Court Opinion

ID: 6342457
Source: CourtListenerOpinion
Date Created: 2022-05-20 05:05:50.158893+00
Date Added: 2024-06-11T09:16:29.631595
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                 revision until final publication in the Michigan Appeals Reports.

                          STATE OF MICHIGAN

                           COURT OF APPEALS

In re RICHARD LEE CONRAD, a legally
incapacitated person.

JOSEPHINE CONRAD,                                                  UNPUBLISHED
                                                                   May 19, 2022
               Petitioner-Appellee,

v                                                                  No. 356598
                                                                   Shiawassee Probate Court
DEPARTMENT OF HEALTH AND HUMAN                                     LC No. 21-039415-PO
SERVICES,

               Respondent-Appellant.

Before: MURRAY, P.J., and SAWYER and M. J. KELLY, JJ.

PER CURIAM.

       Respondent, Department of Health and Human Services (DHHS), appeals as of right the
probate court’s March 3, 2021 protective order issued under the Estates and Protected Individuals
Code (EPIC), MCL 700.1101 et seq. For the reasons discussed below, we vacate the order and
remand to the probate court for further proceedings in accordance with this opinion.

                                       I. BACKGROUND

        Richard Conrad fell and broke his leg. His wife, petitioner Josephine Conrad, who resided
in the couple’s home, was unable to care for Richard at home following his injury. Richard entered
Durand Senior Care and Rehab for physical therapy and treatment. About a month later, on
February 17, 2021, Josephine petitioned the probate court for a protective order.1 Josephine

1
  At the time the petition for a protective order was filed, a Medicaid application had not been
submitted by or on behalf of Richard to cover the costs of the facility. DHHS contends that
Josephine signed an application for Medicaid benefits on behalf of Richard on February 26, 2021,

                                               -1-
alleged that a protective order was needed because Richard was unable to manage his property and
business affairs because of “dementia or a cognitive impairment and he just received a pacemaker.”
She alleged that a protective order was necessary to provide money and/or assets for her own
support, care, and welfare. Subsequently, over DHHS’s objections, the probate court granted the
petition, finding satisfaction of the relevant criteria in EPIC. The court issued a protective order
that awarded Richard $60 monthly from his income and transferred the remainder of the couple’s
combined income, as well as Richard’s individual and joint interests in assets, to Josephine for her
own use and benefit, and terminated Richard’s spousal rights in regard to any potential future
inheritance.

        In this appeal, DHHS argues that the probate court abused its discretion by issuing the
protective order because Josephine failed to establish the necessary criteria for a protective order
of support under MCL 700.5401.

                                    II. LEGAL FRAMEWORK

                                  A. STANDARD OF REVIEW

         Questions of statutory interpretation are reviewed de novo. In re Vansach Estate, 324 Mich
App 371, 385; 922 NW2d 136 (2018). Appeals from a probate court decision are on the record,
not de novo. Id. A trial court’s factual findings are reviewed for clear error, while its dispositional
rulings, including a decision to enter a protective order, are reviewed for an abuse of discretion.
Id. “A finding is clearly erroneous when a reviewing court is left with a definite and firm
conviction that a mistake has been made, even if there is evidence to support the finding.” In re
Bittner Conservatorship, 312 Mich App 227, 236; 879 NW2d 269 (2015) (quotation marks and
citation omitted). “An abuse of discretion occurs when the court’s decision falls outside the range
of reasonable and principled outcomes.” Id. at 235. A trial court may also abuse its discretion by
failing to operate within the correct legal framework. Vansach, 324 Mich App at 385.

                                     B. ARTICLE V OF EPIC

        Article V of EPIC, MCL 700.5101 et seq., provides protection for individuals under
disability. The standards governing protective orders are described in MCL 700.5401. Under
MCL 700.5401(1), the court “may appoint a conservator or make another protective order for
cause” in relation to an individual’s estate and affairs if the court determines that both of the
following criteria are satisfied:

               (a) The individual is unable to manage property and business affairs
       effectively for reasons such as mental illness, mental deficiency, physical illness or

nine days after she filed the petition for a protective order, but that she did not submit the
application for Medicaid benefits, which included the March 3, 2021 protective order of support,
until April 21, 2021.

