Posted by: Kimiya Sarayloo on Jul 1, 2021

Journal Issue Date: July/August 2021

Journal Name: Vol. 56 No. 4

In Netflix’s I Care a Lot, Marla Grayson, a court-appointed Conservator, carries out a sordid scam. Grayson bribes doctors into declaring older adults as unfit to care for themselves, and utilizes the legal system to become their court appointed conservator. Once Grayson is appointed, she institutionalizes her wards and liquidates their assets for her own personal enjoyment. While I Care a Lot is a work of fiction, the film poses a disturbing question for members of the legal profession: Can the indignities endured by Grayson’s wards become a reality in Tennessee, given the protections that our conservatorship statutes afford wards? And, if so, under what circumstances?

In Netflix’s, I Care a Lot, Rosamund Pike (right) plays a con woman who targets the elderly by using legal machinations to become their legal guardian.

This article theorizes that Tennessee’s conservatorship statutes leave low-asset wards vulnerable to the indignities of self-dealing conservators in affording courts with the discretion to waive statutory accounting and bond requirements without taking into account that the ward’s financial circumstances could change through inheritance or some other means.

Attaining the Title of Conservator

The title of “conservator” is not attained by blood or familial relationship with the Ward. The appointment of a conservator is subject to the court’s determination of what is in the best interest of the person with a disability.1 While spouses, children, and family members have priority over professional conservators like Grayson under Tenn. Code Ann. § 34-3-103, there is no guarantee that they will be appointed if the court makes the determination that it is not in the best interest of the ward for a family member to serve as conservator. The objective of a conservatorship is to “protect the person and the property of the disabled person,” and the conservator’s role is fiduciary in nature.2 A conservator can be stripped of her title if her fiduciary obligations are breached.3

Upon the filing of a petition to appoint a conservator, the court may appoint, or elect to waive the appointment of a guardian ad litem.4 Tenn. Code. Ann. § 34-1-125 requires the court to appoint an attorney ad litem if the respondent requests one, if it appears necessary to protect the rights or interests of the respondent, or if the guardian ad litem recommends that an attorney ad litem be appointed. Both the guardian ad litem and the attorney ad litem serve important roles during the course of a conservatorship proceeding in that they can utilize their positions to remind the court of its statutory obligations and alert the court of concerns that a proposed conservator is likely to use her position for personal gain if appointed. The guardian ad litem must impartially investigate the facts of the case and make a recommendation to the court on what is in the best interest of the respondent.5 The attorney ad litem serves as the respondent’s advocate in resisting the appointment of a conservator.6

Tenn. Code Ann. § 34-1-125 requires the court to find clear and convincing evidence that a respondent is disabled and needs the court’s assistance before appointing a conservator. Tennessee conservatorship statutes do not identify any particular illnesses deemed to be disabling, but rather the pivotal inquiry is the effect a particular illness or condition has on the respondent’s capacity.7 Once a court determines that a respondent needs the assistance of a conservator, the Order of Appointment must enumerate the powers removed from the respondent and vested in the conservator.8 The court establishing the conservatorship has an affirmative duty to impose “the least restrictive alternatives” upon the disabled person that are “consistent with the adequate protection” of her person and property.9 Once a conservatorship is established, the adequate preservation of the ward’s property and dignity is largely dependent on the conservator’s continued loyalty to her ward, and the court and clerk of court’s enforcement of the statutory provisions surrounding conservatorships.

The Accounting Requirements of Tenn. Code Ann. § 34-1-111

Of the myriad of statutory provisions dedicated to protecting wards from unscrupulous conservators like Grayson, there is perhaps none more effective than the accounting requirements of Tenn. Code Ann. § 34-1-111. The conservator is required to file a sworn interim accounting with the court within 30 days following the six-month anniversary of her appointment, unless accounting is waived by court order.10 Thereafter, the conservator must file sworn annual accounting within 60 days after the 12-month anniversary of the date of filing interim accounting.11 The accounting shall itemize the receipts and expenditures made for the benefit of the ward and detail the property held by the conservator.12 To support the accounting, the conservator is required to submit bank statements, the original of each cancelled check written on the account (unless an exception applies), a copy of income tax returns filed on behalf of the ward, and a statement that bond is in full force and effect if secured by corporate surety.13 These requirements make it difficult for conservators to evade their fiduciary obligations in cases where accounting is required.

