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What should I do upon becoming conservator?
Determine what needs to be done to try and ensure assets do not lose their value or are totally lost.
What specific steps should I take?
If real estate is part of the conservatorship, check with the county treasurer to make sure taxes are up to date. If back taxes are due, pay them to avoid a future tax sale of the property.
If repairs are needed to the home, a country cabin or to rental property owned by the individual, make those necessary to prevent deterioration or required by building code. Necessary repairs might be small or extensive.
Check all locks and alarms to help guard against vandalism and theft.
Can I borrow money to pay for taxes or needed repairs?
Yes. But if you are mortgaging real property as security for the loan, your letters of authority may require you get probate court confirmation of the transaction.
What else should I do?
Make sure there is adequate insurance on any real property, automobiles and other personal property. Insurance should cover the risk of loss from fire and theft, and cover liability to those who might be injured in an accident.
Ensure valuable personal property is kept in an appropriate location.
Do I have authority to continue to run the individual's business?
Yes. For example, you could continue to run a retail store or wholesale business.
What should I do upon receiving a bill for a past debt?
If you or the individual receive a bill for products or services delivered before you became conservator, first determine whether the debt is valid. Any bill should describe the service rendered, the date or dates of service and itemized charges.
You should quickly pay past utility bills in order to ensure continued service.
Should I use my own personal funds to pay past bills?
No. As conservator you have no obligation to use your own money to satisfy past debts of the individual, regardless of the amount of debt the individual might have.
What if I receive a questionable bill?
Do not pay a questionable bill, but do not ignore it. Promptly write the individual or company that sent you the bill and ask them for further information so that you may determine the bill's validity.
If you don't get a satisfactory explanation, write the individual or company within 63 days of first getting the bill, stating you are denying the claim.
Is there another way for a creditor to present a claim?
Yes. An individual or company can file a claim with the probate court and mail a copy to you. You may pay the bill if you think it is valid. If you are unsure, seek more information. If you decide to deny the claim, write the individual or company within 63 days of the claim being filed in probate court.
Form PC 579 Statement and Proof of ClaimCan I deny a claim in part?
Yes. If you believe some charges to be valid and some not, you can pay part of a bill but not the entire bill. You should explain that in a letter to the individual or company.
If I deny a claim in whole or part, what may then happen?
The claimant can petition the probate court for a determination whether the claim is valid. The court will set a date for a hearing. You will receive notice of the hearing.
If a debt is valid, must I pay it immediately?
No. Your first responsibility is to ensure the present needs of the individual are met. You may have to liquidate assets to be able to pay claims.
Can I negotiate with the creditor for a payment schedule or a reduced bill?
Yes, you have the authority to do so.
What if the total dollar amount of all claims exceeds the value of all assets?
The law provides a priority order if the value of the estate is not sufficient to pay all claims.
1) Costs of administrationHow would I go about paying claims given these priorities?2) Claims of federal or state government having priority under law
3) Claims incurred by conservator for care, maintenance and education provided to the individual and dependents
4) Claims arising prior to the conservatorship
5) All other claims
You would satisfy all valid claims in the first class before paying any in a subsequent class, and continue down the list.
What if there are insufficient assets to satisfy all claims within a particular class?
You may not favor one claim in a class over another claim in the same class. You would divide the assets remaining by the total value of all claims in that class, and pay a proportionate share of each claim.
Must I use or sell off all assets of the individual to satisfy past debts?
No. If the individual or his or her spouse lives in the home, you would not sell the home and furnishings. You also have an obligation to maintain sufficient funds to pay for the individual's present needs.
Can a creditor levy on the property of the individual or garnish his or her wages?
No.
What if present income and assets are more than enough to pay for present needs and past debts?
You need to invest assets and excess income to pay for possible future needs. One step is to thoroughly review the risk and return of current investments.
How do I know what future needs may be?
You can only make a best guess. You may be able to determine the wishes of the individual and how medical prognosis may affect future residential options.
Can I purchase long term care insurance?
Yes. But carefully consider the terms of the policy, its cost and the probability the individual will use the benefits offered.
There may be other effective ways to financially plan for long term care costs.
Can I pay in advance for planned funeral and burial expenses?
Yes. The arrangements, themselves, must be chosen by the individual or guardian.
How do I make choices among investments available?
First, you must consider the risks of each investment and the return. You should certainly look at general economic conditions, the possible effects of inflation, the tax consequences of different investments, the need for liquidity, and the need for income versus capital appreciation.
