Bill Text: MI HB6272 | 2009-2010 | 95th Legislature | Engrossed

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Bill Title: Probate; guardians and conservators; power of conservator to mortgage or place lien on protected individual's home; require prior court approval. Amends secs. 5422 & 5423 of 1998 PA 386 (MCL 700.5422 & 700.5423).

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2010-09-07 - Referred To Committee On Judiciary [HB6272 Detail]

Download: Michigan-2009-HB6272-Engrossed.html

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HB-6272, As Passed House, August 24, 2010

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

HOUSE BILL NO. 6272

 

 

 

 

 

 

 

 

 

 

 

 

     A bill to amend 1998 PA 386, entitled

 

"Estates and protected individuals code,"

 

by amending sections 5410, 5422, 5423, and 5501 (MCL 700.5410,

 

700.5422, 700.5423, and 700.5501), section 5423 as amended by 2005

 

PA 204.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 5410. (1) The court may require a conservator to furnish

 

a bond. If the court determines that the value of cash and property

 

that is readily convertible into cash in the estate and in the

 

conservator's control exceeds the limit for administering a

 

decedent's estate under section 3982, adjusted in the manner

 

provided under section 1210 for the year in which the conservator

 

is appointed, the court shall require the conservator to furnish a

 

bond, unless 1 or more of the following apply:

 

     (a) The estate contains no property readily convertible to

 

cash and the cash is in a restricted account with a financial

 

institution.

 

     (b) The conservator has been granted trust powers under

 

section 4401 of the banking code of 1999, 1999 PA 276, MCL

 

487.14401.

 

     (c) The court determines that requiring a bond would impose a

 

financial hardship on the estate.

 

     (d) The court states on the record the reasons why a bond is

 

not necessary.

 

     (2) A bond furnished under this section shall be conditioned

 

upon faithful discharge of all duties of the conservator's trust

 

according to law, with sureties as the court specifies. Unless

 

otherwise directed, the bond shall be in the amount of the

 

aggregate capital value of the estate property in the conservator's

 

control plus 1 year's estimated income minus the value of

 

securities deposited under arrangements requiring a court order for

 

their removal and the value of land that the fiduciary, by express

 

limitation of power, lacks power to sell or convey without court

 

authorization. Instead of sureties on a bond, the court may accept

 

other security for the performance of the bond, including a pledge

 

of securities or a mortgage of land.

 

     Sec. 5422. (1) A person who in good faith either assists or

 

deals with a conservator for value in a transaction, other than

 

those requiring a transaction that requires a court order as

 

provided in section 5407 or 5423(3), is protected as if the

 

conservator properly exercised the power. The Except as provided in

 

subsection (3), the fact that a person knowingly deals with a

 

conservator does not alone require the person to inquire into the

 

existence of a power or the propriety of its exercise, but a

 

restriction on a conservator's powers that is endorsed on letters

 

as provided in section 5427 is effective as to third persons. A

 

person is not bound to see to the proper application of estate

 

property paid or delivered to a conservator.

 

     (2) The protection expressed in this section extends to a

 

procedural irregularity or jurisdictional defect that occurs in a

 

proceeding leading to the issuance of letters and is not a

 

substitution for protection provided by a comparable provision of

 

the law relating to a commercial transaction or to simplifying a

 

transfer of securities by a fiduciary.

 

     (3) A conservator shall record an order allowing the sale,

 

disposal, mortgage, or pledge of or placement of a lien on real

 

property under section 5423 in the records of the register of deeds

 

for the county in which the real estate is located. Unless the

 

order has been recorded or a person to whom an interest in the real

 

estate is transferred has been given a copy of the order, the

 

person is not entitled to presume that the conservator has the

 

power to sell or otherwise dispose of the real property, or to

 

mortgage, pledge, or cause a lien to be placed on the protected

 

individual's home, as applicable.