With the required accounting, the conservator must also file what are commonly referred to as “Annual Status Reports,” concerning the ward’s physical or mental condition and the need, or lack of need for the conservator’s services.14 This requirement is binding on all conservators and cannot be waived by court order.15 Although Annual Status Reports bring changes to the ward’s physical and mental condition before the court, they do not alert the court to changes in the ward’s financial circumstances in cases where accounting is waived pursuant to Tenn. Code Ann. § 34-1-111(i). The conservator is only required to provide an inventory of the ward’s property once, within 60 days of her appointment.16 If the ward’s financial circumstances change after the inventory is filed, the change could go undiscovered by the court.

Unless the court has extended the deadline for filing accounting, if the conservator fails to file the accounting and supporting documentation within the statutory timeframe, the clerk is required to notify the conservator and her attorney of record.17 Thirty days after sending notice, if the conservator still has not filed the required accounting, the clerk must cite the conservator to appear on a certain date with the accounting.18 Upon failure to appear as cited, the conservator is summoned to appear before the court and show cause why she should not be held in contempt.19

Predatory conservators like Grayson may be disappointed to learn that on failure to account, they — and their surety — may be charged with the value of the ward’s assets at the beginning of the year.20 This amount accrues interest at the prejudgment rate and compounds annually until a proper accounting is made and approved.21

However, the accounting requirements only protect wards to the extent that they are enforced. Tenn. Code Ann. § 34-1-111(i) affords the court with discretion to waive the accounting requirements if it makes a finding based on the evidence presented at the hearing that waiver would be in the ward’s best interest and that one of the following exists:

1. The conservator holds no property of the minor or person with a disability and receives only fixed periodic payments; or

2. The cost of the accounting would exceed 25 percent of the income produced by the property held by the conservator.

Georgia, by contrast, requires all conservators to annually file verified returns of receipts and expenditures, updated inventories detailing the assets and liabilities of the ward, updated plans for managing the ward’s property, and notes or memoranda necessary to show the true condition of the ward’s estate.22

Bond Requirement of Tenn. Code Ann. § 34-1-105

The bond requirement of Tenn. Code Ann. § 34-1-105 is an equally important mechanism for protecting wards from nefarious conservators. The court must set a bond for the conservator equal to the sum of the ward’s income for a year plus the fair market value of the ward’s personal property.23 The bond must be renewed annually for the duration of the conservatorship, and may be adjusted to reflect changes in the ward’s financial circumstances.24 However, like the accounting requirements, courts have discretion to waive bond upon a determination that requiring bond would be unjust if one of the following circumstances exists:

1. The fiduciary is a financial institution;

2. The value of the liquid assets of the ward’s estate is less than $10,000 and the court finds the benefit to the ward by saving the expense outweighs the risks incident to the absence of a bond;

3. A durable power of attorney or other document naming the conservator as fiduciary expressly waives bond;

4. The property of the ward is placed with a financial institution and there is a written agreement, filed with the court, in which the financial institution agrees it will not permit the conservator to withdraw the principal without court approval;

5. The property of the ward is deposited with the clerk and master or clerk of the court; or

6. The conservator is appointed fiduciary over the ward’s person but has not also been appointed as fiduciary over the ward’s estate.25

The Georgia bond statute, by contrast, only excuses bond in cases where the proposed conservator is a financial institution.26

The Case of Marla Grayson and the Low-Asset Heiress

Now consider a ward whose only source of income is $750 a month in Social Security benefits, the entirety of which will be used to pay for the cost of her assisted living care. The assisted living facility is the representative payee of her social security benefits. Her only asset is her bank account, which rests at $250. A court may elect to waive the accounting requirements after reviewing Tenn. Code Ann. § 34-1-111(i) and determining that the assisted living facility, not the conservator, would receive the ward’s social security benefits to pay for the cost of her care, and that the cost of accounting would exceed 25% of the income produced by the property held by the conservator. The court may further elect to waive bond pursuant to Tenn. Code Ann. § 34-1-105(b)(2) as the sum of the liquid assets of the ward’s estate is less than $10,000.

