This is a question we have addressed before, in discussing a 1996 Mississippi case. It comes up from time to time and in different circumstances. The Mississippi case described earlier, for instance, involved a conservatorship rather than a guardianship proceeding, though the principles are the same in either circumstance. The bottom line, as described in our earlier article, is that a person may be able to sign a new will in Arizona — even if they have been determined to be incapacitated, or in need of (financial) protection.
A recent Arizona Court of Appeals decision revisited the question, with a slight twist. John Bartlett (not his real name) had been the subject of both a guardianship and a conservatorship order since 2004. On May 28, 2008, the probate court held a hearing on his request to terminate his guardianship. He maintained that he no longer needed a guardian, but the probate judge decided that he continued to be incapacitated — that is, that he was still unable to make responsible decisions regarding his own care.
That very same day John signed a new will. In it, he disinherited his daughter (his only child) and left his entire estate to his grandson. The document also revoked an earlier will, signed before the guardianship proceedings were begun, which had named his daughter as his personal representative and left his entire estate to her.
When John died a few months after signing his new will, a probate court dispute ensued regarding which document was valid. Did John have the capacity to revoke his old will, and to disinherit his daughter? Both wills were submitted for consideration, and the probate court found the new will to be valid and admitted it to probate.
When the personal representative of the estate filed a final report with the court, John’s daughter objected that her challenge to the new will (and to a trust signed the same day) had not been resolved. The estate’s personal representative disagreed, and filed motions to strike the daughter’s pleadings, enter summary judgment in favor of the later will, and close the estate. In a series of hearings, the probate court granted all of those requests.
The Arizona Court of Appeals disagreed. Although John’s daughter had not put on any evidence — indeed, she had not even filed any pleadings expressly objecting to the summary judgment request — the probate court should have been on notice that there was substantial evidence of John’s incapacity. The fact of a guardianship proceeding was enough to raise doubts about his ability to sign a new will, and summary judgment — entered without taking any evidence — was improper, according to the appellate judges.
The Court of Appeals takes pains to make clear that it is not holding that John’s will is invalid, or that people under guardianship can not sign new wills. In fact, the mere existence of a guardianship does not (in Arizona, at least) even create a presumption of incapacity to sign a will. But the existence of the guardianship proceeding, and especially the guardianship finding on the very day John signed his new will, should have alerted the probate court that there was some evidence in support of a challenge to that will. Estate of Blackford, March 13, 2012.
MARCH 5, 2012 VOLUME 19 NUMBER 9
We have written before about changes to Arizona guardianship, conservatorship and probate proceedings adopted in the past year. Changes involved both probate laws and court rules. One thread running through both sets of changes: the notion that proceedings in probate court could be unnecessarily complicated by “vexatious litigants.”
The problem of a vexatious litigant should be obvious. In a court environment focused on thorough investigation — especially when there are allegations of wrong-doing — the costs can easily spiral out of control. There needs to be some mechanism to stop repetitive filings that impede, rather than advance, the cause of justice.
As it happens, the Arizona Court of Appeals has been dealing with just such a vexatious litigant for a year now. Five separate cases test the probate court’s ability to control multiple and frivolous filings by someone who has been tagged as vexatious. The vexatious litigant in those cases? The subject of the guardianship/conservatorship.
Mark Peterson (not his real name) first came to the attention of the Arizona court system after a party where, he alleged, he assaulted by several other individuals. He filed lawsuits against several people who were at the party. He sued the attorney who represented some of the partygoers. He harassed family members of others in attendance.
The Arizona courts ordered Peterson not to harass any of the people involved. It dismissed his lawsuits. It even entered a $30,000 sanction against him. The court’s presiding judge declared him a vexatious litigant, and ordered that he could not file any more lawsuits without the judge’s permission. He kept harassing his victims.
In an attempt to deal with Peterson, the judge appointed an attorney as his “guardian ad litem,” and authorized her to file a guardianship, conservatorship and/or mental health petition on him. She did, and the court appointed the Maricopa County Public Fiduciary (a public guardianship agency in Arizona). Peterson filed a petition to terminate the guardianship and conservatorship. The court did end the conservatorship, but maintained the guardianship; it also approved an order his guardian ad litem had obtained, ordering him not to harass her or go to her office at all. The Public Fiduciary filed a final conservatorship accounting, and the court approved their account.
Peterson appealed, and in January of last year the Court of Appeals upheld everything the probate court had ordered — partly on the basis that Peterson’s appeal was improperly filed. The appellate judges approved the court’s process for limiting Peterson’s ability to file motions and court actions.
Meanwhile, Peterson had already filed a request with the probate court that he be permitted to file a lawsuit against AHCCCS, Arizona’s Medicaid agency, and a malpractice action against his treating medical team. The probate court had conducted two hearings on his request, and had denied him the authority to file additional lawsuits unless he first met with his guardian ad litem, convinced his court-appointed attorney or guardian to file the lawsuits. Peterson appealed this denial, even as the appellate court was still considering his first (actually his third — but his first guardianship-related) appeal.
The Court of Appeals dismissed this appeal, too. It found that Peterson had failed to provide an adequate record (he had not ordered and paid for transcripts of the probate court hearing), and that the order finding him to be a vexatious litigant was proper.
That was not the last appeal, however. While the other two appeals were pending, Peterson filed a petition asking the probate court to terminate his guardianship and lift the pre-filing limitations on his access to the courts. The probate judge denied his petition, and — you probably guessed this — he appealed.
The Arizona Court of Appeals denied Peterson’s most recent request, just as it had denied the earlier appeals. It is well-settled by now, ruled the appellate judges, that Peterson is a vexatious litigant, and the restrictions on his ability to file multiple petitions, motions and lawsuits are appropriate in the circumstances.
One interesting item to note about the three probate-related appeals orders covering Mr. Peterson: the first was a 12-page opinion, the second 11 pages and the most recent down to 10 pages. Apparently the Court of Appeals is having less trouble upholding Peterson’s status as a vexatious litigant with each visit he makes to their court. In Re Petramala, January 14, 2011, May 5, 2011 and February 23, 2012 (unpublished memorandum decisions).