 

     Sec. 5423. (1) Subject to a limitation imposed under section

 

5427, a conservator has all of the powers conferred in this section

 

and the additional powers conferred by law on trustees in this

 

state. In addition, a conservator of the estate of an unmarried

 

minor, as to whom no one has parental rights, has the powers,

 

responsibilities, and duties of a guardian described in section

 

5215 until the individual is no longer a minor or marries. The

 

parental rights conferred on a conservator by this section do not

 

preclude a guardian's appointment as provided in part 2.

 

     (2) Acting reasonably in an effort to accomplish the purpose

 

of the appointment and without court authorization or confirmation,

 

a conservator may do any of the following:

 

     (a) Collect, hold, or retain estate property, including land

 

in another state, until the conservator determines that disposition

 

of the property should be made. Property may be retained even

 

though it includes property in which the conservator is personally

 

interested.

 

     (b) Receive an addition to the estate.

 

     (c) Continue or participate in the operation of a business or

 

other enterprise.

 

     (d) Acquire an undivided interest in estate property in which

 

the conservator, in a fiduciary capacity, holds an undivided

 

interest.

 

     (e) Invest or reinvest estate property. If the conservator

 

exercises the power conferred by this subdivision, the conservator

 

must invest or reinvest the property in accordance with the

 

Michigan prudent investor rule.

 

     (f) Deposit estate money in a state or federally insured

 

financial institution including one operated by the conservator.

 

     (g) Except as provided in subsection (3), acquire or dispose

 

of estate property, including land in another state, for cash or on

 

credit, at public or private sale, or manage, develop, improve,

 

exchange, partition, change the character of, or abandon estate

 

property.

 

     (h) Make an ordinary or extraordinary repair or alteration in

 

a building or other structure, demolish an improvement, or raze an

 

existing or erect a new party wall or building.

 

     (i) Subdivide, develop, or dedicate land to public use; make

 

or obtain the vacation of a plat or adjust a boundary; adjust a

 

difference in valuation on exchange or partition by giving or

 

receiving consideration; or dedicate an easement to public use

 

without consideration.

 

     (j) Enter for any purpose into a lease as lessor or lessee

 

with or without option to purchase or renew for a term within or

 

extending beyond the term of the conservatorship.

 

     (k) Enter into a lease or arrangement for exploration and

 

removal of a mineral or other natural resource or enter into a

 

pooling or unitization agreement.

 

     (l) Grant an option involving disposition of estate property or

 

take an option for the acquisition of property.

 

     (m) Vote a security, in person or by general or limited proxy.

 

     (n) Pay a call, assessment, or other amount chargeable or

 

accruing against or on account of a security.

 

     (o) Sell or exercise stock subscription or conversion rights.

 

     (p) Consent, directly or through a committee or other agent,

 

to the reorganization, consolidation, merger, dissolution, or

 

liquidation of a corporation or other business enterprise.

 

     (q) Hold a security in the name of a nominee or in other form

 

without disclosure of the conservatorship so that title to the

 

security may pass by delivery. However, the conservator is liable

 

for an act of the nominee in connection with the stock so held.

 

     (r) Insure the estate property against damage or loss or the

 

conservator against liability with respect to third persons.

 

     (s) Borrow money to be repaid from estate property or

 

otherwise.

 

     (t) Advance money for the protection of the estate or the

 

protected individual, and for all expense, loss, or liability

 

sustained in the estate's administration or because of the holding

 

or ownership of estate property. The conservator has a lien on the

 

estate as against the protected individual for such an advance.

 

     (u) Pay or contest a claim; settle a claim by or against the

 

estate or the protected individual by compromise, arbitration, or

 

otherwise; and release, in whole or in part, a claim belonging to

 

the estate to the extent that the claim is uncollectible.

 

     (v) Pay a tax, assessment, conservator's compensation, or

 

other expense incurred in the estate's collection, care,

 

administration, and protection.

 

     (w) Allocate an item of income or expense to either estate

 

income or principal, as provided by law, including creation of a

 

reserve out of income for depreciation, obsolescence, or

 

amortization, or for depletion in a mineral or timber property.