Unbeknownst to the court, the ward is an heiress. Three years after the conservatorship is established, she inherits $1 million in cash assets, and a safety deposit box filled with gold bars, diamonds and the passcode to a Coinbase account containing five bitcoins from her mother. The personal representative of her mother’s estate distributes the assets to her conservator. The conservator, in this case Marla Grayson, uses the assets for her own personal enjoyment.

A substantial inheritance such as this would require the court to set a bond and mandate annual accounting. But, these requirements have already been waived. The Annual Status Reports that Grayson is required to file under Tenn. Code Ann. § 34-1-111(d)(2) do not alert the court to the ward’s change in financial circumstances. Consequently, Grayson’s fraud may go unnoticed. But, perhaps more disturbingly, even if the fraud is detected and Grayson is stripped of her title, a successor conservator could only recoup funds from Grayson as bond was waived. If Grayson is without assets and has spent all the money, the ward is without recourse.

How Do We Mitigate the Risks of Insufficient Care?

In the time that I have served as guardian ad litem and attorney ad litem in conservatorship proceedings in Tennessee, I have met many professionals — from court staff to conservators — dedicated to preserving the dignity of their wards. But, the failure of Annual Status Reports to disclose changes in a ward’s financial circumstances along with the possibility that a Marla Grayson might exist has always shaken me. How do we mitigate the risks of insufficient care in low-asset conservatorship cases?

To begin with, attorneys ad litem and guardians ad litem should scrutinize any waiver of bond or accounting. They should alert the court to the possibility that a ward’s financial circumstances could change, and advocate that the Order of Appointment require the conservator to disclose such changes in her Annual Status Reports. Attorneys can also draft estate planning documents that require personal representatives and trustees to ensure that accounting and bond are mandated before distributing property to a conservator.

For now, and until the Tennessee General Assembly takes action, a ward may one day come across a Marla Grayson —who simply doesn’t care. 

KIMIYA SARAYlOO is an attorney at the Nashville office of Robbins Geller Rudman & Dowd. She is a 2014 graduate of Belmont University College of Law
 


NOTES

1. Tenn. Code Ann. § 34-3-103.
2. AmSouth Bank v. Cunningham, 253 S.W.3d 636, 641 (Tenn. Ct. App. 2006).
3. See Tenn. Code Ann. § 34-3-108(a).
4. Tenn. Code Ann. § 34-1-107.
5. Tenn. Code Ann. § 34-1-107(d)(1).
6. Tenn. Code Ann. § 34-1-125(a).
7. See Tenn. Code Ann. § 34-1-101(14); In re Conservatorship of Groves, 109 S.W.3d 317, 331 (Tenn. Ct. App. 2003) (“[T]he pivotal inquiry involves not merely the diagnosis but also the effect that the illness, injury, or condition has had on the capacity of the person for whom a conservator is sought.”).
8. Tenn. Code Ann. § 34-3-107(a).
9. Tenn. Code Ann. § 34-1-127. Page 8 of 8
10. Tenn. Code Ann. § 34-1-111(a).
11. Tenn. Code Ann. § 34-1-111(b).
12. Tenn. Code Ann. § 34-1-111(d)(1).
13. Tenn. Code Ann. § 34-1-105(d)(1).
14. Tenn. Code Ann. § 34-1-111(d)(2). The phrase “Annual Status Reports” is used in some jurisdictions, such as Davidson County, to define the requirements of Tenn. Code Ann. § 34-1-111(d)(2). See Davidson County Circuit Court Clerk, https://circuitclerk.nashville.gov/probate/forms/formpro_conservannstatusrpt.pdf (last visited June 2, 2021).
15. Tenn. Code Ann. § 34-1-111(i)(3).
16. Tenn. Code Ann. § 34-1-110.
17. Tenn. Code Ann. § 34-1-111(f).
18. Id.
19. Id.
20. Tenn. Code Ann. § 34-1-111(h).
21. Id
22. Ga. Code Ann. § 29-5-60(a).
23. Tenn. Code Ann. § 34-1-105(a).
24. See Tenn. Code Ann. § 34-1-105(a)(3)
25. Tenn. Code Ann. § 34-1-105(b).
26. Ga. Code Ann. § 29-5-40(b).