FEBRUARY 27, 2012 VOLUME 19 NUMBER 8
Phoenix-area resident Larry Robertson (not his real name) was undoubtedly fading mentally, but he had made plans for handling his affairs. He had created a revocable living trust, signed a power of attorney and created a beneficiary deed. All those documents named a husband-and-wife team who were also his caretakers. They would receive his entire estate upon his death, and were put in charge of handling both his finances and his health care decisions while he was still alive.
Larry’s sister Betty lived in Ohio. She became concerned that the caretakers might be taking advantage of Larry, so she consulted with her local Ohio attorney, David Lynch. Mr. Lynch prepared a petition seeking Betty’s appointment as guardian of Larry’s person, conservator of his estate, and trustee of his trust. The petition claimed that there was an emergency requiring immediate action. It was signed by Betty and by Mr. Lynch — who was not admitted to practice law in Arizona. The petition was actually filed by an Arizona attorney, who did not sign it.
Once the petition was filed, an attorney was appointed to represent Larry. Another Phoenix-area attorney entered an appearance on behalf of Larry, claiming that he had prepared all of the questioned documents, that Larry had been perfectly capable of signing them, and that in fact Larry still had capacity and could make his own decisions about placement, caretakers and disposition of his property at his death.
The probate court held a hearing on the emergency petition. At the beginning of that hearing, Mr. Lynch asked to be admitted to practice law in Arizona just for the purpose of this one case — a process that is called “pro hac vice” admission. The probate judge heard some preliminary testimony, and discovered that Mr. Lynch had himself made an appointment with Larry’s attending physician under the pretense that he needed medical treatment, and that he had interviewed Larry’s physician about Larry’s condition. The judge refused to allow Mr. Lynch to be a lawyer in the case, ruling that it appeared that he might have turned himself into a witness instead.
Larry’s sister Betty then testified that she believed the caretakers might be taking advantage of her brother. In her petition she had alleged that Larry’s attending physician had told her that the caretakers seemed to be taking advantage of Larry; on the stand she acknowledged that the physician had not actually told her that he was concerned. The physician himself testified that Betty had asked him to say that Larry was incompetent, but he said that he had declined to render such an opinion.
At the conclusion of the hearing, the probate judge ruled that Betty had not shown any basis for a guardianship and conservatorship. The judge dismissed the petition, and ordered that Betty and her Ohio lawyer, Mr. Lynch, should both be liable to pay Larry’s original lawyer $6,470 in fees incurred in preparing for and conducting the hearing. The sanctions were imposed pursuant to Rule 11, a court rule governing civil proceedings which prohibits filing baseless proceedings.
Later, at a follow-up hearing set to consider whether Betty should be appointed as Larry’s trustee, the probate judge found that there was no basis for that allegation, either. By that point Betty’s entire petition had been denied; as a final blow the probate judge imposed an additional $9,651.04 in fees against Betty and Mr. Lynch — this time to pay the court-appointed attorney’s fees.
Mr. Lynch appealed the second award of fees against him. He argued that he had not been given a chance to show his own good faith in preparing the original petition for Betty. He had relied on Betty’s assertions, he argued, and that should have been all that was required.
Not so, ruled the Arizona Court of Appeals. When an attorney signs a pleading (as Mr. Lynch had done, even though he was not admitted to practice in Arizona), he or she effectively swears that he or she has made a reasonable inquiry into the facts alleged. Simply relying on the statements of the client was not enough — at least not when the witnesses to the documents were readily available, and Mr. Lynch could have simply interviewed them to see what they thought about Larry’s competence. “It appears,” wrote the appellate court, “the only effort Lynch made to verify Betty’s allegations was his inappropriate meeting” with Larry’s physician. The sanctions against Betty and Mr. Lynch, totaling over $16,000 in payments to Larry’s two lawyers, were upheld. Guardianship and Conservatorship of LaLonde, February 16, 2012.
In separate proceedings, incidentally, the Arizona Supreme Court admonished Mr. Lynch for practicing law in Arizona without being licensed in this state. The Ohio Supreme Court followed suit on October 14, 2011, publicly reprimanding Mr. Lynch in the same case.
There are at least two messages to be taken from the court-imposed sanctions against Betty and Mr. Lynch. First, it is important to make sure that you have some actual evidence of incapacity and an emergency situation before filing a petition to secure an emergency appointment as guardian for a family member or loved one. Pretty much the same can be said for a petition for appointment of a conservator, or for appointment of a successor trustee.
The second message is really addressed to lawyers more than to family members. It is not necessarily enough to rely on the assertions of your client. It is also dangerous to get so personally involved that you lose objectivity.Particularly in a time of heightened scrutiny being applied to guardianship, conservatorship and trust administration matters, it is important to have a good foundation before filing a petition that so deeply affects the personal life, independence and autonomy of a client’s family member.
JANUARY 2, 2012 VOLUME 19 NUMBER 1
Two weeks ago we detailed some of the statutory changes facing guardians, conservators and other fiduciaries in Arizona beginning with the new year. At the same time the legislature was working on those changes, the Arizona Supreme Court was considering changes to the rules and procedures governing probate court. That means more changes affecting guardianship, conservatorship, probate, and trust administration.
The Supreme Court rules changes have been adopted, but they are not effective at the same time as the statutory changes described in our earlier newsletter. Most of the rule changes become effective on February 1, 2012; a few of them will be delayed until September 1, 2012. Since some of the changes require continuing review and modification by the courts, some may be changed or delayed even beyond that later effective date.
Here are some of the probate court rule changes (all effective February 1, 2012, unless otherwise indicated):
Every conservator must file an inventory within 90 days of appointment. That has not changed. What has changed is that (beginning in September, 2012) the inventory must also include a budget (unless the Court in individual cases waives this new requirement). The budget must be updated with each annual account. Expenditures in excess of budgeted amounts are not prohibited, but may require an update to the budget or even prior Court approval. Failure to follow the budget may subject the conservator to higher liability at the time of the annual account.
At the same time that the inventory and each annual account is filed, every conservator of an adult must calculate whether it appears that the conservatorship assets will outlast the person subject to the protective proceeding. The precise calculation does not have to be shared with interested persons, but the result does; the conservator is required to explain what he or she anticipates will happen if the money is not sufficient to take care of the protected person for the rest of his or her life expectancy.
