Michigan Court Of Appeals Reverses Conservatorship

On September 8, 2015, the Michigan Court of Appeals reversed a county probate court's appointment of a conservator because 

[t]he probate court made no finding that Shirley Bittner’s property would be wasted or dissipated absent appointment of a conservator, and overlooked consideration of the statutory directive that protective orders encourage “maximum self-reliance and independence” by restricting an individual’s rights only to the extent necessary to safeguard an individual’s estate.

In In re Conservatorhip of Shirley Bittner, Docket No. 320688, the Michigan Court of Appeals addressed the issue of whether the probate court erred in appointing a conservator to manage Shirley Bittner's finances and other affairs. The probate court found, over the objection of Ms. Bittner's guardian ad litem, the psychologist who evaluated Ms. Bittner, and Ms. Bittner's daughter Stacey, that the evidence supported a finding that Ms. Bittner required a conservator to manage her finances.

The Court first recited the facts of the case:

Shirley Bittner is 74 years old. For convenience and clarity, in the balance of this opinion we will use her first name. We refer to her three daughters, Suzanne Bittner-Korbus, Shirleen Vencleave, and Stacey Bittner, as Suzanne, Shirleen, and Stacey.

Shirley’s husband of more than fifty years passed away in October 2011. Stanley Bittner had single-handedly managed the couple’s financial affairs. Newly widowed, Shirley developed serious health problems that required surgery, medications, and a temporary stay in a nursing home. She emerged from this ordeal with some confusion. Shirley decided to entrust the management of her finances to Suzanne, and granted Suzanne a durable power of attorney. Shirley revised her living trust to designate Suzanne as a co-trustee with authority to act independently.

In June 2013, Shirley petitioned the probate court for an accounting and a protective order. The petition averred that Suzanne had diverted a considerable amount of Shirley’s money to herself, converted many of Shirley’s accounts to joint tenancies, and withdrew funds without Shirley’s authorization. Shirley revoked Suzanne’s power of attorney and co-trustee status, the petition asserted, but Suzanne failed to return all the money she misappropriated and refused to “undo the joint tenancy creations.” Shirley demanded an accounting, restoration of her assets, and imposition of a surcharge. In September 2013, the probate court entered a temporary restraining order and authorized discovery.
Two months later, Suzanne filed a petition seeking an appointment of a conservator for Shirley. The petition alleged that Shirley was unable to manage her property and business affairs effectively because of mental illness and mental deficiency. In support of this allegation, Suzanne claimed that “Shirley believes that all her money is gone, she is spending time with her daughter Shirleen and her grandson who have previously stolen from her, [and] she does not remember things that she did.” Suzanne requested that a public administrator act as conservator of Shirley’s estate.

Shirley responded to the petition by denying that she needed a conservator and insisting that the petition was “simply a last minute frivolous effort to distract from Petitioner Suzanne Bittner-Korbus’ illegal behavior[.]” Further, Shirley’s answer maintained, the petition lacked any “allegations that Shirley is not managing her assets appropriately or that her management is adversely affected by some ‘mental illness.’ ”

The probate court ordered that Shirley undergo an independent medical examination with psychologist Terry Rudolph, Ph.D., and appointed attorney Helene Phillips as Shirley’s guardian ad litem. Attorney Phillips met with Shirley on January 30, 2014. According to Phillips’ report, Shirley expressed a correct understanding of a conservatorship and its attendant responsibilities, denied that she lacked the “mental capacity to handle her estate,” and explained in detail the basis for her belief that Suzanne had helped herself to some of Shirley’s assets. The report continued:

I went over the financial documents form with her and on the most part she was able to provide me with the majority of her financial information. Her daughter Stac[e]y corrected a few accounts and added a few accounts. She informed me that she was paying all her own bills and that at times her daughter Stac[e]y was helping her.

