What is Needed for a Court-Ordered Transfer of Assets?

Jun 10, 2022 10:44:00 AM


What is Needed for a Court-Ordered Transfer of Assets_

In Michigan, a court can issue an order for the transfer of assets from one spouse to another when one spouse is institutionalized. Such order is termed a protective order and is authorized under the state’s Estates and Protected Individuals Code. But what is required for a court to issue a binding order?

This issue was recently litigated in Sizick v Department of Health and Human Services. In this case, Janet and Jerome were married for 61 years. Jerome grew ill and entered a nursing home. Thereafter, he filed for Medicaid benefits. Janet filed to obtain a protective order, seeking to transfer Jerome’s property and income to herself. Janet was also Jerome’s agent under a valid financial power of attorney. The trial court ruled in Janet’s favor, and the Department of Health and Human Services (DHHS) appealed.

The appellate court analyzed the pertinent state statute, MCL 700.5401(3), which states:

“(3) The court may appoint a conservator or make another protective order in relation to an individual's estate and affairs if the court determines both of the following:

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

DHHS arguments were threefold:

  1. There wasn’t enough evidence for the trial court to conclude that Jerome was unable to manage his business affairs.
  2. A Medicaid application determination must be obtained before a protective order could be issued.
  3. The trial court’s order as to Jerome’s property was not specific enough; the order must identify and value Jerome’s assets.

As to the first argument, the appellate court ruled in favor of Janet. The court said that the trial court weighed the evidence, which consisted of the testimony of three people, and found that it satisfied the clear and convincing standard. Notably, no testimony was provided from a medical expert; the appellate court said that expert testimony was not required.

However, DHHS prevailed on their two remaining arguments and thus the case was remanded. While there isn’t a statutory requirement that a Medicaid decision is rendered prior to a protective order being issued, there was controlling case law that stated such. And that same case law, In re Estate of Schroeder, also dictates that there must be specificity as to the assets and their corresponding value contained in the protective order.

This case is helpful in that it demonstrates that medical expert testimony is not needed per se. This could save some time and money when seeking a protective order. In addition, this case serves as a reminder that a Medicaid-eligibility determination is needed in Michigan before the court can issue a protective order.

Elder law attorneys can help people of all ages plan for every stage of life. Contact us today to learn more about a WealthCounsel membership.

Topics: legal news

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