant to the fiduciary estate or its beneficiaries:

  • General economic conditions.
  • The possible effect of inflation or deflation.
  • The expected tax consequences of an investment decision or strategy.

The role that each investment or course of action plays within the overall portfolio, which may include financial assets, interests in closely-held enterprises, tangible and intangible personal property, and real property.

  • The expected total return from income and the appreciation of capital.
  • Other resources of the beneficiaries.
  • The need for liquidity, regularity of income, and preservation or appreciation of capital.
  • An asset's special relationship or special value, if any, to the purposes of the fiduciary estate or to 1 or more of the beneficiaries.

A fiduciary shall make a reasonable effort to verify facts relevant to the investment and management of fiduciary assets. A fiduciary may invest in any kind of property or type of investment consistent with the standards of the Michigan prudent investor rule. A particular investment is not inherently prudent or imprudent. A fiduciary who has special skill or expertise, or is named fiduciary in reliance upon the fiduciary's representation that the fiduciary has special skill or expertise, has a duty to use that special skill or expertise.