The important holding in this case is that a conservator can execute a ladybird deed without first asking for court permission. The facts and other nuances of the case have the potential to cloud this otherwise important rule (as important as a rule can be in an unpublished opinion).
Married homeowners Dale and Barbara Greer were in a nursing home together. An acquaintance named Lucas made a deal with Dale that if she brought both of them home and took care of them there for the rest of their lives, she would be given their house.
A ladybird deed was prepared reserving a joint life estate in Dale and Barbara, with the remainder to Lucas. Barbara was incompetent at that time, so Dale signed for himself and as power of attorney for Barbara.
Lucas brought the Greers home in April. In June, Barbara’s cognitive state required her to be re-institutionalized. In July, Dale died. So, the actual caregiving provided by Lucas was for only three months.
After Dale’s death, the local probate court appointed a professional fiduciary, Appellee, as guardian and conservator for Barbara.
Soon after their appointment, the conservator exercised Barbara’s reserved power in the ladybird deed to remove Lucas and appoint the property, upon Barbara’s death, to the trustee of the joint revocable trust of Dale and Barbara.
This action was contested by Lucas on a couple grounds.
First (and this is the holding of this case that is worth noting), Lucas said that the act of executing a ladybird deed without first giving notice and holding a hearing violated MCL 700.5423 which says that a “conservator shall not sell or otherwise dispose of the protected individual’s principal dwelling, real property, or interest in real property or mortgage, pledge, or cause a lien to be placed on any such property without approval of the court.”
The COA spends a good portion of the opinion looking at this language and discussing how a ladybird deed functions. It concludes that, because Barbara’s interest in the property was unaltered by the replacement ladybird deed, there was no “disposal” of the property and therefore the conservator’s act of creating the ladybird deed did not run afoul of MCL 700.5423.
The second issue is whether the conservator breached its fiduciary duty by changing the beneficiary on the ladybird deed without court permission. MCL 700.5428 requires a conservator to “take into account the protected individual’s estate plan” when managing the ward’s affairs.
The COA spends significantly less time explaining their reasoning on this point and doesn’t do a great job (IMO) of explaining the conclusion that there was no breach. Without putting words into their opinion, it seems to me that their best explanation rests on the proposition that because the purpose of making Lucas the beneficiary of this ladybird deed was based on a contract for services, that the arrangement was part of a contract and not part of Barbara’s estate plan. And I guess I can buy that – but again, I’m not certain that’s what they were trying to say.
This issue comes up. Frequently, there are situations in which a ladybird deed would be helpful, but the homeowner is incompetent and subject to a conservatorship. Based on this opinion (I would think), an attorney advising the conservator can safely advise that a ladybird deed can be executed by the conservator without the cost and delay of a court hearing. That’s a good rule – a helpful rule.
But there’s a caveat to the rule: Provided that the execution of the ladybird deed does not alter the existing estate plan. To read this case to mean that a conservator, acting without court permission, and where the ladybird deed is an integral part of the protected person’s estate plan, has the authority to exercise the reserved power in the ladybird deed and redirect the property at the ward’s death to other persons, is, I believe, taking this holding too far. Rather, the implications of MCL 700.5428 were negated in this case based on the unique facts surrounding the creation of the initial deed.
CT Pride Moment
Chalgian and Tripp represented the Appellee in this case (aka, “the winner”). YAY!!
Congrats to the team of Dan Hilker, Val Kutz-Otway and Elizabeth Graiziano for their excellent legal work. They make us all proud.