Surcharge for breach of fiduciary duty; MCL 700.5416; In re Conservatorship of Murray; Fiduciary standards for conservators; MCL 700.1212(1)

Holding that the probate court did not abuse its discretion by surcharging respondent for penalties, interest, and fees incurred during her conservatorship, the court affirmed. The protected individual’s (Hyden) successor conservator discovered outstanding federal income taxes and, with the probate court’s permission, paid the debt and sought a surcharge for the interest and penalty portion accruing while respondent served as conservator. The probate court found respondent in civil contempt and surcharged her for amounts tied to her tenure after reconsidering its initial, broader ruling. The court noted that a conservator must “act as a fiduciary and observe the standard of care applicable to a trustee” and “shall discharge all of the duties and obligations of a confidential and fiduciary relationship[.]” The probate court found that “[s]he had a fiduciary duty to make sure that the taxes were paid on behalf of [Hyden] and they were not done.” The court agreed that respondent’s “generic assertions of relying on others to determine the taxability of Hyden’s settlement” did not show reasonable care. It rejected respondent’s arguments that the tax issue was merely “marital debt” that should have been addressed in divorce court and that she was “in contact” with the IRS to get the penalties and fees reduced. The court noted that the surcharge arose from her fiduciary failures while conservator, not the propriety of the tax debt itself.