NOVEMBER 16, 2015 VOLUME 22 NUMBER 42
This week we’re going to ask you to be the judge. We’re going to tell you a story, then give you a moment to decide what you think should be the outcome of a lawsuit. Once you’ve decided, we’ll tell you what actually happened in the courts. Ready?
Diego Ramirez (not his real name) was 80 years old when his wife died. Shortly thereafter he moved in with his daughter and son-in-law.
Diego was a Spanish immigrant, and spoke no English. He was having trouble handling his finances, and his daughter and son-in-law helped him. They also provided care for him — first in their home, and later in the nursing home where he moved when he was unable to stay at home any longer.
The care they provided for Diego was complete — they made doctor’s appointments (Diego had a heart condition as well as his increasing confusion), transported him to medical appointments, administered his medications, took him on social and recreational outings, and even took care of his dog. Diego’s daughter actually quit her job to take care of her father (though she was able to return to work part-time and, eventually, full-time).
Shortly after Diego arrived in their home, his daughter and son-in-law arranged to sell his house. His daughter located an attorney, made an appointment and took Diego to visit the attorney. The attorney helped complete the sale of the home, and prepared a power of attorney document for Diego to sign. The power of attorney gave his daughter and son-in-law authority to manage his finances, and to conclude the sale of his home.
The daughter and son-in-law used some of the proceeds from that sale to improve their own home, adding rooms for Diego and doing some other work that needed to be done. They did not add Diego to the title on their home; when they later sold the home, the took the proceeds and bought a new home in their own names.
Diego had a private pension and Social Security. His daughter and son-in-law deposited the monthly checks in their own account and used the proceeds — along with their own income and savings — to take care of the entire household, including themselves and Diego. In other words, they did not keep separate accounts for Diego, and could not show exactly how his income had been spent after the fact. They handled Diego’s savings in the same way, using his funds to keep the entire household operating.
According to the daughter and son-in-law, Diego knew how his funds were being used. They said that he had agreed with them that they could use his funds so long as he lived with them and they were providing the care he needed.
After this relationship continued for ten years, Diego died. One of his sons successfully sought appointment as personal representative of his estate, and sued the daughter and son-in-law for return of the funds they had allegedly exploited from Diego while he was a vulnerable adult. The daughter and son-in-law responded that the reasonable value of their services on his behalf exceeded what they had received, and that if anything his estate owed them money.
The probate court held a one-day hearing on the allegations of exploitation of a vulnerable adult. From the recitation of facts we’ve provided (taken from the later Court of Appeals decision, by the way), can you tell how the court ruled? Did Diego’s daughter and son-in-law take funds from him improperly? Were they entitled to additional fees for the ten years of care they provided?
Think about it a minute before you move on. What would you decide?
The probate judge decided that Diego was a vulnerable adult, that his daughter and son-in-law acted as if they had been his conservator (though they were never appointed by any court), and that they had commingled his assets and income with their own. They enriched themselves with his assets, and they were unable to provide any meaningful accounting of the funds they had used. They were found liable for a breach of their fiduciary duty and a violation of the Arizona statutes on exploitation of a vulnerable adult, and they were ordered to repay his estate $15,527.26 — plus an additional $35,000 in attorney’s fees incurred by the estate.
The Arizona Court of Appeals upheld that ruling, agreeing with the probate judge that Diego was a vulnerable adult, that the daughter and son-in-law improperly commingled assets, and that they had violated the exploitation statutes. Of some interest to the appellate court was the provision of the Arizona law that anyone in the daughter and son-in-law’s position must use the vulnerable adult’s assets solely for the benefit of the vulnerable adult.
The existence of the power of attorney did not improve the daughter and son-in-law’s position. Nor did the agreement that Diego could live with them and that they would provide care. Neither of those authorized the daughter and son-in-law to commingle assets or take Diego’s funds for their own benefit. Rodriguez v. Graca, November 3, 2015.
Let us assume for a moment that Diego in fact wanted to turn over most of his assets and income in return for a home and the care required to allow him to live there as long as possible. What could he (or his daughter and son-in-law) have done in order to make that arrangement possible?
First, a clear (and, preferably, written) understanding should have been reached. It probably would have been helpful to discuss that arrangement with Diego’s other children, so they could talk with Diego about it at the time. It also would have been important for the daughter and son-in-law to maintain clear records, showing how much of Diego’s money was needed to care for him, and how they spent the funds. That could have included time records as well as financial details.
A final word of advice: do not enter into these kinds of arrangements lightly. It is very difficult to establish the reasonableness of the agreement years later, with the vulnerable adult no longer available to explain what they had in mind at the time. Recognize that the senior’s needs — and ability to supervise or negotiate — will probably change over time, and perhaps over a short period of time.
Oh, and how did you do as the judge?