People frequently assume that a person for whom a guardian/conservator is appointed automatically loses the right to engage in estate planning – in other words, a finding of a need for a guardian/conservator amounts to a finding of lack of testamentary capacity. The Michigan Court of Appeals showed that such assumption is incorrect by its ruling in In Reynolds v. Van Dan Steene, 2022 Westlaw 17871205, Docket No. 359803 (Mich Ct App Dec 22 2022).
According to the decision, 37-year-old Carrie was hired as a caregiver for 90-year-old Donald. They became so close that Donald bought a house to sell to Carrie and her husband on favorable land contract terms. Carrie then divorced her husband, brought a wedding officiant to Donald’s home, and married Donald. Donald then updated his trust to gift not only the land contract house, but also his primary residence, to Carrie. Carrie then would disappear for periods of time, leaving Donald alone. Donald would become upset and direct his attorney to file for divorce, and then Carrie would resurface and persuade Donald to dismiss the divorce action.
After observing all this, Donald’s friend and financial advisor successfully petitioned to be appointed as guardian for Donald. Subsequently, Donald executed a restatement of his trust (prepared by an experienced estate-planning attorney), disinheriting Carrie and leaving his assets to his first wife’s nephews and nieces. He then died, and Carrie challenged the validity of Donald’s trust restatement, based on mental incapacity. Her evidence consisted solely of the evidence from the guardianship proceeding, including a physician assessment concluding that Donald needed a guardian based on cognitive impairment. The probate court dismissed Carrie’s claim because she offered no evidence of testamentary incapacity, and she appealed.
The Court of Appeals observed that “[t]he appointment of a guardian does not by itself establish lack of testamentary capacity.” Id at *3. The standard for appointing a guardian is different than the standard for testamentary capacity, and as a result, Carrie’s proofs from the guardianship proceeding did not shed any light on the testamentary capacity factors. The physician assessment found that Donald needed the protection of a guardian because his weakened mind left him vulnerable to exploitation, yet Donald himself recognized and admitted the situation, which showed meaningful insight. The attorney who prepared the trust restatement testified that she was certain that Donald possessed capacity to amend his trust, and that the restatement reflected his free will and intentions. Therefore, the appellate court affirmed the probate court’s ruling.
As an observation, while appointment of a guardian/conservator does not automatically divest the ward of testamentary capacity, it is often difficult for the ward to engage in estate planning without the approval or assistance of the guardian/conservator (who controls the ward’s person and/or finances). Here, the decision does not indicate that the guardian had any involvement with the preparation of the new trust restatement, but the guardian obviously disapproved of Carrie and so likely supported Donald’s trust restatement on moral grounds (even though it did not benefit the guardian personally).
If you need assistance with a trust or estate dispute, contact David Skidmore at 616.752.2491 or dskidmore@wnj.com.
