Posts Tagged ‘Michigan Court of Appeals’

Intestate Succession Rules Can Be Tricky to Apply

APRIL 4, 2016 VOLUME 23 NUMBER 13

March was “Write-a-Will” month (sometimes referred to as “Why a Will” month). Though we’ve never understood the difference, August will be “Make a Will” month again this and every year.  In the United Kingdom, every March and October are “Free Wills” months. Or is it April?Or is that only in Canada?

With all the emphasis on the importance of getting estate planning done, you’d think people would actually get around to writing a will. It turns out that any month is a good one for illustrations about why making a will is important.

Consider Kent Konrad (not his real name), who died in Michigan in February, 2012 — just weeks before his 60th birthday. He never wrote a will. His estate became embroiled in a fight about who was entitled to receive his property.

Kent never married, never had children. Both of his parents had died before him. The Michigan rules for “intestate succession” (the default distribution for people who have not made a will) directed that his estate should be distributed half to the descendants of his maternal grandparents, and half to the descendants of his paternal grandparents.

That seems fairly straightforward, but there was a wrinkle. Kent’s father was a posthumous child. In other words, Kent’s grandfather (Karl) died before Kent’s father was born. In fact, Karl died as a result of a fight over the affections of Kent’s grandmother; the couple had quarreled, and Karl had threatened anyone who might try to date his girlfriend. When another man attempted to kiss her, Karl knocked him down with a single blow — the suitor got up and stabbed Karl to death. Karl died in 1931; Kent’s father was born three months later.

Kent’s grandmother never had any other children, so under Michigan law his paternal relatives’ share would go to Karl’s other descendants — a son Ernest. Except for the wrinkle.

Kent’s maternal relatives argued that Ernest should not receive any share of Kent’s estate. Why not? Because Karl never acknowledged Kent’s father, and never agreed to support him. Under Michigan law (Arizona has a similar statute), that permitted an argument that Karl could not inherit from his son or his son’s children — and that arguably would cut Ernest out from receiving any share of Kent’s estate.

Nonsense, ruled the Michigan probate judge. Not only was Ernest the closest relative in Kent’s paternal lineage, he should receive half of Kent’s estate. The other half would be divided among Kent’s cousins on his mother’s side of the family.

The Michigan Court of Appeals agreed. The fact that Karl died before ever even meeting his son did not amount to a refusal to acknowledge or support him, according to the appellate court. Although one of the three appellate judges deciding the case disagreed, the court upheld the probate judge’s ruling by a 2-1 vote. Estate of Koehler, March 24, 2016.

It is important to keep in mind that the legal dispute over Kent’s estate could easily have been addressed. All Kent needed to do was to sign a will. The precise relationship of his uncle and cousins would then have been unimportant. He could have left his estate in shares, or all to his uncle, or all to his favorite cousin, or all to his girlfriend, or to charity. He could have left some or all of his estate in trust to take care of his two dogs — or any variation or combination of those choices.

If Kent had signed a will, could his uncle, or his cousin, have challenged the will? Well, yes — but will challenges are very rare, and even more rarely successful. It would not be enough to show that there was confusion over his family relationships — anyone contesting the will that Kent should have signed would have to show that he was incompetent, or mistaken, or unduly influenced.

Why do people not get around to signing wills? Reasons vary, of course — some people don’t think it’s important, some just can’t get focused on their own mortality, some mean to make that appointment but just don’t get around to it.

Don’t wait for a pre-set month to get your will written. Don’t wait for inspiration, or discounts, or free clinics. If you don’t have a will, this would be a really good month to get the task done.

Not Every Cognitively-Impaired Senior Needs a Conservator

SEPTEMBER 28, 2015 VOLUME 22 NUMBER 35

We handle a lot of guardianship and conservatorship proceedings at Fleming & Curti, PLC. We also meet with a lot of clients (or potential clients) and help them figure out how not to initiate a guardianship or conservatorship proceeding — we subscribe to the modern view that court involvement ought to be avoided when possible, and that people ought to be allowed the greatest possible autonomy and self-direction.

The view that court proceedings should be used sparingly is shared by the judges we work with in Arizona. That has not always been the case, and it is not necessarily true in every courtroom. It is easy for judges to get protective about the individuals they see in court, and sometimes judges can overreact.

We read this week about such a case, from Michigan. It involved a 74-year-old woman we’ll call Martha and her three daughters Dana, Diane and Dora. Martha’s husband (and the father of the three girls) had died a year before the legal troubles began, and Martha had spent some time in a hospital and a brief spell in a nursing home. Although she had returned to her home, she was a little weak and confused.

Martha had named Dana as agent in a power of attorney, and had made her co-trustee of the trust that held all of Martha’s assets. During the period of Martha’s illness, though, Dana had misused her position and had actually used some of Martha’s funds for her own benefit. Martha filed a court proceeding asking for an accounting from Dana. In the course of that family dispute, Dana asked the court to appoint a conservator to handle Martha’s finances.

Martha objected vigorously, but the judge ordered a psychological evaluation to address whether she could manage her own finances, and also appointed an attorney to act as Martha’s “guardian ad litem“. Both the psychologist and the guardian ad litem reported that Martha had memory limitations, but was not improperly using her funds or at any apparent risk of losing assets. Both noted that she had signed new documents naming another daughter, Diane, as her trustee and agent; that appeared to be appropriate and effective.