The rules introduce the legal concept of “vexatious conduct.” If a litigant has been found to have filed repetitive pleadings for the purpose of harassing others, the court may enter an order limiting their ability to file future pleadings. Such an order might, for example, require the vexatious litigant to get the court’s approval before filing any new pleadings, or relieve the other litigants of any obligation to file responsive pleadings until the court has made an initial review of the vexatious litigant’s filings. Another new rule permits a party who thinks a given filing is repetitive to respond by simply pointing out that the pleading is repetitive; once that is done, no further response is required until after the court determines whether the filing is in fact repetitive.
When a guardianship or conservatorship is filed, an attorney and a court investigator are normally appointed (to represent the subject of the proceedings and to report to the probate court, respectively). That does not change with the new rules. There are several changes about how those appointments will work, however. First, court-appointed attorneys, court investigators and guardians ad litem must undergo a training program to be devised by the courts (this is one of the requirements that is implemented on September 1, 2012). Second, court-appointed attorneys and guardians ad litem are disqualified from serving in cases where the proposed fiduciary is a client of theirs in other matters, even if unrelated. Third, it is now impermissible for the court appointees to end up serving as the guardian or conservator.
Speaking of guardians ad litem, the new rules spell out in more detail what that position entails and when a GAL may be appointed. The request for appointment of a GAL must detail why special expertise is needed, and any order appointing a GAL must spell out the limits of the appointee’s authority.
When a guardian or conservator is appointed by the judge, that fact alone does not give them any authority to act. The clerk of the court must first issue “letters” evidencing the appointment (which may require that the appointee file additional documents). The new rules imposes several changes involving the “letters.” First, every court order appointing a guardian or conservator must include a warning that the appointment is not effective until the letters have been issued. Second, every conservator must record a certified copy of his or her letters with the County Recorder in the county where the protected person resides and in every other county where the protected person owns real property. Third, a conservator’s letters must include specific language if sale of real property or access to other assets (like bank accounts, for instance) has been restricted by the court.
Every person or entity appointed as guardian, conservator or personal representative must undergo a training program either before or shortly after appointment. This provision is not effective until September 1, 2012 (in order to give the courts time to create an appropriate training program). It does not apply to professional fiduciaries who have been licensed by the Supreme Court (they already have testing, training and continuing education requirements) or banks acting as fiduciaries. It does apply to family members who act as fiduciaries. There are no exceptions for people who have been named as personal representative in a will, for example, or for parents who act as conservator for a minor child whose assets are all in court-controlled bank accounts.
Any lawyer or fiduciary who expects to be paid from a ward’s (or prospective ward’s) funds must first give everyone in the case notice of how his or her fee is to be calculated. The Supreme Court has directed that some sort of fee guidelines be adopted in the future; those guidelines will govern how attorneys may charge in guardianship and conservatorship matters.
Annual accounts must be in the form prescribed by the Supreme Court. That form has not yet been adopted (it is one of the items that will have a September 1, 2012, effective date to give the Court time to finalize the forms), but preliminary forms have been circulated. They are quite different from the accounting forms approved by the Court for the past four decades, and will require significant retooling of accounting practices and software. Details are not yet settled, but will be adopted over the next few months.
Alternative dispute resolution is encouraged. In contested proceedings, the parties are required to notify the Court within 30 days about their efforts to initiate mediation, arbitration or other resolution efforts.
When a guardian has been appointed for a minor, the guardian has an affirmative duty to notify the court on the minor’s reaching majority, getting married or adopted, or upon the minor’s death. If there is no conservator appointed, the guardian’s notification must include a list of any property the guardian believes may belong to the child — and that information must be provided to the Court as well as the subject of the guardianship.
Attorneys for guardians, conservators and other fiduciaries are required to encourage their clients to do as much of the fiduciary work as they can without involvement of the lawyer. Complaints have been made in the past about lawyers overseeing their clients’ work too closely, and at too high a cost. The new rules make clear that the responsibility is the fiduciary’s, not his or her lawyer’s.
Can we generalize about the effect and value of these changes? Not yet — or at least we can not generalize about how much they will actually improve the practice or lower costs. We can make a few educated guesses, though — and we will:
It seems likely that the cost of most guardianship and conservatorship matters will increase slightly, as compliance with the new (and more detailed) rules requires more work.
We expect fewer family members will be willing to take on what was already a difficult task, and will now become somewhat more difficult. That means more cases moving to professional fiduciaries.
Our estate planning clients will be reminded again and again how important it is for them to execute living trusts, powers of attorney and other arrangements to avoid any need for guardianship or conservatorship proceedings. One small irony: even as the process for handling decedent’s estates has been streamlined over the past several decades in response to public and consumer complaints about costs, delays and legal micromanaging, the guardianship and conservatorship process have become more expensive, slower and more subject to Court micromanagement. That may have been necessary to protect a vulnerable population, but it certainly is an example of the doctrine of unintended consequences.
Contentious family members and friends will have more access to the Courts, not less. Contested proceedings will likely become somewhat more frequent in guardianship and conservatorship cases. It is likely that the same effect will not be seen in decedent’s estates and trust administration cases, but we could be wrong about those predictions.
Here’s our final (and, we think, safe) prediction: the effect of these changes will be less profound than either practitioners fear or reformers hope. We will all learn the new rules over time, and many of us will refer fondly to the good old days, before 2012, when people just seemed to get along better and the process did not seem to get so bogged down in minutiae and micromanagement. We will be wrong about our glowing, Rockwellesque memories.
Want to read the new rules yourself? It’s a little hard to find and read them. First, the Arizona Supreme Court’s site for proposed rule changes is confusing and impenetrable, and does not distinguish well between recent changes and proposals and those from prior years (or, we assume, prior decades — once the kludgy system gets to be ten years old). Second, as of this writing, the “official” rules page does not show the changes (which admittedly will not be effective for another month). We will give you our best bet for temporary review; we will try to remember to update the online version of this article once the final rules make it to the official rules page. Look at the Arizona Supreme Court’s Rules of Probate Procedure page, and remember that you have to actually open and integrate three PDFs to figure out which rules are effective on what dates and where each change is located.
