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Under conservatorship, 9-year-old buys $240,000 house

The law requires financial conservators to spend the money under their control to pay for the children's special needs, with a judge's approval. There can be horrible consequences when they fail this fiduciary duty. A case from Michigan involving a 9-year-old with a disability who apparently purchased a $240,000 home is instructive. It also reveals the dangers of inadequate conservatorships and guardianships in Arizona.

In 2008, the boy was born in an Fort Hood Army hospital, suffered a series of seizures and showed signs of brain damage. He was ultimately diagnosed with spastic quadriplegic cerebral palsy. His severe physical and mental disabilities prevent him from ever taking care of himself.

His parents sued the military for negligence by their doctors before and after their son's birth. The lawsuit was settled for $6.5 million. Most of these funds were placed into a revisionary trust to pay for the boy's medical care. However, $551,979 was awarded directly to the child.

After military discharge, the parents divorced, and the mother moved to Michigan. The probate court granted the child's mother petition to be named conservator of his estate.

After receipt, she placed the $551,979 into her personal account instead of the account created for the boy's money. Within a year, the funds were entirely spent on a 2,400-square foot home costing $240,000 and equipped with a large outbuilding and a trampoline. She also purchased vehicles costing $60,000, made transfers to other individuals and engaged in other reckless spending.

The attorney who was subsequently appointed as conservator said she spent the funds as if they were hers without court approval. He argued that the bank where the money was to be deposited shares responsibility for allowing the funds to be deposited into her personal account.

Other legal problems are mounting. The local district attorney is investigating. The mother failed to pay property taxes and obtain homeowners insurance that was ultimately paid by the new conservator. A judge issued a default judgment against her for almost $306,000 for the money that was taken, minus the cost of the house. The bank began garnishing her wages. Despite these problems, however, the couple still have custody of their child.

Source: Lansing State Journal, "How did a 9-year-old boy who is disabled buy a $240k house?" Christopher Haxel, Nov. 7, 2017

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