Conservatorship, for our purposes is a legal concept where an individual is subjected to the legal control of another person, known as a Conservator. Conservatorship is established by court order.
In Michigan the court may appoint a conservator or make another protective order in relation to an individual’s estate and affairs if the court determines both of the following:
(a) The individual is unable to manage property and business affairs effectively for reasons such as mental illness, mental deficiency, physical illness or disability, chronic use of drugs, chronic intoxication, confinement, detention by a foreign power, or disappearance; and
(b) The individual has property that will be wasted or dissipated unless proper management is provided, or money is needed for the individual’s support, care, and welfare or for those entitled to the individual’s support, and that protection is necessary to obtain or provide money.
The court may also appoint a conservator in relation to the estate and affairs of an individual who is mentally competent, but due to age or physical infirmity is unable to manage his or her property and affairs effectively and who, recognizing this disability, requests a conservator’s appointment. See 2000 PA 466 (eff. June 1, 2001).
In Michigan, a “Guardian ad litem” will be appointed by the Court to review the facts of the case and submit a report, usually required to be in writing, to the court before the court makes a decision on the request to establish a conservatorship (or guardianship). A guardian-ad-litem does not take instruction from the proposed protected person, but rather acts on her/his behalf and tells the court what the guardian-ad-litem thinks is in the best interests of the proposed protected person, whether or not that is what the proposed Conservator or proposed protected person wants.
Once appointed, a conservator has broad powers to handle all assets held on behalf of the protected person and to make payments from the assets for the health, benefit, and welfare of the protected person, including all the powers of a trustee. Specific powers that the conservator may exercise without court authorization or confirmation (unless the court otherwise provides) include the following:
- to invest or reinvest funds in accordance with the Michigan Prudent Investor Rule
- to retain assets in which the conservator has a personal interest
- to exercise powers and duties relating to stock ownership
- to hold stock in the name of a nominee
- to continue and participate in the operation of the protected individual’s business
- to open a bank account
- to acquire or lease real estate
- to repair, erect, or demolish real estate improvements
- to purchase insurance
- to borrow money to be repaid from estate property
- to pay or settle claims by or against the estate Note, if the conservator is to share in a settlement, a guardian ad litem must be appointed to represent the protected person’s interests and must consent to the settlement in writing or on the record, or else the court must approve the settlement over any objections.
- to employ professionals
- to respond to environmental concerns
Michigan law also authorizes a conservator to sell real estate, but only with court approval after a hearing, with notice to interested persons.
A conservator is obligated to pay the protected person’s bills out of the conservatorship estate, to the extent possible. See MCL 700.5423, 5429.