DECEMBER 19, 2011 VOLUME 18 NUMBER 43
It is not exactly a secret that the Arizona probate court system has been widely criticized over the past two years or so. The Phoenix-area newspapers have been filled with stories about alleged abuses of the probate process. Many of those stories have focused on practices in the guardianship and conservatorship systems, which in Arizona are controlled by the probate courts. During last year’s Arizona legislative session a number of changes were adopted; most of those take effect on January 1, 2012.
At the same time the legislature was acting, a committee of the Arizona Supreme Court was considering many of the same (or similar) changes. The courts have now released their final changes; some of them will take effect on February 1, 2012, and some on September 1, 2012. We will describe some of those changes, and what effect they are likely to have on existing and future clients, in a later newsletter. For now, we focus on the changes adopted by the legislature. They include:
Fiduciaries are now expressly required to consider costs when making decisions about how to act, and to make reasonable decisions to limit those costs. The notion of a cost/benefit analysis, which we all apply to business and personal decisions in our own lives, has been adopted for guardianship, conservatorship, probate and trust administration proceedings. See Arizona Revised Statutes section 14-1104.
Unreasonable litigants — including those who repeatedly file the same kinds of pleadings despite successive decisions against them — can now be prevented from running up probate costs, and can even be charged with some or all of the costs they do incur. The probate court has the express power to prohibit further court filings by an unreasonable party, and to summarily deny repetitive motions without requiring others to answer or argue. See Arizona Revised Statutes sections 14-1105 and 14-1109. The court rules which become effective a month later, incidentally, include a concept of “vexatious conduct” that is similar but somewhat more expansive.
Arbitration of probate disputes is encouraged — but not (yet) required. Mediation and other forms of alternative dispute resolution are also permitted. See Arizona Revised Statutes section 14-1108.
Guardians, conservators and attorneys must now provide written information about their fees — how they are going to be calculated and at what rate or rates — at the beginning of their involvement. Failure to do so will mean that they are not permitted to collect fees from the ward in a guardianship or conservatorship proceeding. The probate court has been given wider latitude to determine when a professional fee is reasonable and necessary. See Arizona Revised Statutes section 14-5109. Another fee-related change: attorneys are not permitted to wait until the conclusion of a case (or some later event) to submit their bills. Any bills not submitted within four months of the services are waived. See Arizona Revised Statutes section 14-5110.
It should be easier for the subject of a guardianship or conservatorship — or his or her family — to seek appointment of a new guardian and/or conservator. This change reflects the legislature’s concern that even when family members are unable (or unsuitable) to serve, they should have some say in selecting the fiduciary. There are limits on how often the ward and family members may ask for changes, and the court retains the final say on any substitution, but the statutory changes will probably lead to more changes of fiduciary, at least in contentious cases. See Arizona Revised Statutes sections 14-5307 and 14-5415. The notion that family members — even family members who can not themselves serve — should have a greater say in selecting and monitoring guardians and conservators is sprinkled through other sections of the new law.
Although most of the new law deals with guardianship and conservatorship changes, there are a few changes in probate proceedings and at least one in trust administration matters. The principal change for trusts: the beneficiary of a trust has the ability to direct appointment of a new trustee — at least if the trust was originally established by the beneficiary. See Arizona Revised Statutes section 14-10706. This section will not apply — at least not directly — to trusts established by someone else for the benefit of the beneficiary. It will apply to self-settled special needs trusts and other irrevocable trusts established by the beneficiary.
What effect will the statutory changes have on guardianship and conservatorship practice? It is hard to be certain until there is more experience. A few likely effects, including some that might be categorized as unintended consequences:
The cost of probate court proceedings is likely to go up in most cases. This is a paradox, since one of the original motivations behind the changes was to control costs, and especially legal fees. In some very expensive cases in recent years, that might well be the effect. In the vast majority of cases, however, increased requirements and a higher burden on fiduciaries and their attorneys will likely result in at least a small increase in costs.
There are likely to be fewer private fiduciaries willing to get involved in difficult or contentious cases. That, in turn, is likely to mean an increase in caseloads for the Public Fiduciary in each county. Not only will the Public Fiduciary see an increase in cases, but it is likely that the complexity of the average Public Fiduciary case will increase.
Some private professional fiduciaries may leave the field, or change their practices significantly. We predict (on the basis of no empirical data whatsoever) that another paradox is likely to be an increase in the number of licensed fiduciaries — and that both the average case load and the professional training and experience of private fiduciaries may well be lower in future years.
On January 18, 2012, Fleming & Curti, PLC, will host a training session for our clients who act as guardian, conservator or personal representative. We will invite fiduciaries who are not our clients, as well. Those in attendance will likely include both family members handling a single case and professional fiduciaries with large and complicated case loads; both kinds of fiduciary will need to know what the changes mean for them. We will cover both these legislative changes and the Supreme Court’s changes in rules and accounting requirements (and forms). If you are interested, you can pre-register by calling Yvette in our office (520-622-0400) and leaving your name and e-mail address. We will be sending out formal invitations in the upcoming week.
DECEMBER 12, 2011 VOLUME 18 NUMBER 42
Last month we saw an interesting variation on fee requests for guardianship and conservatorship proceedings. A Washington State Supreme Court case dealt with the payment from wards’ estates to a professional fiduciary organization in unusual circumstances.
James R. Hardman and his mother Alice Hardman are certified professional guardians under Washington State’s guardianship regulation program. As in Arizona, the program is operated by the state Supreme Court, and requires testing, training and reporting to a court-operated agency. In addition, Washington professional guardians are required to report to the local probate judge once each year on the finances and welfare of each individual ward — just as all other guardians do.
The Hardmans are guardians of the person and the estate (in Arizona we would say guardians and conservators) of “more than 20″ developmentally disabled adults residing at a state-run residential facility known as Fircrest School. They handle their wards’ finances, make health care decisions and determine the proper placement for each ward, and no allegations were raised that they do that work anything other than conscientiously and well. Because they are so deeply involved in the developmental disability community, they are also very active in advocacy efforts. They lobby state, local and federal agencies and elected officials and they vigorously oppose efforts to transfer Fircrest residents to residential placements that they believe provide inadequate care.
