Estate planning in Michigan is much more than figuring out the distribution of assets to beneficiaries but can be a means to protect yourself and your children when you can no longer do so. One way you can protect yourself or any children is through the creation of a comprehensive estate plan that can help you avoid the need for a conservatorship.
At the law office of Andrew Byers, PLC, our estate planning attorney in Troy, Michigan will ask the right questions so that a comprehensive estate plan can be created. To do so, we help you understand what conservatorships are, how they are used, and what their effects are so that you can make informed decisions. Contact us online or at (248) 469-4261 for a consultation to learn more about estate planning generally and conservatorships specifically.
What Constitutes a Conservatorship in Oakland County, Michigan?
Conservatorship is a process a court uses to grant someone (the conservator) legal authority to make decisions on behalf of another person (the protected person or ward––depending on your jurisdiction) regarding finances and to manage the protected person's estate. The term, however, is confusing because it is used for multiple purposes and different states substitute it with the term guardian, which is a term more often used when speaking of minor children. In Michigan, guardians are also appointed to make health care and other personal decisions for an incapacitated adult. As such, an incapacitated adult can have a conservator and guardian.
There are two basic types of conservatorships: (1) limited; and (2) general conservatorships.
A limited conservatorship is created for a person who has a disability like autism, epilepsy, cerebral palsy, or other developmental disability and has had it prior to their 18th birthday. These conservatorships are “limited” because they require less supervision and care than conservatees of a general conservatorship. Conservatees of limited conservatorships require less supervision because they are able to maintain a certain level of care on their own.
In these situations, parents should really consider a will that appoints a guardian for a minor child and a conservator for an adult child (which is sometimes referred to as adult guardianship––depending on your jurisdiction). When you die, and your child is still a minor, you want to make sure the person caring for that person (if the other parent is deceased as well or otherwise unable to care for the child) is someone you both trust. Plus, through an estate plan, you can do other things, like setting up a trust that will help ensure your child (whether a minor or adult) is financially secure for as long as the trust allows. Plus, if drafted right, an estate plan can also make sure your child benefits from public assistance in addition to trust funds.
A general conservatorship is created when an adult (typically an elderly person but can be a younger adult person) cannot manage their finances or health due to deteriorated mental capacity or impairment caused by an illness or injury. While they recover from the illness or injury, a conservator may be appointed by a court to address their medical and financial needs. If you think you are too young to have a conservatorship affect you, then think of this famous case: Britney Spears and her father.
Examples of when a general conservatorship may be needed include but are not limited to the person (protected person or ward), regardless of age:
- falls into a coma due to an injury or illness
- develops a neurological disease, like Alzheimer's, Parkinson's, or dementia
- suffers from a physical trauma––like a head injury, a fall, or a stroke––that impairs their ability to think or express their wishes
- suffers from any other type of mental or physical incapacitation, even if for a short period
One word of caution: People who suffer from any of the above can become vulnerable to bad actors who may try to manipulate the situation for their own financial gain. These bad actors may, for example, attempt to divert your disability payments (fraud) or coerce you into changing a will (undue influence).
This is why it is ever-important to draft an estate plan as soon as you can regardless of your age or job because when it comes to your children or your own assets, it's nice to know someone you trust is taking care of matters for you while you can not.
To avoid a court-appointed conservator when or if you become ill or incapacitated in some way, you should ensure your estate plan includes legal instruments like a living trust or durable power of attorney. What type of document you have will depend on your life circumstances, so speaking with an estate planning attorney in Troy, Michigan is important.
The Role of Conservators in Michigan
A conservator has the power to make important financial decisions on the protected person or ward's behalf. Some common duties they may be permitted to undertake include:
- paying the ward's bills
- making all other financial decisions on behalf of the protected person regarding banking, investments, etc.
- selling the ward's home, though permission from the probate court is usually required
- Changing legal rights, generally
- Accessing the ward's confidential records
- Entering into contracts on behalf of the ward
Of course, not all of the above duties will apply to each individual case. In fact, the specific powers of a conservator can be limited. Moreover, a person may have both a conservator and guardian. For example, one person may have a conservator to specifically handle financial matters (also known as a conservator of the estate), and another conservator to address health care and other personal matters (also known as a guardian of the person). The conservator and guardian may be the same person or different people.
