Posts Tagged ‘attorney’

Subject of Guardianship Allowed to Hire Own Attorney

JULY 4, 2016 VOLUME 23 NUMBER 25
Just two weeks ago we told you about an Ohio appellate decision dealing with the authority of a close family member (in that case a sister) to participate in, and appeal from, a guardianship hearing. At about the same time another Ohio appellate court was dealing with a related question for guardianship proceedings: does the subject of a guardianship have the right to hire his or her own attorney? Spoiler alert: yes.

Janna Christensen (not her real name) was the subject of a guardianship proceeding in Marion County, Ohio. Her daughter Maria was appointed as her guardian in January of 2013.

By mid-2015, Janna wanted to terminate or modify her guardianship. Another daughter of Janna, and Janna’s brother, helped her get in touch with attorney Brian Cook, who agreed to represent her. Because his new client had a guardian appointed, Mr. Cook asked for court approval for her signature on a retainer agreement or, in the alternative, an instruction that Maria should sign on her mother’s behalf.

At a hearing a week later, however, the probate judge was skeptical about Mr. Cook’s involvement. The judge criticized Mr. Cook, saying: “I don’t disagree that [Janna] has the right to independent counsel,” but “you have also usurped the authority of the guardian and the Court who’s the superior guardian” for Janna. In other words, the Judge felt that the decision about hiring an attorney was one for Maria or the judge, not for Janna herself.

At that same hearing, with Janna not present (and without allowing Mr. Cook to speak on her behalf), the probate judge went on to deny Janna’s request for a review. At a later hearing, again without Janna present and without allowing Mr. Cook to represent her, the probate judge went further and agreed with Maria that visitation by other family members should be limited.

Mr. Cook nonetheless filed an appeal on behalf of Janna. The Ohio Court of Appeals agreed with his analysis, and reversed the local probate judge. There were at least three problems with the probate court order, according to the appellate court:

  1. The ward in a guardianship proceeding is entitled to be present at hearings. When Janna specifically asked to be present, to be heard, and to have a specific attorney represent her, the probate judge was wrong to make a decision about her attorney without granting her request to participate.
  2. Janna had a right to choose her own attorney, and her choice should not have been subjected to her daughter’s oversight.
  3. Maria’s request to restrict her visitors should not have been considered without Janna’s presence, especially since she had specifically asked to be there, to address the court, and to have her attorney represent her.

Generally speaking, the subject of a guardianship proceeding should be given the right to select their own attorney. The probate court’s decision in Janna’s case to gloss over that right was cause for reversal of its orders, and the entire proceeding was remanded for further proceedings — with Janna’s attorney in place. Guardianship of Carpenter, June 13, 2016.

Unmentioned in the Court of Appeals proceeding, but of great concern in some of the pleadings filed in the case, is that Maria, the daughter appointed as guardian, has already charged over $90,000 in fees in her administration of her mother’s estate. Maria is an attorney in Marion, Ohio, and she apparently charged her regular attorney’s rate of between $175 and $200 per hour for the work she did in managing her mother’s affairs, her finances — and her visitors.

Would a similar result occur in Arizona? Yes, almost certainly. Though there is no clear statutory provision authorizing the subject of a guardianship or conservatorship to hire his or her own attorney, the implication in the statutes — and the universal practice — would permit such a decision. It may not be hard to imagine circumstances in which the probate court might question whether the legal representation was actually initiated by the client, or for the purposes of advancing the client’s wishes, but that would be the rare circumstance. In general, even a person who has been found to be incapacitated will — and should — be permitted to select their own attorney.

Would the same outcome be anticipated in every state? Perhaps not. Some states might take the position (either by law or by practice) that the determination that a person lacked capacity precluded them from hiring an attorney. That position would, however, be wrongheaded, misguided, and antediluvian. Not that we feel strongly about it or anything.

Trust Administration Dispute Ends Up Costly for Complainant

MAY 20, 2013 VOLUME 20 NUMBER 20
One of the reasons people create living trusts is to reduce the likelihood of disputes among family members. In fact, any well-written estate plan — whether it involves a living trust or not — should focus at least partly on that worthwhile goal. Most estates do get settled without disputes, and those with disputes are often easily resolved because the trust, will, and beneficiary designations are clear. But if family members are determined to be fractious, no amount of careful planning can completely remove the risk of a costly dispute.

Take the revocable living trust of Lorraine Bird (not her real name). It was prepared by a lawyer in 2003, and it contained straightforward provisions: most of Lorraine’s property was to be divided in half, with one half to go to her son Greg and the other half to her son Tony’s two children. Tony was named as successor trustee. like many revocable trusts, the document included a “Schedule A” listing the assets that Lorraine was transferring to the trust’s name.

The first problems arose when Lorraine started writing on the trust document directly. In 2004, 2006 and twice in 2008 she wrote on Schedule A, indicating what should happen to some items of her property. Also in 2008, while she was in hospice, she had Tony’s wife write out an amendment to the trust indicating that, among other things, her gold coins should be divided between her two sons. Lorraine died shortly thereafter, apparently without having her trust looked at or formally updated by her lawyer.