The Washington guardianship regulation scheme assumes that guardians like the Hardmans should be paid no more than $175/month from their wards’ funds for guardianship services. There is a mechanism for seeking more fees, however, when it is required because the ward has unusual issues. The regulation particularly describes the possibility of convoluted property transactions, interaction with criminal courts for a ward who has gotten into legal trouble, extensive or emergency medical services, or similar complications.
The Hardmans estimate that their advocacy work consumes 80-100 hours per month. They believe that it benefits all of their wards. They sought approval of not only the ordinary $175/month payment in each case, but an additional $150/month from each ward to compensate them for advocacy for the residents of Fircrest.
The effect of approving the higher fees would have a direct effect on the state programs for the developmentally disabled. Because reasonable guardians fees are deductible from a resident’s share of cost under Washington law (this varies from state to state, and would not be handled the same way in Arizona, for instance), the $150/month per ward would effectively reduce the total amount paid by residents to the state by as much as about $50,000 paid to the Hardmans.
Although the first judge hearing the matter agreed and allowed the Hardmans their higher fees in a single case, the next two times it was considered their request was denied. The case ended up before the state Supreme Court, which ruled that the Hardmans could not collect fees from their individual wards to fund their general advocacy work.
There are a number of problems, in the state high court’s view, with the Hardmans’ request. The actual amount requested, and the justification of the amount of time spent, was different in the two cases considered by the court. The direct benefit to individual wards was not clear to the Justices. The advocacy work might arguably benefit the class of guardianship wards, but the high court did not believe it was “necessary” to the actions of a guardian — a requirement of the state law governing fee requests.
One of the more intriguing ideas promoted by the Hardmans was that denial of their request would effectively deprive their wards of their constitutional rights to free speech and to petition the government for redress of grievances. Not so, ruled the Justices — they could still speak out through advocates provided to them by the system, and nothing prevented the Hardmans from continuing their own advocacy work. It was just not required that their guardians should be compensated for that advocacy — particularly since that would put the probate judge in each individual case in the untenable position of having to decide which “speech” would need to be protected and paid for. In the Matter of the Guardianship of Lamb, November 23, 2011.
NOVEMBER 14, 2011 VOLUME 18 NUMBER 39
Let’s talk about guardianship and conservatorship proceedings. Before we do, though, let’s remember a couple of important principles:
We only know about Arizona guardianship or conservatorship. Well, OK — we might know a thing or two about other states’ rules and procedures — but we only practice in Arizona. Our observations are not universally applicable. They may not even be universally applicable inside Arizona’s borders.
As always, we simply can’t give specific case-based legal advice here, and you should not rely on this newsletter (or anything you read online or in books) to resolve your case. This is big-picture stuff. We can and do write about how the system works, what the rules look like, and what you might expect if you are involved in a guardianship and/or conservatorship matter in Arizona. Don’t expect to print out our articles, take them to court and argue with the judge, though. She won’t appreciate it, and neither will we. Plus it won’t work. Get good legal advice.
One thing we’ve learned from years of law practice: people think they understand their own cases, but they get blinded to the nuances (or maybe they aren’t told everything about the contrary evidence or opinions) and tend to overgeneralize. We don’t think that means they are stupid, or liars — they are just trying to put the best face on their case, and that’s human nature. But it also means that if you say “aha — he hit the nail on the head and that’s exactly what my worthless brother is trying to do” we’d be likely to tell you (if we were your lawyer): “slow down. It’s not that clear.”
We have written a lot about guardianship and conservatorship. Here’s one of our better (and most comprehensive) articles, a White Paper on guardianship and conservatorship. But it’s a difficult and confusing topic, with lots of information — and misinformation — out there.
Disclaimers aside, let’s talk about guardianship and conservatorship. Let’s start with some definitions of terms.
In Arizona, the word “guardianship” is applied to the court proceedings instituted to acquire legal control over another human beings’ person. In general terms, a guardian is authorized by the court to make placement and health care decisions for that other human being. Not every state uses the same word. Not every state has the same process to get a guardian (or whatever they call the office) appointed. But every state does have some kind of court proceeding in which a person can be appointed to manage the health care and living arrangements of another person.
In Arizona, the word “conservatorship” is applied to the court proceedings instituted to acquire legal control over another human beings’ finances. A conservator usually is authorized by the court to handle checking accounts, real estate, brokerage accounts, businesses, vehicles, horses, airplanes, family photographs, oil and gas leases — you name it. Just to keep the confusion level high, not every state calls this type of court-appointed person a conservator — some, in fact, call them guardians. But in Arizona, the person managing property and finances is a conservator.
Neither guardians nor conservators are “powers of attorney.” In point of fact, powers of attorney are pieces of paper, not people at all. But now we quibble. The person named to manage your property and/or your person in a power of attorney is properly called your “agent” or your “attorney-in-fact.” A guardian or conservator is neither an agent nor an attorney-in-fact. They usually have authority over agents and attorneys-in-fact, though it may require separate court action to make that clear, and it may be possible for the court to determine that the agent (or attorney-in-fact, if you prefer hyphenated names) still has authority even after appointment of a guardian and/or conservator.
Who can have a guardian appointed? Someone who is incapacitated. Their incapacity can be based on their age (minors — those under age 18 — are automatically incapacitated under Arizona law unless they are “emancipated”) or their circumstances. Generally speaking, parents are the natural guardians of their minor children, so they do not need to go to court to secure guardianship. The same is not true for any class of adults. So if your 18-year-old child has a lifelong disability that makes him unable to make responsible decisions, you do not automatically shift from being his natural guardian at 17 to being his legal guardian at 18. A court proceeding is necessary. Same thing if your husband or wife becomes incapacitated — you may need court proceedings to become guardian (if there is no power of attorney and there are things that need to be taken care of). “Incapacity” for adults requires a court showing of (a) a mental, medical or other condition that (b) affects the ability of the person to make and communicate responsible personal decisions and (c) makes it difficult or impossible for them to provide their own food and shelter without assistance. It is also necessary to show that (d) the appointment of a guardian will actually help accomplish that goal.
Appointment of a conservator is based on similar, but slightly different, grounds. First, minority is always considered a legally disabling condition, but parents are not the natural conservators of their children in the way that they are natural guardians. That means if a minor child comes into money, even if they live with both parents and all are harmonious and responsible, there is no way to manage that money without going through the conservatorship process. If an adult becomes unable to manage their money in order to prevent its waste or dissipation, they may have a conservator appointed, as well. Frankly, the definition of when a conservator can be appointed is a great deal less precise than that for guardianships, which can sometimes lead to problems.