Subsequently, Phillips interviewed Stacey. Phillips concluded: 

After my meeting with Shirley Bittner, conversation with daughter Stac[e]y and conversations with both Suzanne’s attorney and Shirley’s attorney I do not believe that Shirley Bittner falls under the code’s requirements of being a person who needs protection and is not in need of a conservator. I would recommend that the court not approve this conservatorship. I have some minor concerns with Shirley Bittner’s full knowledge of her assets but I believe that there are enough safeguards in place with the POA and daughter Stac[e]y’s help.

Dr. Rudolph interviewed Shirley in February 2014, and administered several psychological tests. He noted that Shirley had originally scheduled the exam for January 31 but forgot about it, and “only came to know of it during a conversation with her attorney.” Dr. Rudolph summarized his encounter with Shirley as follows:

Today, Ms[.] Bittner was oriented to person. She was able to name her presumptive heirs. Ms[.] Bittner appeared to be able to identify her sources and amounts of monthly income, albeit that she was reading from prepared notes. She appeared to be aware of her real estate holdings.

Ms[.] Bittner was alert, verbal and oriented fully to person and place and generally to time. Her memory was in the low average to borderline range but her fund of general information was intact. She was poor at mental arithmetic. Ms[.] Bittner’s interpretation of proverbs was superficial and literal and her reasoning was concrete. As a result, Ms[.] Bittner’s formal judgment was marginal.

Testing indicates that Ms[.] Bittner functions in the low average range of cognitive abilities. She displayed an intact vocabulary and fund of general information along with some capacity to deal with abstract material. Ms[.] Bittner was very poor at mental arithmetic and quantitative facts. She was readily able to initiate and maintain verbal responses, but was very poor at the initiation and maintenance of motor responses. This does not bode well for her continuing to drive at this time. Ms[.] Bittner had some difficulty in registering and recalling new material.

Ms[.] Bittner has testamentary capacity and could make an informed decision about who she would want to assist her in handling her own affairs and make suggestions as to how she would want her assets used on her behalf. She has the capacity to live independently in her home for the time being and make daily decisions about activities, foods she wants to eat and clothes she wants to wear. Ms[.] Bittner’s presentation during this evaluation, as well as her performance on objective testing indicates problems in consistently being able to initiate and carry out the tasks necessary to effectively manage her financial affairs. She has poor registration and recall, as well as poor arithmetic and quantitative skills which negatively impact her ability to be able to independently manage her financial resources.

His report concluded with the following recommendations: 

1. Ms[.] Bittner has cognitive impairments brought about by Vascular Dementia, but not at a level of severity to be considered a Legally Incapacitated Person who requires the assistance of a Conservator to preserve her assets and assist her with her financial affairs.

2. Ms[.] Bittner has testamentary capacity and could make an informed decision about who she would want to handle her affairs and give some direction as to how she would want her assets used on her behalf.

3. Ms[.] Bittner has made arrangements for her daughter, Stac[e]y Bittner, to assist her with financial matters. This is within her current decision making capacity. It will probably be in her best interest to have someone who can provide her with checks and balances and support in the conduct of her financial affairs.

The probate court entertained argument regarding the conservatorship petition, granted it, and appointed Stacey as conservator. The court’s bench opinion discredited Dr. Rudolph’s recommendations, finding his opinions tainted by his inaccurate assumption that the standard at issue mirrored that for declaring a person “legally incapacitated.” “[I]n my mind,” the court elaborated, “he’s talking about a legally incapacitated person as that term is defined in Section 1105 [MCL 700.1105(i)] meaning a person who is incapacitated so as to require the assistance of a Guardian. The standards for a Conservator are different.”

The court then turned to the first factual requirement for appointment of a conservator, that an individual is “unable to manage property and business affairs effectively” for reasons such as mental illness and mental deficiency. Dr. Rudolph’s report, the court emphasized, supports that Shirley falls within this rubric:

This is what Dr. Rudolph says on page 5, “Ms. Bittner’s presentation during this evaluation, as well as her performance on objective testing indicate problems consistently being able to initiate and carry out the tasks necessary to effectively manage her financial affairs.” He may not admit to it, but he nails the statutory language directly. He says that she has problems in being able to initiate and carry out the tasks necessary to effectively manage her financial affairs.

