People have asked me in the past whether they might be a fiduciary without explicitly agreeing to do so, either verbally or in writing. Well, In re Cadarette Estate (Click here for case), a recent unpublished opinion from the Michigan Court of Appeals seems to answer that questions.

Decedent (the person who died) drafted a will in 1995 leaving her property equally to all five of her children. Before she died, approximatley $94,000 of her assets were transfered into joint accounts with one of her children, Norman, who then transferred them into his name only. Through testimony at trial it was shown that she requested Norman’s assistance with financial and other matters as she aged. He would write checks from the joint account for her needs and arranged for a relative to care for her for 2 years. She primarily looked to Norman for assistance and Norman helped her whenever she needed anything.

The court went on to explain that a fiduciary relationship can exist when one person “stands in a position of confidence and trust” with another persons (MCL 700.1212(1)). A fiduciary has a duty to act for the benefit of the other person on matters within the scope of the relationship (In re Karmey Estate, 468 Mich 68,74 n2; 658 NW2d 796 (2003)).

The facts clearly showed that Norman was in a position of trust and confidence with decedent and was therefore required to act for her benefit rather than his own personal interests. Norman benefited handsomely from the relationship as he testified that he spent the money on himself. Although Norman argued that he was entitled to the funds as a result of being the survivor on a joint account, the court pointed out that the presumption of survivorship can be overcome by evidence of fraud or undue influence. Given his closeness with decedent, his influence (he convinced decedent to transfer funds to at least one joint account for concern that a sibling was stealing from her), and evidence showing that decedent was not happy when she found out he opened the joint accounts, the court denied that Norman was not entitled to full access to the funds and instead ordered the money back into the estate to be distributed as stated in the will.

The moral of story: if you are going to help someone out on a regular basis such that you could be considered a fiduciary, act in an honest manner and be true to the relationship. Don’t try to pull a fast one.