A recent Michigan appellate court decision, Cynthia Mifsud v Fam Options Servs (In re BJH), NW2d; 2025 Mich. App. LEXIS 2803 (Ct App, Apr. 10, 2025), highlights the need for agents acting under durable powers of attorney to keep good record of their actions.
What Happened
In 2013, BJH named her daugher, Cynthia Mifsud, as her agent under a durable power of attorney. In 2021, Mifsud filed a petition to be appointed BJH’s guardian. BJH objected, arguing that she didn’t need a guardian and that she had moved out of Mifsud’s home “due to financial mismanagement and mistreatment.”
The probate court suspended BJH’s authority under the durable power of attorney and appointed a GAL to evaluate BJH’s best interests and act on her behalf in further proceedings. It subsequently appointed a temporary guardian and special conservator for BJH. Mifsud stipulated that she would provide an accounting for the two and a half years she acted under the durable power of attorney beginning in January 2019.
What followed was a series of court proceedings as Mifsud filed accountings that the GAL and conservator found inadequate. The GAL submitted a report that she could not find verification for more than $100,000 in expenses listed in Mifsud’s amended accounting. Apparently, Mifsud had spent considerable funds building a “grand-pad” for BJH. Ultimately, the probate court disapproved approximately $85,000 in Mifsud’s accounting and rejected Mifsud’s request for reimbursement of over $25,000 in legal fees.
The Appeal
Mifsud appealed, arguing that she should be free of liability due to a provision in the durable power of attorney exonerating the agent from liability “for any loss that results from a judgment error that was made in good faith,” and there was no evidence presented that she had acted in bad faith.
In considering Mifsud’s appeal, the Court of Appeals starts by reminding us that “an attorney-in-fact is bound to act in the principal’s best interests and owes the principal common-law and statutory fiduciary obligations, which include the duties of good faith and loyalty and the prohibition against self-dealing.”
In considering Mifsud’s argument that the exoneration clause in the durable power of attorney relieves her of liability, it distinguishes between an agent’s decisions regarding investments or various spending on BJH’s behalf from her “failure to adequately document and otherwise manage these expenses.”
The Court also questioned whether Mifsud in fact did act in good faith. She had “admitted to taking out numerous cash withdrawals from BJH’s bank account—all of which remained unexplained even after Mifsud’s testimony—and to spending BJH’s funds on her own personal expenses rather than expenses meant to benefit BJH, including her property taxes, utilities and credit card bills, groceries, airline tickets, meals, and entertainment.”
With respect to Mifsud’s request for reimbursement of her attorney fees, the Court finds that by the time she hired a lawyer to assist her with preparing her accountings she was no longer acting under the durable power of attorney and, therefore, had no right to reimbursement. Further, “[g]iven that Mifsud’s wrongdoing is what prompted the accountings and litigation and led to her incurring the attorney fees at issue, Mifsud was not entitled to use assets of the estate to pay for those fees.”
What This Means
Of course, in this case it appears that Mifsud pocketed some of her mother’s funds and that no doubt influenced the Court’s decision. But any agent under a durable power of attorney runs the risk of being suspected of malfeasance and failure to being able to explain expenditures can create liability and the need to pay attorney fees even when the agent did nothing wrong. So, the best rule of thumb is to keep all financial records just in case. And avoid cash transactions; use checks and credit cards so that there’s a record.
Ultimately, however, it’s not totally clear what the import of this decision is. While part of Mifsud’s accountings were rejected, it’s not clear that this is an action for damages. BJH may have to bring another action against Mifsud for repayment of what she took. The probate court may or may not have jurisdiction over that type of case. If not, it will have to be brought in a different court, though the probate court proceedings should be good evidence of the damages.