Conservatorships in Michigan

July 22, 2011 (Press-News.org) Conservatorships in Michigan

With more baby boomers turning 65 every day, families across Michigan will be faced with the question of how to care for their elders as they grow older. There may be times where an elderly person may not be able to make complex decisions for themselves or may need someone to help them through legal proceedings. Assistance in understanding mortgage or loan documents, managing investments, completing tax forms and seeking legal remedies are prime examples of such actions. In these situations, a conservatorship would be very helpful in protecting vulnerable adults. This article will explain what conservatorships are, how they are obtained and the implications of having a conservator.

A conservatorship is actually the relationship between a conservator and a protected person. The conservator is a person appointed by probate court to be responsible for the assets (called an "estate") of someone who cannot manage their own financial affairs (an incapacitated or "protected" person). A conservator is different from a traditional guardian in that the conservator merely cares for a protected person's finances. A guardian and conservator may be the same person, but need not be.

Conservatorships help to protect vulnerable adults who cannot resist financial pressure from others, including zealous salespeople, creditors and family members. They can also help people who are being taken advantage of financially or who are quickly losing assets due to mismanagement. This is especially important for seniors who are being pushed into investments that may not be appropriate, or are giving away money to help opportunistic family members and friends.

Under Michigan law, anyone interested in the protected person's estate or financial affairs may petition the court for a conservatorship. This may include family members, business partners or any entity that would be adversely affected by the mismanagement of the protected person's assets. For example, a man who owns a chain of grocery stores develops dementia, and can no longer manage the business. His suppliers and insurers may have a vested interest in making sure the stores continue to operate, so they are allowed to petition the court to have a conservator appointed so that the business does not fail. In the same example, the man's children may also seek the court's permission to handle his financial affairs, including the grocery business.

In Michigan, a person may also request the establishment of a conservatorship if the individual recognizes that his or her assets will be wasted or dissipated if a conservator is not put in place. Under this approach, the person needing protection does not necessarily need to be incapacitated in order for a conservator to be appointed. A senior who is facing pressures to give money or other assets to family members, friends or even total strangers can themselves help stop the financial abuse by requesting that the probate court appoint a conservator.

A conservator has a fiduciary duty to the protected person, in that he or she must provide an inventory of the protected person's assets, and maintain a detailed accounting of all income and expenses that will be provided to the court each year. The conservatorship will continue indefinitely. As such, a conservator must be of high moral character and have management skills to properly oversee the estate. The conservator must act in the best interest of the ward when handling the person's assets.

After a conservatorship petition is filed, the court will set a hearing date to give interested parties an opportunity to provide evidence supporting or opposing the nomination. The proposed ward has important, constitutionally protected rights at stake. He or she may consent or object to the petition. If, wither with consent or following a contested hearing, the court will issue an order appointing a conservator.

The proposed ward may agree to have the person nominated in the petition serve or may tell the court who he or she wants to serve as conservator. Who serves as conservator may also be the subject of a contested hearing.

While conservatorships may be helpful to the elderly and incapacitated, there are other legally recognized ways to protect someone's assets. For example, a trust may be established for the protected person, where the assets are owned by the trust and managed by an appointed trustee. Also, a durable power of attorney may be created, so that a specific person (or group of people) may be responsible for making decisions on behalf of an incapacitated person. For those receiving government benefits, another person could be deemed a representative payee. This person would not be subject to the reporting and accounting obligations conservators must adhere to. Trusts and powers of attorney are good options especially when a single transaction or transfer of property is involved. These approaches may avoid the need for probate court involvement.

The costs of maintaining a conservatorship are an important consideration due to the reporting requirements, court hearings and management tasks. An experienced estate planning attorney can help you evaluate the need for a conservatorship and compare the benefits to other forms of asset protection.

Article provided by Galloway and Collens, PLLC
Visit us at http://www.gallowaycollens.com/