 

     (x) Pay money distributable to a protected individual or the

 

protected individual's dependent by paying the money to the

 

distributee or by paying the money for the use of the distributee

 

to the distributee's guardian, or if none, to a relative or other

 

person having custody of the distributee.

 

     (y) Employ a person, including an auditor, investment advisor,

 

or agent, even though the person is associated with the

 

conservator, to advise or assist in the performance of an

 

administrative duty; act upon the person's recommendation without

 

independent investigation; and, instead of acting personally,

 

employ an agent to perform an act of administration, whether or not

 

discretionary.

 

     (z) Employ an attorney to perform necessary legal services or

 

to advise or assist the conservator in the performance of the

 

conservator's administrative duties, even if the attorney is

 

associated with the conservator, and act without independent

 

investigation upon the attorney's recommendation. An attorney

 

employed under this subdivision shall receive reasonable

 

compensation for his or her employment.

 

     (aa) Prosecute or defend an action, claim, or proceeding in

 

any jurisdiction for the protection of estate property and of the

 

conservator in the performance of a fiduciary duty.

 

     (bb) Execute and deliver an instrument that will accomplish or

 

facilitate the exercise of a power vested in the conservator.

 

     (cc) Respond to an environmental concern or hazard affecting

 

property as provided in section 5424.

 

     (3) A conservator shall not sell or otherwise dispose of the

 

protected individual's real property or interest in real property

 

or mortgage, pledge, or cause a lien to be placed on the protected

 

individual's home without approval of the court. The court shall

 

only approve the sale, or other disposal, mortgage, or pledge of or

 

lien against the real property or interest in real property if,

 

after a hearing with notice to interested persons as specified in

 

the Michigan court rules, the court considers evidence of the value

 

of the real property or interest in real property and otherwise

 

determines that the sale, or other disposal, mortgage, pledge, or

 

allowance of the lien is in the protected individual's best

 

interest.

 

     Sec. 5501. (1) A durable power of attorney is a power of

 

attorney by which a principal designates another as the principal's

 

attorney in fact in a writing and the writing that contains the

 

words "This power of attorney is not affected by the principal's

 

subsequent disability or incapacity, or by the lapse of time", or

 

"This power of attorney is effective upon the disability or

 

incapacity of the principal", or similar words showing the

 

principal's intent that the authority conferred is exercisable

 

notwithstanding the principal's subsequent disability or incapacity

 

and, unless the power states a termination time, notwithstanding

 

the lapse of time since the execution of the instrument.

 

     (2) Before exercising authority as attorney in fact under a

 

durable power of attorney, a person shall sign an acceptance of the

 

designation, acknowledging and accepting all of the following

 

obligations, liabilities, and rights:

 

     (a) To act in the best interest of the principal.

 

     (b) To keep the principal informed of the attorney in fact's

 

actions and account to the principal.

 

     (c) To not make gifts of the principal's property unless

 

specifically authorized by the power of attorney.

 

     (d) To be prosecuted and punished for any criminal acts.

 

     (e) To keep the principal's assets in an account that does not

 

include money of the attorney in fact or another person.

 

     (f) To only use the principal's property and income for the

 

benefit of the principal, unless otherwise authorized specifically

 

in the power of attorney.

 

     (g) If requested, to provide an accounting at any time to the

 

principal, a fiduciary appointed on behalf of the principal, or the

 

court.

 

     (h) To maintain sufficient records of every transaction and be

 

prepared to defend each action.

 

     (i) To be held financially responsible for any transaction

 

that is not specifically authorized in the power of attorney.

 

     (j) To hire an advisor, attorney, accountant, or other

 

professional as reasonably required to comply with the attorney in

 

fact's duties and to pay for the professional's services from the

 

estate of the principal.

 

     (k) Unless prohibited by the power of attorney, to receive

 

reasonable compensation for the attorney in fact's services, which

 

compensation may be subject to scrutiny by the court.

 

     Enacting section 1. This amendatory act takes effect April 1,

 

2011.

 

     Enacting section 2. This amendatory act does not take effect

 

unless House Bill No. 4619 of the 95th Legislature is enacted into

 

law.