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The Court of Appeals’ Discussion of Conservatorship Raises Questions

Posted on Monday, May 7, 2018

In the case of In re Conservatorship of Rhea Brody, No. 332994, the Michigan Court of Appeals (MCOA), affirmed the lower court’s appointment of a conservator over Rita Brody, an adult, under the Estates and Protected Individuals Code (EPIC) MCL 700.5101 et seq. This is the second case concerning this family to be challenged by Robert Brody, the first being In Re Rhea Brody Living Trust, No.330871 in which Robert was removed as trustee and Mary Lyneis appointed trustee.

Robert and his son, Jay Brody now challenge the appointment of Lyneis as conservator of Rhea’s personal assets. While agreeing with the court that Rhea is incompetent, he argues that the court erred in concluding that Rhea “has property that will be wasted or dissipated unless proper management is provided.”

The court turned to Article V of EPIC, providing for individuals under disability stating that “the court may appoint a conservator…in relation to individual’s estate and affairs if the court determines both” that the individual can’t manage property because of mental illness and that the individual has property that will be wasted or dissipated unless proper management is provided. These prerequisites must be established by clear and convincing evidence.

The probate court considered Rhea's circumstances and the nature of each of her personal assets—a Fifth Third bank account for tax refunds, an individually-held IRA, a jointly-held Chase Bank account, and jointly-owned homes in Michigan and Florida—before concluding that the requirements of MCL 700.5401(3) had been met by clear and convincing evidence.

Robert’s arguments of note:

1. It was improper for the probate court to consider joint assets when evaluating the risk of waste or dissipation because a conservator would be unable to change the nature of jointly-owned property. 

The court: Although case law precludes a conservator from changing the nature of joint accounts after the conservator's appointment, it does not limit a conservator's power to manage the accounts or exclude joint assets from being considered at the conservatorship hearing.

2. The probate court erred in appointing a conservator to act on behalf of Rhea because Robert held a durable power of attorney (DPOA) and was in a position to prevent waste and dissipation of Rhea's estate. At the very least, according to Robert, he should have been given priority over Lyneis as a potential conservator.

The court: The existence of a DPOA does not prohibit the appointment of a conservator, and selection of an individual to be appointed as an incapacitated person's conservator is a matter left to the discretion of the probate court. The court noted that testimony established that Robert didn’t handle matters using DPOA and was unduly influenced by son, Jay, thus not competent to be conservator.

Under MCL 700.5409, a protected individual's spouse is entitled to consideration for appointment as conservator, and is granted priority over all other individuals except “[a] conservator, guardian of property, or similar fiduciary appointed or recognized by the appropriate court of another jurisdiction in which the protected individual resides,” MCL 700.5409(1)(a).

As Rhea's husband, Robert was entitled to priority consideration unless the probate court considered an independent fiduciary and found him or her unsuitable. The court noted that Lyneis, as trustee and independent fiduciary, had statutory priority over Robert, despite Robert's marriage to Rhea. MCL 700.5409(1).

Question. In what “appropriate court of another jurisdiction” was Lyneis appointed giving her priority?

3. The probate court’s appointment of a conservator was an abuse of discretion since there was no evidence that any asset of the estate had been wasted or dissipated.

The court: The Legislature's use of the word “will” to modify “be wasted or dissipated unless proper management is provided” in MCL 700.5401(3)(b) supports the probate court's decision to focus on the likelihood that assets will be prospectively wasted or dissipated if a conservator is not appointed.

The MCOA, which covered more issues than those presented, affirmed the lower court on all points and found the Robert was unsuitable because Jay, the son, could manipulate his father to the Rhea’s detriment.

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