                                                 -2-
       disability, chronic use of drugs, chronic intoxication, confinement, detention by a
       foreign power, or disappearance.

               (b) The individual has property that will be wasted or dissipated unless
       proper management is provided, or money is needed for the individual’s support,
       care, and welfare or for those entitled to the individual’s support, and that protection
       is necessary to obtain or provide money. [MCL 700.5401(3).]

         Before entering a protective order, the probate court is first required to determine by clear
and convincing evidence that the protected individual meets these requirements. MCL
700.5406(7); Vansach, 324 Mich App at 383-384. “The most demanding standard in civil cases
is the clear-and-convincing evidence standard.” In re Schroeder Estate, 335 Mich App 107, 114;
966 NW2d 209 (2020) (citation omitted). “Evidence is clear and convincing when it produces a
firm belief in the truth of the allegations that a party is attempting to establish.” Id. “The standard
has also been described as equating to evidence that is as clear, directly, weighty, and convincing
as to enable a fact-finder, absent any hesitancy, to come to a definitive conclusion regarding the
truth of the precise facts at issue.” Id.

                                           C. VANSACH

        In the consolidated appeals in Vansach, each probate court entered a protective order under
EPIC that required all of the income of the individual institutionalized in a nursing home and
receiving Medicaid benefits to be paid to the respective spouses who remained in the community.
Vansach, 324 Mich App at 376. This Court said, relevant to the issues raised in this appeal:

               In considering whether money is “needed” for the “support” to which a
       spouse is “entitled,” we acknowledge that the duty to support a spouse is not
       discharged “by furnishing only enough money to buy sufficient food to keep body
       and soul together. We are not, therefore, suggesting that a showing of need under
       MCL 700.5401(3)(b) requires a determination that the spouse requesting support
       lacks even the basic necessities of life. However, we emphasize that an entitlement
       to support does not necessarily guarantee that a spouse may enjoy a particular
       standard of living regardless of the protected individual’s means and circumstances.
       To the contrary, in Michigan, the obligation to support a spouse is contingent on
       the assumption that the spouse providing support has sufficient financial ability to
       provide that assistance. And the level of “support” required is generally recognized
       as being that which is “reasonably consistent” with the supporting spouse’s “own
       means and station.” In other words, it cannot reasonably be expected that one
       spouse should become impoverished in order for the other spouse to maintain his
       or her standard of living.

              In the context of a petition for a protective order under MCL
       700.5401(3)(b), it follows that a finding that money is needed for a spouse entitled
       to support from the protected individual requires consideration of the requesting
       spouse’s needs and resources as well as the protected individual’s needs and
       circumstances. The spouse requesting support must make a showing of need—not
       merely a desire to maintain a current standard of living without regard to the other

                                                 -3-
       spouse’s circumstances. Whether the community spouse2 is “entitled” to “support”
       will depend on all the facts and circumstances, including the incapacitated
       individual’s financial means and ability to provide assistance. For instance, when
       crafting a protective order, the probate court should consider the protected
       individual’s “foreseeable needs,” the interests of the protected individual’s
       creditors, and the interests of the protected individual’s dependents. A probate
       court considering a protective order should also bear in mind that the protected
       individual has the right to acquire, enjoy, and dispose of his or her own property.
       Weighing the various concerns will obviously depend on the facts of each case, but
       a protected individual’s rights and interests can never be totally disregarded in an
       effort to provide for his or her spouse. In other words, a community spouse cannot
       make a showing of “need” and is not “entitled to the [incapacitated] individual’s
       support” merely to maintain his or her current lifestyle when providing money to
       the spouse will leave the incapacitated individual entirely destitute and unable to
       meet his or her own needs. [Vansach, 324 Mich App at 394-396 (citations
       omitted).]