Another important factor to consider is the possible length of the conservatorship.
Should I consider the individual's wishes and past investment strategy?
Yes. There may be investments particularly cherished by an individual. Although past investment strategy is not determinative of how you should act, it is a factor you can consider. There may be a degree of risk with which the individual has been comfortable. Investments in stocks in particular industries may be anathema to her or him.
Am I free to make any investment as conservator I would be comfortable making with my own funds?
No.
How much risk am I permitted to take?
As conservator, you have an obligation to be prudent. There are investments where the risk of loss is too high.
On the other hand, investments need not be insured to be prudent, and some insured investments such as savings accounts may have too low a return to be a wise choice.
Is there a specific standard of return to which I will be held?
No.
Can I invest such that I individually benefit?
You have an obligation to invest only in the interests of the individual and those dependent upon him or her.
You may not lend money to yourself or family, or invest money in any enterprise in which you or your family are principals, without prior court approval.
Do I have an obligation to diversify the investments?
Yes, in some circumstances when there are substantial assets. You might seek a mix including money market, stocks, bonds or mutual funds. Other investments could also be considered, depending on the size of the estate.
Must I make investment decisions immediately upon being appointed conservator?
No. You have a reasonable time to collect information on present investments, assess the investments and the size of the estate, determine the investment goals, and implement an investment strategy to meet those goals.
Can I seek professional assistance?
You can hire an investment counselor or financial planner either on a short or long term basis, if charges are reasonable in relation to the assets of the estate.
Am I permitted to delegate to a professional the power to make investment decisions?
Yes. But you must use care in selecting that individual, establishing investment guidelines, and periodically reviewing the individual's action.
Can I exercise voting rights in corporate elections, based on stock shares?
Yes.
Do I have an obligation to review my investment strategy?
Yes. The individual's present needs, projected future needs and market conditions will likely change over time.
Can the individual make a will or change an existing will?
Perhaps. Merely because a conservator has been appointed does not mean the individual loses testamentary capacity. The individual can sign a will if he or she knows the document is a will or codicil, is generally aware of property owned, and can name his or her closest relatives.
The will must, of course, reflect the wishes of the individual, not those of someone else.
Can a conservator write a will for an individual or change an existing will?
No.
Can a conservator force an individual to write a will or change an existing will?
No. Having a will is a purely voluntary act. An individual cannot be forced to have a will or change a will, no matter how advantageous such action might be.
Is a conservator permitted to change the beneficiary on an individual's life insurance policy?
You may change the beneficiary on a life insurance policy only with court approval after a hearing. You would start by bringing a Petition for Authority.
The court will consider whether the change is in the individual's best interest, and approve the change only if the individual has consented or is incapable of consenting.
Should the conservator continue to pay any premiums due on existing life insurance?
In most circumstances, yes.
Can a conservator cash in a life insurance policy?
A conservator should seek court approval before taking such action.
Could a conservator purchase life insurance?
Yes. If it were consistent with the individual's estate plan, and the present and future needs of the individual, spouse and dependents.
What are the conservator's obligations regarding an existing estate plan?
You should be aware of an estate plan, as may be reflected by a will, trusts, life insurance and jointly-held property.
If you must sell assets, you should disrupt that plan as little as possible.
Can a conservator establish a trust?
A conservator can seek court permission to establish a trust. At a hearing, the court would consider whether the trust furthered the wishes or needs of the individual. One type of trust for which an individual under age 65 may be eligible is known as an OBRA '93 trust.
If the individual has in the past made gifts to relatives or others, can I continue that practice?
If the size of the estate is sufficient to pay for present needs, past debts and projected future needs, you can make gifts based on past practice of the individual. These can certainly include birthday and holiday presents.
For large gifts, you would consider tax consequences, and any effect of divestment on future Medicaid eligibility. Collectively, gifts cannot exceed 20 percent of annual income, unless the court gives prior approval after a hearing.
Might gifts include donations to charity?
Yes, if such gifts reflect what the individual has done in the past.
Can I give gifts to myself or my family?
You must seek court approval before taking such action.
Can I exercise the individual's right to take against his or her spouse's will?
Yes, with court approval, you can choose the forced share set in statute rather than the share, if any, provided in the will.
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Last Updated 12-12-02
Send your comments, questions and suggestions to Phil Harter at 161
E Michigan Avenue, Battle Creek, Michigan 49014 or
e mail to pharter@calhouncountymi.gov