The court further noted Dr. Rudolph’s findings that Shirley had “poor registration and recall,” “poor arithmetic and quantitative skills,” marginal judgment, and low-average cognitive abilities. “For all of those reasons,” the court concluded, “I find that the condition here for Shirley Bittner fits squarely into Section 5401(3)(a) [MCL 700.5401(3)(a)], which is that the individual is unable to manage property and business affairs effectively. So, I will appoint a Conservator.”

The conservatorship order grants Stacey Bittner “authority with respect to all assets of the estate,” requires the filing of an annual account, forbids the sale, assignment, transfer or mortgage of any real estate without written court order, and prohibits the sale, “transfer, discount, assign[ment]” or encumbrance of any annuity or life insurance policies in which Shirley has an interest, absent a court order. On Shirley’s behalf, Stacey now appeals the conservatorship order. Suzanne has filed a brief defending the conservatorship . . . .

The Court's analysis of whether the probate court erred in appointing Ms. Bittner a conservator followed:

. . . We agree that Dr. Rudolph likely conflated the standards for imposing a conservatorship and for appointing a guardian for a legally incapacitated person. We also agree that clear and convincing record evidence substantiated that Shirley’s cognitive impairments give rise to “problems in consistently being able to initiate and carry out the tasks necessary to effectively manage her financial affairs.” But this finding, standing alone, does not clearly and convincingly evidence a need for conservatorship.

The plain language of MCL 700.5401(3)(a) requires a determination that an “individual is unable to manage property and business affairs effectively,” and that this disability arises from causes such as “mental illness” or “mental deficiency.” We first consider whether clear and convincing evidence substantiated that Shirley Bittner was “unable” to perform the tasks necessary to “effectively” care for her assets.

Dr. Rudolph’s finding meets this statutory criterion only to the extent that it demonstrates intermittent “problem[s]” with Shirley’s ability to effectively manage her finances. Whether Dr. Rudolph would find Shirley consistently unable to conscientiously and competently manage her affairs remains unknown; Dr. Rudolph never addressed this specific question. Although Dr. Rudolph observed that Shirley has “problems in consistently” initiating and carrying out tasks relevant to her finances, he rendered no opinion regarding the real question: do Shirley Bittner’s mental “deficiencies” render her “unable” to act as a responsible custodian for her funds? The sentence immediately following Dr. Rudolph’s pronouncement regarding Shirley’s “problems in consistently” initiating and carrying out pertinent tasks states: “She has poor registration and recall, as well as poor arithmetic and quantitative skills which negatively impact her ability to be able to independently manage her financial resources.” (Emphasis added.) But do the problems that “negatively impact” Shirley’s abilities rise to a level that render her “unable” to think and act appropriately regarding her finances?

The evidence supporting a finding of “inability” must be clear and convincing. Here, the probate court inferred that Dr. Rudolph would agree with the probate court’s interpretation of Dr. Rudolph’s findings. Given the demanding standard of proof applicable in this case, we are not so sure . . . .

Here, the evidence presented to the probate court established that Shirley’s financial affairs were in good order and well-managed through her arrangement with Stacey. Although Shirley exhibited some deficits in memory, math, motor skills and executive functioning, she understood her sources of income and economic responsibilities. Shirley’s grant of a durable power of attorney to Stacey confirms rather than negatives her ability to effectively manage her property and business affairs. We are definitely and firmly convinced that the probate court erred by finding that the evidence satisfied that a conservatorship was appropriate under MCL 700.5401(3).

We reverse the order establishing a conservatorship and appointing a conservator, and remand for further proceedings. We do not retain jurisdiction.