This past week, The Probate Pro prevailed on an issue that appears to be an issue of first impression.  The Wayne County Probate Court held in a four page Opinion that our client, the Conservator is allowed to invade an IRA for the payment of attorney fees and nursing home expenses.

The Probate Pro was appointed and qualified as Conservator to manage the assets of a family member. At the time of appointment, the person under protection owned two Individual Retirement Accounts (IRAs) in his own name.  His wife was the designated beneficiary of both accounts.

The individual died in May. The wife immediately liquidated both of the IRAS prior to termination of the conservatorship in an attempt to avoid paying the existing attorney fees and nursing home bills. Shortly after the death to ensure that the IRA funds would not be depleted, The Probate Pro filed a request for a restraining order.  The court granted that request.

The wife argued that since the IRA had her as the designated beneficiary, immediately upon death the IRA became hers. She also argued that the probate court no longer had jurisdiction of the IRA funds now that her husband had died. The Probate Pro argued that the probate court had continued jurisdiction of all conservatorship assets even after the death. Also, The Probate Pro argued that the IRA beneficiary designation does not immediately pass to the wife at death in a similar fashion as a joint bank account pursuant to MCL 700.2708(b). The Probate Pro argued that the wife’s interest as an account beneficiary does not vest until the Conservatorship is terminated and administrative expenses are paid.

MCL 700.5431 provides as follows:

The protected individual, conservator, or another interested person may petition the court to terminate the conservatorship. A protected individual seeking termination is entitled to the same rights and procedures as in an original proceeding for a protective order. Upon determining, after notice and hearing, that the minority or disability of the protected individual has ceased, the court shall terminate the conservatorship. Upon termination, title to the estate property passes to the formerly protected individual or to successors subject to the provision in the order for expenses of administration and to directions for the conservator to execute appropriate instruments to evidence the transfer.

The Probate Pro argued that MCL 700.5431 plainly and clearly contemplates that administrative expenses of the Conservatorship should be paid upon termination of the Conservatorship, before title passes to the rightful successors.

The Wayne County Probate Court ruled that:

Because EPIC provides the Court with the authority to exercise jurisdiction over the IRA accounts, the Court may authorize the Conservator to make expenditures from those funds for administrative expenses and any claims that arose during the course of the conservatorship.

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The Court could find no authority that bars a conservator from using funds from a private IRA to pay for the care of a ward, and no relevant authority has been provided.

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The fact that he has died does not create a bar to permitting payment from those IRAs.  EPIC provides that the Conservator continues to serve as trustee of those funds until such time as the conservatorship is discharged and the conservatorship is terminated.

 The Probate Pro is unaware of any other time that this issue has been addressed before a Michigan court.  The successful resolution provides that a Conservator is allowed to invade an IRA.