Appointments of Conservators in Michigan
Conservators are appointed by a court. The exact process for becoming a conservator depends first on the procedures set out by the specific court overseeing the process.
A conservatorship starts when a petition is filed in the probate court where the person who needs protection resides. The filing must be served on the potential ward, called the respondent, and must set forth why the respondent's condition results in the inability to make important decisions. A hearing will be held, and the judge will examine the evidence and make a decision. If the probate court judge believes a conservatorship is necessary, any number of people can be appointed including:
- Spouse, adult children or other family members
- Church member
- other professional conservators
The court takes these matters seriously and will attempt to award the conservatorship to the best person, but that person may not always be available.
Pros and Cons of Conservatorships in Michigan
To better understand the impact of conservatorships, it can be useful to look at what the benefits and downsides are.
Possible Advantages of Conservatorships
- Protection for vulnerable individuals: Conservatorships can provide protection for individuals who are unable to manage their own affairs due to physical or mental incapacity, such as the elderly, disabled, or those with serious mental illnesses.
- Financial management: A conservator can manage the individual's financial affairs, pay bills, and protect their assets from financial exploitation or mismanagement.
- Court oversight: the conservator will have to file detailed reports with the court on an ongoing basis. These are called the Inventory and annual Accounts.
- Legal authority: A conservator has legal authority to make decisions on behalf of the individual, which can provide clarity and consistency in decision-making.
Possible Disadvantages of Conservatorships
- Loss of autonomy: A conservatorship can result in the loss of autonomy and control over one's personal and financial affairs.
- High cost: Conservatorships can be expensive, as legal fees and court costs can add up quickly. Preparing the annual account can be a time consuming and expensive process.
- Stigma: Conservatorships can carry a stigma of incompetence or incapacity, which can be stigmatizing for the individual.
- Loss of control: The person the court appoints as conservator may not be who you would have wanted to handle your affairs.
Conservatorships can provide valuable protection and support for vulnerable individuals who are unable to manage their own financial affairs. However, it is important to carefully weigh the pros and cons to determine whether you want to take steps via an estate plan to avoid a conservatorship. The potential for abuse is the most concerning part, and recent high-profile cases underscore how damaging and serious the abuse can be.
Can a Conservatorship be Contested or Terminated in Michigan?
A petition requesting the court to award a conservatorship over you or someone you love can be contested. When the petition is filed and served, you can respond, contesting it. Also, to prevent a specific person from being appointed as a conservator, you can file competing petitions. The rules vary according to jurisdictions, so speaking with an attorney is your best way to avoid delays and errors in the process.
As for termination, conservatorships are typically made as a permanent arrangement. They are terminated upon the conservatee's death or recovery from the illness or injury that had incapacitated them.
There are times, too, when a court will remove a conservator when cause is found (like abuse). That said, simply because the conservator is removed does not remove the conservatorship. Another conservator may be appointed unless the reason for the conservatorship no longer exists.
Alternatives to Conservatorships
If you want to avoid a conservatorship situation, there are alternatives.
A comprehensive general durable power of attorney (POA) is an important option. In this legal instrument, you appoint an Agent to make financial decisions for you in the event of your incapacity. If you do this in advance of becoming incapacitated, your Agent can handle finances for you, reducing if not eliminating the need for a court conservatorship. You can change and revoke the POA.
Revocable Living Trusts are another option. In the trust, you appoint an incapacity trustee to manage the assets in the trust for you in the event of your incapacity.
The best alternative to a conservatorship will depend on the person and the circumstances. Speaking to an elder law and estate planning attorney to discuss these things is an important way to identify and create a comprehensive estate plan.
Contact an Estate Planning Attorney to Understand Conservatorships in Michigan
Conservatorships are serious, and the protected person can lose control of some or all of their financial and personal matters. Speaking to an attorney to determine what makes sense in your unique situation is critical. At the law office of Andrew Byers, PLC, our estate planning attorney will address your concerns and guide you through the process. If you need help establishing a conservatorship for an incapacitated loved one, help with the conservatorship Inventory and Account, or would like to plan to avoid a conservatorship, contact us online or at (248) 469-4261 to schedule a consultation.