An important reality for family members and friends to understand: if a guardianship and/or conservatorship proceeding is initiated, the court has been invoked and will not later simply step aside to let concerned — even appropriately concerned — family members take over. Once the courts are involved, they tend to stay involved.
That means that the cost of securing guardianship and conservatorship can be high. In Arizona, a lawyer is automatically appointed to represent the person who is alleged to be in need of a guardian or conservator. A medical report is required. A court-appointed investigator must go to the residence, conduct an investigation and file a report. There are significant court costs involved. Plus the process is complicated enough that the petitioner is almost always going to hire an attorney. That attorney’s bill is likely to approach half the total cost of getting the guardianship or conservatorship set up.
Much has been written, spoken and broadcast in recent years about the high cost of guardianship and conservatorship. The natural tendency of the system has been to make it more difficult to get guardians and conservators appointed, and to require them to provide more information, more frequently. Though that may be a positive development, it has the (presumably unintended) effect of making the process not only more difficult, but also more expensive.
So — guardianship and conservatorship can be difficult, expensive, even ineffective. Not always, of course, but there is a possibility and it proves to be the case too often. What can beleaguered family members do?
Most lawyers practicing in the field spend the first portion of any contact with a new client talking about how to avoid guardianship and conservatorship proceedings. Did your family member sign a health care power of attorney, a financial power of attorney, a living will, a living trust? Are there other ways to get done what needs to be done? What bad things will happen if we (that is, the family and the lawyers acting together) simply do not file a guardianship or conservatorship proceeding, even if one is warranted? Are there ways to get agreement from all the family members in advance, in order to hold down legal costs?
One important concern, at least in the case of adult guardianship and conservatorship: we will ultimately need to be able to prove that your family member has a medical, mental, emotional or other problem that prevents them from making their own personal or financial decisions. We will need medical evidence. Have you spoken with your family member’s physician, or psychologist, or other member of their treatment team? Can you get a letter from that person describing diagnosis, prognosis and any functional limitations? Without that, we may not be able to proceed. With that in hand, though, the process may be significantly streamlined.
Getting guardianship or conservatorship can be expensive, emotionally wrenching, and sometimes even ultimately unsatisfying. Sometimes, however, it is absolutely necessary. We just need to be sure you are prepared for the cost, the procedures, the limitations, and the possibilities in this type of legal proceeding. That’s why you hire a lawyer, after all.
AUGUST 1, 2011 VOLUME 18 NUMBER 28
It is a recurring question in guardianship and conservatorship cases: when there is family conflict, or an allegation that a family member has taken advantage of an individual, who should the courts appoint to manage the person’s financial and personal affairs? Family should have priority, of course — but what should the courts do when family members have misbehaved?
We have written about earlier cases from other jurisdictions. Some examples: in a Wisconsin case in 2000, a court decided that a chosen family member should have priority even though it appeared that there might be conflicts with caregivers. A California court in 2004 removed a family member and appointed a private fiduciary as trustee and personal representative (executor) after family disputes ran up legal bills of almost four hundred thousand dollars. And a 1996 case in Arizona upheld the appointment of a professional private fiduciary over the objections of family members.
A recent Connecticut case adds a new element to the family-vs-professional-fiduciary discussion. It deals with how the court should select a private fiduciary once it becomes apparent that family members can not serve.
In the summer of 2007 Janet Follett decided that her mother, Zoe Ross (both names have been changed here), had declined to the point that appointment of a conservator was appropriate. Ms. Follett had held her mother’s power of attorney for quite some time — though the power was a so-called “springing” power of attorney, which was not effective until a doctor certified that Ms. Ross had become incapable of handling her own affairs. Ms. Follett had secured the appropriate doctor’s statement earlier in the year. She had in fact been handling her mother’s finances for some time before that — she had been a joint signer on Ms. Ross’s bank account since 2002, for example.
Ms. Follett and her sister did not see eye-to-eye when it came to handling their mother’s affairs. In the course of the court proceedings to secure a conservatorship, the court-appointed attorney for Ms. Ross agreed with Ms. Follett’s sister that it would be better if a neutral professional was appointed as conservator.
At a four-day hearing early in 2008, the judge heard testimony from nine different witnesses about Ms. Ross’s condition, the suitability of Ms. Follett to serve as conservator, and the size and nature of Ms. Ross’s estate. Later, the judge entered an order finding that Ms. Follett should be disqualified to serve as conservator. Instead, the judge appointed local lawyer Robert Mirto to serve as conservator. Mr. Mirto had not testified, had not been discussed in the hearing process, and had not been interviewed by the parties about his possible service as conservator.
Ms. Follett appealed, arguing that (a) she should have been appointed as conservator and (b) if she wasn’t going to be appointed, she should have been given a chance to interview the prospective conservator, to object to the individual and to suggest other candidates. The Connecticut Appellate Court agreed with her as to the second argument, but not as to the first.
The appellate court noted that there was evidence of at least some transactions that Ms. Follett should not have entered into using her authority as co-signer and agent on her mother’s power of attorney. In addition, both her sister and the court-appointed attorney argued for appointment of a non-family member as conservator. Given those circumstances, said the appellate judges, the lower court was justified in choosing a professional fiduciary over a family member.
But it was improper, agreed the appellate court, for the judge to simply choose a favorite fiduciary to serve. The history of probate court — and especially of Connecticut’s unusual probate system, relying as it does on part-time non-lawyer probate judges — made it important to strive for open and transparent administration of conservatorships. Recent Connecticut legislative changes had heightened the focus on those values, and had been part of an effort to change the culture of probate courts in the state. Given that background, the selection of a private fiduciary should be more open and concerned participants should be given an opportunity to participate in the process.
The appellate judges directed that the selection decision should be referred back to the probate court for a new hearing. The court’s decision not to appoint Ms. Follett was approved, but the appointment of Mr. Mirto was reversed and the probate court instructed to give the parties an opportunity to be heard on selection of a non-family member conservator. Falvey v. Zurolo, July 19, 2011.