                                        III. ANALYSIS

    A. MCL 700.5401(3)(A)—CAPACITY TO MANAGE PROPERTY AND BUSINESS
                           AFFAIRS EFFECTIVELY

        DHHS argues that Josephine failed to present clear and convincing evidence that Richard
was unable to manage his property and business affairs effectively for reasons such as mental
illness, mental deficiency, or physical illness or disability. MCL 700.5401(3)(a). Josephine
alleged in the petition that Richard was unable to manage his property and business affairs
sufficiently because he suffered from “dementia or a cognitive impairment and he just received a
pacemaker.” The attorney appointed as Richard’s guardian ad litem (GAL) prepared a report and
indicated that he had not been able to meet with Richard in person because of COVID concerns
and so he spoke with Richard via Zoom. The GAL said that during the Zoom meeting Richard
“did not have any understanding of the petition or its purpose” and was “not very verbal.” The
GAL said that Richard could identify himself but could not identify his surroundings or where he
was or why he was there, and did not understand how the proposed order would affect his rights
or ownership of the parties’ assets. The GAL said that Richard’s diagnosis was dementia, and that
he had a broken leg and was not cooperating in his physical therapy. The GAL said that Richard
was currently unable to manage his own property or financial affairs because of his medical
condition and need for treatment. DHHS did not present any evidence to counter the GAL’s report.

2
  Vansach involved the issuance of orders of support under EPIC after an initial Medicaid
eligibility determination had been made. This Court explained that “Title XIX of the Social
Security Act is commonly referred to as the Medicaid act. In the Medicaid context, and as used in
this opinion, the term “community spouse” refers to a spouse living at home, while the term
“institutionalized spouse” refers to a spouse who has been institutionalized, usually in a nursing
home.” Vansach, 324 Mich App at 376 n 2.

                                               -4-
        No medical reports were presented in the probate court regarding Richard’s purported
diagnosis of dementia. The allegations of “dementia or other cognitive impairment” in the petition
are not evidence. The assertions of the GAL, who did not meet with Richard in person, who did
not assert that he had performed an investigation beyond a Zoom meeting with Richard and a
telephone conversation with Josephine and review of her petition, and who is presumably not a
medical professional, were not supported by any medical reports and do not constitute clear and
convincing evidence that Richard suffered from dementia and was unable to manage his property
and business affairs. See Schroeder, 335 Mich App at 119. While Richard may, in fact, suffer
from dementia, the probate court did not make any findings of fact to support its determination
that Richard was “unable to manage property and business affairs effectively for reason of physical
illness or disability.” On this record it is not clear that Richard suffered from dementia or any
other ailments, nor is it clear that any ailments rendered him unable to manage his property or
business affairs effectively. Inability to manage property and business affairs effectively for
reasons such as mental illness, mental deficiency, or physical illness or disability is one of the
prerequisites for a protective order. The probate court erred because it failed to make sufficient
findings of fact to allow for meaningful appellate review. See Woodington v Shokoohi, 288 Mich
App 352, 357; 792 NW2d 63 (2010) (reversing and remanding because the trial court failed “to
make findings of fact that [were] susceptible to appellate review”). Under these circumstances,
we vacate the protective order and remand to the probate court for the court to articulate reviewable
findings of fact considering the circumstances as they actually exist at the time of remand. See
Schroeder, 335 Mich App at 123 (holding that where circumstances have likely evolved during
the pendency of the appeal involving care, on remand the probate court shall consider the
circumstances as they actually exist). On remand, the probate court must permit the parties to file
additional evidence that will enable the court to make findings sufficient to enable meaningful
appellate review. Additionally, given that COVID restrictions have been lifted, the probate court
is to direct the GAL to prepare an updated report after complying with the duties under MCL
700.5305(1), which include, among others, the duty to personally visit the individual. MCL
700.5305(1)(a).

