Commonly (at least in my practice), family members advance money for legal services until they get appointed conservator, at which time they repay themselves out of the ward’s resources and report that reimbursement in the first accounting. I can’t recall ever having had any issues with that approach – which is the say, it seems to work – but I’ve never felt great about it either. I’ve wondered how it is that the ward became obligated to repay those funds, notwithstanding that it was done for their benefit.
A juicy story out of Antrim County puts questions about that practice front and center.
The Players:
Nancy Ann is the demented person
Nancy Coyle is her niece
Paul is a preacher who makes home visits.
Adam is Nancy Ann’s lawyer. Or is he?
Act I
Nancy Coyle files for guardianship over Nancy Ann. The Petition is accompanied by a doctor’s statement that Nancy Ann lacks capacity to handle either her own medical or financial affairs. The Court appoints an attorney who serves until Attorney Adam files an appearance as Nancy’s retained counsel.
Act II: (the plot thickens)
While the guardianship matter is pending, Nancy Coyle files a petition for conservatorship, alleging Nancy Ann is being exploited which alleged exploitation includes substantial payments from Nancy Ann’s accounts to Attorney Adam for his legal fees. In addition to representing Nancy Ann in the probate proceedings, Attorney Adam has also prepared for Nancy Ann a new financial power of attorney and new patient advocate designation appointing Preacher Paul as her agent in both instances.
Act III
When the dust settles, a professional fiduciary has been appointed Nancy Ann’s conservator and that professional fiduciary petitions the court for authority to “reimburse” Preacher Paul $15,000 for legal fees he paid to Attorney Adam which is characterized as a “loan” by Preacher Paul to Nancy Ann.
The trial judge is indignant, both on the grounds of the amount of legal fees incurred by Nancy Ann during this process, and also on the proposition that a demented Nancy Ann knowingly borrowed money from someone that she could not recognize when he was pointed out to her during a court proceeding. Accordingly, the trial judge denies the request reimbursement.
Act IV
This messy matter is taken to the Michigan Court of Appeals which remands the case to the trial court with instructions to make findings on the following two fact questions:
(1) Whether appellant’s $15,000 check constituted a loan or a gift? and
(2) If it constituted a loan, whether Nancy Ann was legally capable of agreeing to such a loan?
Act V
Act V is still to be written, and unless it ends up back in the COA (or unless some kindly Antrim County practitioner decides to give me a heads-up), we will probably never know how the story ends.
Postscript
But I can say that the ugliness of this case only makes me more uneasy with the method I have historically employed to get retainers in cases where family members seek help in guardianship and conservatorship cases. The idea of requesting the court approve a loan in the initial (or I suppose, a subsequent) hearing, seems overkill. And, in light of fact that to date all of my sins have been cleansed in the waters of the river of “nobody objects,” I’ll probably keep doing what I’ve always done – just worry about it a little more.
To read In Re Estate of Nancy Ann Mannausa, click on the name. It is unpublished.
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