What will the follow-up hearing look like? Nothing in the appellate opinion makes clear how it might work. The only indication is that Ms. Follett (and, for that matter, her sister and the court-appointed attorney) must be given notice of who is being considered, and an opportunity to challenge the appointment of that individual. The probate judge might well choose to appoint Mr. Mirto again, though any objections will need to be disposed of first.
JULY 25, 2011 VOLUME 18 NUMBER 27
We have told you about Lillian Glasser before. She is a wealthy New Jersey woman with two children who disagree about where she resides, who should manage her health care and finances, and what should be done about financial actions taken in the months before court proceedings were begun. Much of the dispute centers over whether Texas or New Jersey courts should hear her case. That issue seems to have been put to rest, with New Jersey the victor.
To recap: Ms. Glasser, then worth about $25 million, lived in New Jersey. She occasionally visited her son in Florida (where she also had a rented home) and her daughter in Texas. In 2002, Ms. Glasser was persuaded to execute a new estate plan. She signed a will putting her daughter in charge of her estate, and a new power of attorney in favor of her daughter.
In 2004 and 2005, Ms. Glasser’s daughter fired her mother’s caretaker in Florida, moved Ms. Glasser to Texas, and initiated a Texas guardianship proceeding. In the meantime, she used her power of attorney to create a family limited partnership which she controlled, and transferred the bulk of her mother’s assets into the partnership’s name.
The Texas guardianship proceeding spawned a variety of legal actions. Ms. Glasser’s son, a nephew who was close to her and a family friend all objected in Texas. The litigation costs in Texas exceeded a million dollars, with much of the cost being paid from Ms. Glasser’s assets. The result: the Texas courts authorized her return to New Jersey, where there was more legal action pending.
After Ms. Glasser’s nephew filed a separate New Jersey guardianship proceeding, that state’s Adult Protective Services agency weighed in with a complaint alleging that Ms. Glasser had been subjected to exploitation. Those two actions were consolidated. Meanwhile, the Texas courts decided to wait until New Jersey had completed its review of Ms. Glasser’s situation.
In 2007 the New Jersey court held a 34-day trial on Ms. Glasser’s condition, the transfers of her assets, and the actions of the various players. The result: a judgment finding that Ms. Glasser’s daughter exercised undue influence and behaved in her own interest rather than her mother’s best interest, ordering return of all of the assets transferred into the family limited partnership, and appointing a bank as guardian of Ms. Glasser’s estate and an independent party as guardian of her person. That ruling was the subject of our 2007 update on the Glasser litigation. Ms. Glasser’s daughter appealed that ruling, as did two of the other litigants; much of the appellate argument focused on who should pay the extensive legal costs of the proceedings. The New Jersey Superior Court Appellate Division (that state’s intermediate appellate court) has now — four years after the original court findings — ruled on those appeals.
Spoiler alert: the appellate court affirmed the extensive trial court decision without modifying a single finding or order.
The appellate judges approved the trial judge’s finding that Ms. Glasser’s daughter had exercised undue influence over her mother. They agreed that she should be ordered to put all of her mother’s assets back into Ms. Glasser’s name, to be managed by the bank named as guardian of her estate (what we in Arizona would call her conservator). They confirmed the daughter’s history of inappropriate and evasive actions with regard to Ms. Glasser’s placement and care, and agreed that she was not suitable to manage her mother’s personal OR financial matters.
Then the appellate judges turned to the extensive fees incurred in the various legal proceedings in two states. They confirmed the trial judge’s decisions that:
Ms. Glasser’s daughter should pay her own legal fees in both New Jersey and Texas. That meant that she would have to repay the money she had taken from her mother’s assets to fund the Texas proceedings, for which she had paid her attorneys at least $1 million.
Ms. Glasser’s estate should pay the legal fees of the lawyer she selected to represent her (the court having found that she had the capacity necessary to hire an attorney of her own choosing). It should also pay the legal fees of her nephew, who filed the guardianship action in New Jersey, without forcing her daughter to reimburse those fees.
Ms. Glasser’s son argued that his mother’s estate should pay most or all of his legal fees; the trial judge decided that it would not order her to pay all of his legal fees in Texas, and that (since he hadn’t filed a guardianship petition in New Jersey) he was not entitled to reimbursement for his New Jersey expenditures. The appellate judges agreed, noting that his sister had no standing to object to the amounts allowed in any case.
In the Matter of Lillian Glasser, July 21, 2011.
So how much did Ms. Glasser’s legal predicament cost her, and what was the total cost paid by all of the litigants in protracted proceedings in two states? It may be impossible to calculate exactly, but it is obviously several millions of dollars — after all, her daughter’s legal fees in Texas alone exceeded one million dollars.
Assuming (and the evidence is good) that the outcome is correct, was there a way to prevent the absurd expenditure of millions of dollars, the delay of half a decade, and the angst and anguish associated with this case? A few things might have helped:
A carefully created and well-documented estate plan, drafted at a time when Ms. Glasser was clearly competent, might have headed off some of these problems. It might not, however. Ms. Glasser did have an estate plan in place in 2002, at a time when she was competent to make her plans. Her daughter’s undue influence and over-reaching upset that plan over the next few years.
If both Texas and New Jersey had adopted the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act prior to 2005 then considerable cost might have been avoided. That Act would have made clear that New Jersey had jurisdiction and Texas should not act — the very conclusion that the respective judges reached, though only after more than a million dollars in legal fees. Unfortunately, the Jurisdiction Act did not exist in 2005. Since it was first proposed in 2007, about two-thirds of the states have adopted it (including Arizona). So far neither Texas nor New Jersey has. In fairness, adoption of the Jurisdiction Act might have sped the proceedings up by only a few months, and saved only a fraction of the many millions of legal costs.
Mediation of the family disputes might have been effective — but it might not have. The appellate judges made reference to Ms. Glasser’s son adopting a “‘take no prisoners’ approach to anyone who disagreed with his views.” Her daughter’s intransigence is pretty clear from her actions and her legal posture. Perhaps they could not have ironed out their differences.
JULY 18, 2011 VOLUME 18 NUMBER 26
“Elder law” (what we practice here at Fleming & Curti, PLC) can be a fairly broad practice area. We work in estate planning, long-term care planning, guardianship and conservatorship, trust administration and probate — and each of those areas encompasses a number of other topics as well. But some variation of the question below is one of the most common questions potential new clients ask us. We want to take a moment to explain the difference between two poorly-understood legal concepts: powers of attorney and guardianship/conservatorship.