    B. MCL 700.5401(3)(B)—MONEY NEEDED FOR SUPPORT, CARE, AND WELFARE

        As relevant to this case, MCL 700.5401(3)(b) makes clear that a protective order can be
entered when money is “needed” for someone “entitled to the individual’s support,” provided that
the entry of a protective order is “necessary to obtain or provide money.” “Plainly, to warrant a
protective order under this provision, there must be a showing of need.” Vansach, 324 Mich App
at 394. DHHS argues that there was not clear and convincing evidence that Josephine needed
additional support from Richard.3 DHHS argues that the probate court did not consider Richard’s
needs for his assets and income. It argues that by awarding Richard just $60 per month from his
income, the probate court effectively looked to taxpayers to fund Richard’s care through a
governmental program—Medicaid—that is intended for the needy, not for persons with assets and
income that they can use to pay for their own care. DHHS argues that because Richard had not
already been granted Medicaid benefits, the probate court could not consider Medicaid coverage

3
 DHHS does not contest that Josephine is a person entitled to support from Richard. A married
person is generally entitled to support from their spouse. Vansach, 324 Mich App at 394.

                                                -5-
to pay expenses as a reason to distribute an inequitable amount to Josephine. DHHS argues that
Josephine was Richard’s attorney-in-fact and had the ability to access any asset or portions of
income without a protective order.

        The only evidence offered in this case was a budget prepared by Josephine and the GAL’s
report. The petition alleged that all of the parties’ combined income was necessary to support the
budget submitted by Josephine. The petition alleged Josephine’s needs were greater than
Richard’s because Richard’s “needs were being fully met in his current living arrangement at the
nursing facility,”4 and because she “is reasonably expected to have a considerably longer lifespan
than [Richard] and will require more assets to sustain herself.” The GAL stated that he saw “no
reason to alter or modify the relief requested” and that “it seems that the income and assets owned
and received by the parties are necessary for the care and support of” Josephine. The GAL said
that he reviewed the budget and that “it seems clear, without the relief requested [Josephine] would
become destitute and unable to manage her daily living needs.” The GAL said that the “parties’
income and assets are necessary for the necessary support, care, needs and welfare of [Josephine].”
The GAL report did not mention monetary figures, nor did it mention Richard’s needs.

         The entirety of the probate court’s oral ruling was: “I think the needs have been flushed
out. I think the distribution is reasonable. I’ve looked at the budget.” The court awarded Josephine
sole ownership of the assets owned by Richard individually or jointly with Josephine and ordered
that the assets be transferred to Josephine for her own use and benefit. The assets identified by
Josephine in the petition were valued by her at $389,831.5 In addition to the assets identified by
Josephine, the court also awarded Josephine “[a]ll other assets owned by” Josephine and/or
Richard. The order also awarded Josephine all of Richard’s monthly income of $1,535.46, except
for $60 per month that the court awarded to Richard “for his own use and benefit and so that he
may contribute to the costs of future care, needs, and obligations.” The order stated that the court
found by clear and convincing evidence that Josephine had met her burden to show cause and
necessity for entry of the protective order, but the court made no findings of fact to support the
finding. The order stated that the court “has considered the interests of the individual and his needs
and obligation to contribute toward the costs of his own care in deciding whether and how much
to award to the Petitioner” and that the court determined that “the individual has the financial
means and ability to provide financial assistance to the Petitioner; and that the foreseeable needs
of the Individual, the Individual’s creditors, and the Petitioner’s basic, but not excessive or merely
desirable, needs have been considered,” but no evidence was presented with respect to Richard’s
needs or the needs of his creditors, and the court did not make any findings of fact to support this
finding. The court relied solely on the budget presented by Josephine when finding that the “needs
have been flushed out.” The court did not make any other factual findings with respect to
Josephine’s needs. The budget prepared by Josephine considered only Josephine’s purported
expenses and was not supported by any evidence. The court determined that it was in the best
interests of Richard and his dependents to transfer all of the couple’s assets to Josephine, but the
court did not make factual findings to support the determination. The protective order generally

4
 The petition did not indicate how Richard’s “needs” at the nursing home were being funded. The
petition alleged that Richard “may need to apply for Medicaid assistance in the near future.”
5
    No supporting evidence of the couple’s assets or valuation of the assets was provided.