The judge hearing the dispute between Martha and Dana thought otherwise. He noted that the reports indicated Martha had “poor arithmetic and quantitative skills” and otherwise appeared to have diminished capacity. Michigan’s law (like Arizona’s) does not require a finding of incapacity before appointment of a conservator of the estate; the probate judge decided to appoint daughter Diane as conservator.

Diane did not think she needed to be Martha’s conservator. She thought that the trust and power of attorney were sufficient to allow her to help protect her mother. Martha also continued to believe that she did not need a conservator. Diane filed an appeal on behalf of her mother. Dana (still embroiled in her dispute with Martha over trust administration) disagreed, and argued that a conservator was necessary.

The Michigan Court of Appeals sounded a clear call for maximum individual autonomy and self-direction. It is not enough, ruled the appellate court, to show that Martha’s capacity is diminished by her memory and reasoning problems. Before a conservator can be appointed, it would also be necessary to show that Martha was unable to manage her own finances — or arrange for their proper management and protection.

Michigan’s conservatorship statutes (again, like Arizona’s) specifically direct the probate court to apply the law in a way that tends to “encourage the development of maximum self-reliance and independence,” noted the judges. In Martha’s case, she had appropriately chosen Diane to oversee her finances and had understood and signed the power of attorney and trust documents necessary to effect that change. Indeed, she had managed to monitor Dana’s handling of her finances sufficiently to observe that she had a problem that needed to be corrected. Appointment of a conservator was unnecessary and in fact impermissible in those facts. Bittner-Korbus v. Bittner, September 8, 2015.

The Michigan appellate court’s approach is consistent with what we see in Arizona, and what we like to implement in our practice. Is it possible to assist and protect the mildly impaired senior without recourse to the court? If so, we favor that alternative. Creating a trust, naming a trusted family member or friend as agent under a power of attorney, setting up a mechanism for monitoring finances — all of these approaches can help reduce the need for conservatorship or other court involvement.

It is worth observing that this is not just a matter of self-determination — it is also an issue of economics. Court oversight of a conservatorship tends to be an expensive undertaking. It can also be frustrating for both the subject of the proceedings and the conservator.

Of course conservatorship is an expense (and a frustration) that absolutely has to be incurred in many cases — but it should not be the default choice or even undertaken lightly or regularly. Our first effort is usually to try to figure out an alternative that provides both assistance, protection and even peace of mind.

[A word of warning about the principles we discuss in this article: not every state uses “conservator” and “guardian” the same way that Michigan (and Arizona) does. This case, and our observations about it, apply to conservatorship of the estate under Michigan’s law, which is very similar to Arizona’s.]

Lawyer Ordered to Return Funds Taken by Conservator

NOVEMBER 2, 2009  VOLUME 16, NUMBER 60

Michigan Attorney William R. Ford represented Preshus Graves, who had been appointed as conservator of her son Calvin Graves. Calvin Graves, then not quite three years old, had been injured in an automobile accident, and his mother had pursued a personal injury action against the driver of the other vehicle. When the case settled (for a total of $9,300, or $6,122.70 after payment of costs and attorneys fees) the probate judge appointed Ms. Graves as conservator for her son, approved the settlement and ordered her to deposit the proceeds into a court-controlled account. Instead she took the money.

The order appointing Ms. Graves as her son’s conservator was clear. To further reduce the possibility of error, the court also issued a “Notice to Attorney of Duties Under Conservatorship of a Minor.” That document, addressed to lawyer Ford, directed him to accompany his client to the bank, to make sure the account was titled as a conservatorship account, and to see to it that the account was clearly marked as unavailable to the Ms. Graves or anyone else unless they could present a court order allowing distribution of some or all of the funds.

Instead of following the instructions given to him by the probate court, Mr. Ford simply wrote two checks to Ms. Graves for the net settlement proceeds. Nothing on the checks indicated that they really belonged to her son, and nothing alerted the bank to the need to block any account set up with the money. Mr. Ford handed the checks to his client in his office, and did not accompany her to the bank.

A few months later, when the appropriate bank restrictions had not been filed with the court, Ms. Graves was removed and a new conservator was appointed. The new conservator filed a petition to surcharge both Ms. Graves and her lawyer. Mr. Ford responded by blaming the entire matter on his client; he had instructed her on what to do, he said, and her failure to follow the court’s order was her own fault.

After some legal maneuvering (and Ms. Graves’ failure to sign a promissory note for the missing money, as she had promised she would do), the court ordered Mr. Ford to return the missing money. He appealed the surcharge order.

The Michigan Court of Appeals agreed that, on these facts, at least, the attorney is liable for the loss of conservatorship money. Although they upheld the finding, the appellate judges disagreed with the trial court’s reasoning. The “Notice to Attorney” was not a court order, and so Mr. Ford could not be held liable for violation of any court order for not taking Ms. Graves to the bank himself. But by issuing the checks to her in her individual capacity, he effectively gave away the assets of Calvin Graves to an unauthorized person. Matter of Estate of Graves, October 27, 2009.

The difference between a court “notice” and an “order” may be the sort of hair-splitting that appeals primarily to lawyers, but the problem is a real one. Out of ignorance, need or avarice, family members may sometimes be unable to resist the temptation to use a minor’s (or incapacitated adult family member’s) assets improperly. If the probate court wants to make sure that the money is properly placed, how better than to instruct the family member’s lawyer to follow specific rules?

Arizona probate courts (and those in most other jurisdictions) recognize a similar “blocked account” arrangement for protecting funds belonging to minors. As in Michigan, Arizona courts rely on the attorneys involved to see to it that the accounts are properly set up in the first instance.

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