Here’s the question, distilled to its essence: We had to put dad into a nursing home. The staff there are telling us we need to get a power of attorney. Can you prepare a power of attorney for us?
Seems like a simple enough question. A power of attorney is, after all, a fairly straightforward document. You can download a form from the internet, and many seniors have already signed one. Turns out that the question is usually much harder to answer than it appears, however.
Different kinds of powers of attorney
The first issue: there are different kinds of documents that are all called “powers of attorney.” As if that wasn’t confusing enough, some states (and some practitioners) use different terms — “health care proxy,” or “patient advocate designation,” or “durable power of attorney,” for example — for what are essentially the same things.
In general terms, there are two well-recognized kinds of power-of-attorney document. One kind designates some one else who can make decisions about the signer’s health care — medical authorization, placement decisions and the like. The other names some one to handle financial matters — check signing, sale of property, transfers of assets into a living trust, even gift-giving (in some cases).
When the nursing home tells you that you need a power of attorney for your recently-admitted father, they are probably most concerned about the health care power of attorney. They want someone to be able to approve medications and treatments, to make decisions about hospitalization (or declining hospitalization) and to notify about your father’s condition and progress. They may also be interested in making sure you have power to handle his finances, especially to pay his nursing home bills — but that may not be their primary focus.
Distinguish guardianship and conservatorship
Contrast the power of attorney with the guardianship/conservatorship process. If you have to secure a guardianship or conservatorship with regard to your father, that means you will have to file a court proceeding and go through a number of mandated procedures.
You will probably be hiring a lawyer to represent you; in Arizona, a lawyer will certainly be appointed to represent your father (unless he already has his own lawyer). There will also be a medical report, and a court investigator. A process server will have to physically hand (or read) the court papers to your father. A hearing will be held at the courthouse. Once you are appointed, you will have annual reports to file with the court. If you have been appointed as conservator, you will also have to file a “surety bond” — an insurance company’s guarantee that your father’s estate will be made whole in the event that you misspend his money or otherwise behave inappropriately.
Wait — what’s the difference between guardianship and conservatorship (you ask)?
It’s a good question. Be careful about generalizing here — different states use different versions of these terms to mean different things (and sometimes they have the opposite meaning in other states). But in Arizona, guardianship is the court process to secure control over an incapacitated person’s health care and placement decisions. Conservatorship is the court process to secure control over the finances of a person who needs protection.
Roughly speaking, a guardian (in Arizona) has the same kind of authority that a health care agent might have. Meanwhile, an Arizona conservator has the same kind of powers and responsibilities that an agent under a financial power of attorney might be given.
So which do I want — power of attorney or guardianship/conservatorship?
It’s not really which one you want so much as which one you can get. A power of attorney requires a competent signer, willing to give the power (health, financial or both) to you. A guardianship or conservatorship requires the court to find that your father is not able to make his own decisions — in essence, not able to sign his own power of attorney. So our first question to you will be: what does his doctor say about his competence? What do you think: will he understand the nature of a power of attorney, and be willing to give you that authority?
If your father is already too far into the dementia process to sign a power of attorney, you may have no choice but to seek guardianship and/or conservatorship. If he is mentally pretty alert, and able to understand (and explain) the reasons why he might sign a power of attorney, it might well be appropriate to talk with him about that choice.
What are the relative costs?
Once again, it is hard to generalize. Getting your father to talk with a lawyer, discuss powers of attorney (and, probably, estate planning generally) and getting him to sign after he has agreed to the documents should probably cost a few hundred dollars — more, if it takes multiple meetings, he has unusual estate issues or wishes, or there is family discord to deal with. Guardianship and/or conservatorship will probably cost ten times as much, and assure continuing legal involvement as future accountings and reports have to be prepared and filed.
OK — I think dad will understand the power of attorney and be willing to sign it. Can you please come to the nursing home with one and get him to sign?
Would that it were that easy. A good lawyer will want to meet with your father more than once. While many make home (or nursing home) visits, they will probably charge more. And a key element of representation of your father requires that he be the client — that may mean that after we have talked about his situation extensively, we are uncomfortable being the ones who prepare his documents.
In that case, we are likely to refer him to another lawyer. We will probably suggest one geographically close to him, and give you some advice about how to make the initial contact. Basically, we want to make sure that (even if you make the call and set up the appointment) there is no question in your father’s mind that his lawyer is in fact his lawyer. You may be absolutely certain that you and he are on the same page — but we sometimes see situations where that turns out not to be the case, and we all want to make sure his wishes are paramount.
Do I really have to do any of this?
You might not, actually. In Arizona (this is not true in every state) there is a mechanism for family members to make health care decisions for someone who never got around to signing a health care power of attorney. There is a priority checklist (starting with spouses and working through family friends) for who can make decisions. One limitation: the person named in the checklist can not make a decision to withhold or withdraw life-sustaining artificially-provided food and fluids.
There is no similar mechanism for financial decisions. If your father has only his name on his bank accounts (or brokerage accounts, car title or deed to his house) then it will require either a power of attorney or a conservatorship to get authority to liquidate assets, pay bills or even request annual minimum distributions from his IRA. Quick — go look to see if he didn’t sign a power of attorney years ago.
This is all so complicated. Can’t I just get the power of attorney form, fill it out and get him to sign it?
Yes, and it will probably work just fine. If it doesn’t, you could look like you were trying to take advantage of him. If someone later decides your form is inadequate, or not properly signed, or has some other defect, you might not find out about it until after he is clearly incapacitated and unable to sign a new power of attorney. But candidly, those are not the most likely outcomes. What we offer is professional counsel, answers to complicated and personal questions, and peace of mind. We’re pretty comfortable that our services are worth what we charge.
We hope that helps. Good luck with your father, whether we see you or not. We know that this is a difficult time, filled with anxiety and unexpected challenges. There are also a number of rewards along the way, but no one should minimize the work you have undertaken.
Oh, by the way — if it’s your mother, your aunt, your son or your sister you are caring for, the answers are mostly the same.
