What is your answer when a family member asks whether the attorney in fact for an elderly person must account to the entire family? Do you ask the family member what he needs to know and whose interests are served when third parties are “kept informed”?
Many family members are disappointed when the attorney in fact does not engage them in shared decision making. This is especially true after the principal has become mentally incompetent. When making decisions, the attorney in fact should take into account the importance that the principal places on the family’s preferences. Like attorneys at law, the attorney in fact has a duty to understand and follow the principal’s wishes. Family members do not always share the principal’s priorities and may demand to be kept informed in an effort to circumvent the principal’s wishes (1). This is especially true when the person becomes disabled. A disabled principal may have needs that are burdensome or disruptive for the family. For example, a principal with cancer may feel pressured to reject radiation therapy because of the time involved and the number of outpatient visits.
On the other end of the spectrum, a family member may be demanding the most aggressive treatment for the principal over the principal’s own objections. The attorney in fact must consider the good, the bad and the ugly of the family’s influence over the principal’s decisions. The principal may direct the attorney in fact to consult with a family member. A family member may not, however, demand that the attorney in fact inform and consult with him because he intends to overrule, exploit or unduly influence the principal.
Unless the durable power of attorney itself requires the attorney in fact to account to third parties, the attorney in fact has no duty to supply reports to family members as State of Michigan law does not require it.
The concept of requiring an attorney in fact to account to third parties is new to many people. Here are ten things that you should know about obtaining an order for an attorney in fact to account:
- Michigan law does not require an attorney in fact to supply annual or any other type of periodic accounts. Instead, the attorney in fact has a duty to provide an account on demand. Do not mistake failure to provide periodic accounts as a failure to properly perform fiduciary duties.
- Only the principal, a guardian or conservator for the principal, or the court may demand an account from the attorney in fact. Do not mistake failure to account to family members as a breach of a fiduciary duty by an attorney in fact with something to hide.
- The attorney in fact does not provide a comprehensive account with income, disbursements and year to year balances for all of the principal’s assets in the same manner as a conservator. Instead, he accounts for actions and transactions. MCL 700.5501(3)(f). He is required to maintain a record of his acts for the principal. If the attorney in fact has no journal of his acts, then it is a breach of a fiduciary duty but it does not signify any damages unless his failure to provide information when asked caused the principal to miss an opportunity to invest, obtain a refund, make a warranty claim, etc. Do not conclude that a ledger and box full of deposit slips, cancelled checks and receipts is a sign that the attorney in fact is not doing his job properly.
- After signing an acceptance, an attorney in fact has no dutyto act. If and when he acts, he has a duty to act according to fiduciary standards. Therefore, the signing of the acceptance does not denote a date on which the principal has a duty to account. Do not request an account from an attorney in fact dating back to the date he signed an Acceptance.
- The attorney in fact does not have the authority to deny the principal access to the principal’s assets. Even after the attorney in fact learns that malfeasance has occurred, he does not have a duty to report or intervene. Therefore, the attorney in fact is not required to keep copies of the principal’s bank statements or monitor the principal’s checkbook register. Do not demand that the attorney in fact produce bank statements dating back to the date he signed an Acceptance. He never had a duty to obtain those bank statements in the first place.
- An attorney in fact should not be ordered to account in a preliminary protective order. MCL 700.5407(2)(a). Preliminary protective orders are limited by statute. Id. The provisions of the statute do not include issuing an order for an attorney in fact to account to the court or anyone else.
- Also, an attorney in fact cannot be ordered to account in a hearing for a protective order. MCL 700.5401. The protective order statute governs, MCL 700.5408, and it does not include issuing an order for an attorney in fact to account.
- A probate court cannot order a fiduciary to account under MCL 700.1308(1)(d). MCL 700.1308 applies to court appointed fiduciaries with duties to heirs, devisees, beneficiaries, protected individuals and wards.
- When the attorney in fact provides an account pursuant to a court order, it is under MCL 700.1303(1)(j). The probate court has concurrent legal and equitable jurisdiction to require, hear, or settle an accounting of an agent under a power of attorney. The court’s authority is derived from its jurisdiction over the estate of a decedent, protected individual, ward, or trust. (See also, MCL 700.1201 for rules of construction about the purpose of the probate code). The court-appointed fiduciary for the estate demands an account from the attorney in fact.
- If an attorney in fact is asked to provide an account that exceeds the scope of MCL 700.5501(f), he can object and seek relief under MCR 2.401(A). MCR 2.401(A) provides that the court, on its own initiative or at the request of the parties, may hold an early scheduling conference to discuss the purpose of the petition and to set the scope of discovery. The scheduling conference and order are permissive, not mandatory. If the court elects to issue a scheduling order, it is required to include in that order a discovery cut-off date. Thus, MCR 2.401 establishes a date upon which discovery must be complete. Until or unless the court establishes such a date, discovery may continue until an order of the court. An early scheduling conference is important to establishing the timeframe and the extent to which the attorney in fact is required to supply receipts and records.
Published in State Bar of Michigan Probate and Estate Planning Journal, Spring 2015. Author: Constance L. Brigman.
1) Family members may steer the principal towards making decisions that serve the family member’s purposes over those of the principal in many settings. See, Incorporating Patient and Family Preferences into Evidence-Based Medicine, Laura A Siminoff, BMC Medical Informatics and Decision Making 13 (Suppl 3) (2013). This article is part of a supplement titled “Articles from the Eisenberg Center Conference Series 2012: Supporting informed decision making when clinical evidence and conventional wisdom collide.” The article invites the physician to understand the role that family members play in the patient’s decisions.