                                                 -6-
states that the court found that the criteria required under MCL 700.5401 in order to issue a
protective order had been met, but the court made no findings of fact. Again, the probate court
erred because it failed to make sufficient findings of fact to allow for meaningful appellate review,
Woodington, 288 Mich App at 357, and remand is warranted. It appears from DHHS’s argument
on appeal that circumstances have likely evolved during the pendency of this appeal regarding
Medicaid coverage. Again, on remand, the probate court shall consider the circumstances as they
actually exist. Schroeder, 335 Mich App at 123.

                                C. THE TRANSFER OF ASSETS

        DHHS argues that the probate court’s transfer of the assets Richard owned jointly with
Josephine on the basis of need under MCL 700.5401 failed to identify the interests being
transferred and the value of those assets. Schroeder, 335 Mich App at 124. Here, the petition
included a list of property owned by Richard individually or by Richard and Josephine jointly, and
the purported value of the assets. The petition also indicated that the couple’s property was not
limited to the property listed in the petition. The protective order awarded Josephine sole
ownership of the assets Richard owned individually, as well as the assets Richard owned jointly
with Josephine.

        DHHS’s argument mirrors the argument the DHHS made in Schroeder. In Schroeder, the
DHHS argued that the probate court only had authority over the estate and assets of the protected
individuals, not their spouses. Id. The DHHS contended that in setting the amount or value of
transferred assets, a probate court must accurately determine whether the protected individual
actually possesses that amount to transfer. Id. In the companion case in Schroeder, the DHHS
asserted that “ ‘[w]hen a probate court order inflates the amount that the protected individual is
transferring to an amount that is more than he owns, it will be in conflict with the amounts reported
and verified in the filed Medicaid application,’ and if ‘the application amounts and the court order
cannot be reconciled it creates a conflict in making a Medicaid determination.’ ” Id. (alteration in
original). This Court noted that the probate court had ordered the individuals to transfer their
interests in assets owned individually and jointly with their spouses, as follows:

                With respect to Mr. Schroeder, the probate court valued the asset transfer at
       $450,000. In the petition, Mr. Schroeder’s son claimed that there was $203,400 in
       real property and $737,000 in personal property for a grand total of $940,000 in
       assets. With respect to Mr. Almy, the probate court valued the asset transfer at
       $500,000. In the petition, Mrs. Almy claimed that there was $275,400 in real
       property and $718,000 in personal property for a grand total of $993,400 in assets.
       [Id. at 124.]

       This Court said that the DHHS “did not truly assail the values offered below or offer
evidence to the contrary; the issue has essentially been developed on appeal.” Id. This Court
continued:

       That said, there was little to no supporting evidence regarding or identifying
       specific asset interests and values—just conclusory assertions. We hold that when
       a probate court acts to transfer property upon satisfaction of the prerequisites in
       MCL 700.5401 relative to need, it is imperative for the court to identify the interests

                                                -7-
       being transferred and the value of those interests. Although there is no specific
       language in EPIC demanding that information, when a court is examining the
       financial needs of spouses and orders asset transfers on the basis of those needs, a
       valuation of the assets or interests therein is an inescapable and necessary
       component of the analysis. To the extent that asset transfers are again considered
       on remand, the probate court shall require evidence concerning the nature of the
       interest held in the particular assets and the value of the interest in the assets. [Id.
       at 124-125.]

        In the present case, as in Schroeder, there was no supporting evidence of specific asset
interests and values—only the allegations in the petition—which the probate court incorporated
into the protective order. The probate court failed to make findings of fact sufficient to allow this
Court to conduct meaningful appellate review of the court’s decision to transfer assets to
Josephine. “To the extent that asset transfers are again considered on remand, the probate court
shall require evidence concerning the nature of the interest held in the particular assets and the
value of the interest in the assets.” Id. at 125.

        The protective order is vacated, and we remand to the probate court for further proceedings
consistent with this opinion. We do not retain jurisdiction.

                                                              /s/ Christopher M. Murray
                                                              /s/ David H. Sawyer
                                                              /s/ Michael J. Kelly

                                                 -8-