The next round of problems arose after her death, when Tony (the successor trustee) gave Greg the keys to their mother’s house. Greg removed some items; Tony asked for a listing of what Greg had taken, but the list he got back did not account for all the missing items. Tony hired a lawyer to assist him in administering the trust, and pursuing Gary for more detail about the property in his possession.

The most valuable item in Lorraine’s trust was a piece of real estate northeast of Phoenix. At first Greg wanted it sold and the proceeds divided between him and his niece and nephew. In fact, though he didn’t have any authority, Greg put a “For Sale” sign on the property and listed his own phone number. He also offered to let his niece and nephew buy out his interest in the property. Later he changed his mind, and insisted that his brother should distribute the property to the three beneficiaries and let them decide how to handle it.

Tony had the property appraised, and his children approached Greg with the appraisal results in hand. They offered to buy out his interest for $325,000. If he didn’t want to do that, they would sell him their interest for the same amount. Greg refused, and instead offered to purchase their interests for a total of $153,000. Then Greg filed a civil lawsuit against his niece and nephew, asking the court to divide the property. He also filed a complaint against his brother, alleging that Tony had breached his duties as trustee by not distributing the property in kind, had made allegations of theft against him, and had favored his own children over Greg in his handling of the trust.

The judge consolidated the two actions, and conducted a three-day trial. There were a number of questions to answer, including:

  • Did Lorraine’s handwritten notes on Schedule A modify her trust?
  • Was the separate amendment prepared by her daughter-in-law valid?
  • Did the trust require distribution of her property in kind? If the trust was unclear, is there a presumption in favor of in-kind distributions?
  • Who should pay the cost of the legal proceedings to resolve these questions?

At the very end of the trial, Greg and his niece and nephew struck a deal on the property: Greg bought out their interests for $325,000. There were still a number of issues to resolve, however, and the judge ended up making eight separate rulings. She found that Tony had not breached his fiduciary duty, but that Greg had initiated most of the problems by his own actions. She also ruled that Greg pay a total of $176,466 to the other parties for attorneys fees, and another $4,979.19 in costs.

Greg appealed, arguing that Tony had mismanaged the trust by not distributing the property in kind, pursuing him for personal property that turned out to have little economic value, and various other alleged breaches. Among them: Greg insisted that by asking his own son to help find a real estate broker for the property, without telling Greg, Tony had favored one trust beneficiary over the others. Similarly, Tony’s daughter had sent Tony an e-mail calling Greg names; when Greg later learned about it he insisted that Tony had breached his duty to all the beneficiaries by not promptly sharing that e-mail.

The Arizona Court of Appeals upheld the trial court ruling in pretty much every respect. It was not a breach of fiduciary duty to talk with one beneficiary without sharing every detail with the others. Tony did not violate his duty to resolve the trust administration just because Greg beat him to the courthouse with a petition asking the court to determine whether the handwritten amendments were valid. Even if there was an argument that Tony should distribute the property in kind, it was rendered moot by Greg’s agreement with his niece and nephew resolving the dispute. Greg’s own misbehavior made it inappropriate for him to complain about the cost of getting him to comply with the trustee’s requests for information about personal property he had taken from his mother’s house. It was proper to charge him the attorneys fees and costs incurred in defending his lawsuit. Perhaps most tellingly, the Court of Appeals added more costs and attorneys fees, awarding Tony and his children their requested fees and costs for having to respond to the appeal itself. In re Bower Revocable Trust, May 14, 2013.

It is worth pointing out (again — we make this point with some regularity) that the dispute was both expensive and time-consuming. In addition to approximately $200,000 in fees and costs Greg was ordered to pay for Tony’s and his children’s lawyers, Greg presumably had significant legal fees for his own side of the litigation. The Court of Appeals decision was rendered more than four years after Lorraine’s death (and that was speedier than most similar cases in our experience).

Are there clues and tips in Lorraine’s story that could help other families avoid similar costly delays in handling estates? Yes, there are several, including at least these:

  1. Don’t modify your estate planning documents by writing on them directly — even if you date and sign the changes (Lorraine didn’t). Although Lorraine might have paid a couple thousand dollars to have the changes done right, that would have been less than 1% of the total legal cost generated when she did not do that.
  2. Do your children not get along? Then include some language directing how to resolve disputes. Consider a mandatory arbitration provision in your trust as a way of speeding up dispute resolution — such a provision could prevent any beneficiary from forcing a complicated court proceeding.
  3. Are you administering a trust with a contentious beneficiary? Even though you may not have to, you might want to consider complete disclosure and transparency, and do not hesitate to affirmatively seek court direction rather than let problems fester and perhaps become intractable.
  4. Are you pretty sure you’re right, and your sibling/trustee/beneficiary is wrong? Do a reality check, and then do it again — there is a real risk that you could end up paying everyone’s legal fees.
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