Posts Tagged ‘conservatorship’

We Are Creeping Up On a Quarter Century Here

JANUARY 4, 2016 VOLUME 23 NUMBER 1

Note the “Volume” number above. Is it even possible that we’ve been doing this for 23 years?

In that time, a number of topics have been perennially popular. We see a lot of internet traffic, and get a lot of questions or comments, when we write about:

Of all those topics (we now have an archive of well over a thousand weekly newsletter articles), which is our favorite? That’s easy: the one you read, gain something from, and have a follow-up question about.

So what’s your question? We won’t try to give individualized legal advice, but maybe we can help you with a relevant legal principle, or perhaps we can elucidate some of your alternatives. We will often tell you that the right answer is “consult an attorney,” but maybe you can get to the attorney’s office as a better-informed client.

Oh, and Happy New Year.

Management of Risk in Guardianship and Powers of Attorney

DECEMBER 14, 2015 VOLUME 22 NUMBER 46

Imagine: you have just been named as guardian for your aging father. You are responsible for his medical care and decisions, his comfort and his placement. You were appointed, in part, because of your concern about his safety at home — you are thinking perhaps he needs to be moved to a safer location. Your job is to eliminate — or at least dramatically reduce — the risk that he might fall in his home, that he might wander, that he might not take his medications. Right?

Not exactly.

If you were grappling with this common-place scenario several decades ago, the answer might have been clear. Legal scholars and advisers generally agreed that the primary standard governing guardians should be to protect the “best interests” of their wards. That usually meant protection from risk first, and addressing emotional and psychic needs after physical protection could be afforded.

Let’s spin the hypothetical back in time a few years. You are talking with your still-capable father about his wishes. Presciently, you ask him this question: “So, Dad, if you were at risk of falling here in your home and the only way to be sure you were safe would be to move into a nursing home or assisted living facility, would you want to go?” What do you suppose he would have said?

He probably would have asked for more information. How much risk? How serious of an injury? What might the facility look like? What other limitations might he have to endure?

We manage risk in our daily lives all the time. We make decisions from brushing our teeth to crossing the street outside a crosswalk to skydiving or motorcycle riding — and we weigh the likelihood of injury from each action constantly and almost unconsciously. When put in charge of someone else’s care, however, it human nature to try to eliminate risk altogether. That is not the way your father managed his life before you were appointed as his guardian, and it is not the way you should make decisions for him now.

Over the last several decades, legal writers have developed a concept of “substituted judgment” to guide decision-making by guardians. The doctrine is misleadingly named — though it may sound like you, as guardian, are to substitute your judgment for your father’s, it means exactly the opposite. When making decisions for your father, you should start with a good-faith attempt to figure out what your father would want and substitute that decision for the one you would otherwise make on his behalf.

Does that mean you can never place your father in a more-controlled facility? Of course not. But it does mean that you need to make an open-eyed analysis of his likely wishes, and try to emulate his approach to the decision if he were making it for himself. Are there less-restrictive ways to reduce the risk to a suitable level (but not to zero)? What other negative effects might flow from the proposed decision? What would your father do?

Is this principle universally applied? Perhaps not, but it is clearly the law in Arizona and likely the rule in most other U.S. states. It is definitely the modern trend in legal thinking.

Does this concept only apply to guardianships? No — it applies to health care powers of attorney, financial powers of attorney, conservatorships (of the estate), and trust administration. In fact, it applies to even informal, unsanctioned decision-making, like when you consent to medical treatment as next of kin.

Do these rules apply only to big decisions? No, they apply to even (perhaps especially) the small decisions — visiting schedules, travel, caretaker changes and everything else.

Is it important that our hypothetical talks about your father? What about your mother? Your brother, your daughter, or anyone else? The same thinking applies to any substitute decision-maker for an adult — though it is obviously much, much harder to apply in the case of a person who never had the opportunity to develop a risk profile of their own. In other words, decision-making for your son who was born with a profound disability does not require you to try to figure out what he would have decided if he had been competent for at least a brief period after his eighteenth birthday — though it wouldn’t hurt to try to think through what a similarly-situated person might reasonably decide.

Does this mean you have to live with the real possibility of a disastrous outcome? No, it doesn’t mean that you must engage in risky behavior. It only means that you must realistically weigh the possibility of a bad result in protecting your father. Might he slip away from the care home, get lost in the desert and have a terrible outcome? Yes — but it’s not too likely, and probably doesn’t justify locking him into his room at the facility.

In other words, you might try applying a special variant of the “golden rule.” What decision would you want him to make for you, if the roles were reversed? Might he have come to the same conclusion that you are now reaching?

Good luck handling your job as substitute decision-maker. It can be emotionally draining, and physically tiring. You will find it much more satisfying, we predict, if you will think about management, rather than elimination, of risk.

Handling Your Own Legal Work — Without a Lawyer

OCTOBER 12, 2015 VOLUME 22 NUMBER 37

Last week we wrote about when you might reasonably represent yourself — that is, when you might not need a lawyer for your legal work. We suggested that what lawyers do is not precisely brain surgery, and that reasonably intelligent, informed and diligent non-lawyers might well be able to handle a number of legal tasks on their own. But which tasks, particularly?

You know you’re not going to get a lawyer to answer that question without a number of disclaimers and qualifications. Let’s be clear about what we have to say here: this advice will not apply to every individual, or in every state, or in circumstances that seem similar to what we describe. Treat this advice like the dangerous information it is: we’re not giving you blanket permission to represent yourself in a range of legal issues, and if things go wrong we don’t want you complaining that we told you it would be fine. We mean no such thing.

The default choice you should make in every legal issue is to talk to one of the people who know legal matters best. There is a name for those people: they are called lawyers.

Are you worried about cost? Start the conversation with the lawyer you consult by insisting on knowing how charges will be calculated and how you can stop the cost if it begins to overwhelm. Are you worried about getting information you don’t want to hear? Then you really, really need to talk with a lawyer. Are you worried about people finding out just how much trouble you’re in? Your conversations with the lawyer are almost always completely privileged — no one is going to hear about the fact that you consulted the lawyer, much less what you talked about.

All that said, we know how people are. You want to do it yourself. You want to save money. You want to figure it out, just like you did when you built your house without a contractor, or fixed your car without a mechanic. OK — are there some legal tasks that are safer for you to tackle than others? Yes, there are.

Wills

Can you write your own will? Yes. There are lots of forms out there, and you can use software to do much of the work. As between those two choices, by the way, we prefer software; it will take you down a branching decision tree, and will reduce the likelihood that you will make a mistake. But not eliminate it.

We are fond of recalling the client who brought us his father’s will. Dad had found a form for a will for a single person, and had just scribbled out the provisions about being single and written in mom’s name. Then he had adjusted the other provisions for the fact of mom being in his life. Problem was, the whole thing no longer made sense. Property did not pass the way dad almost certainly intended. Yes, he saved a couple bucks on legal fees — but the cost to his family was much, much higher.

That story being told, the reality is that most people will do just fine if they write their own wills. The key word in that sentence is “most” — some will foul up their estates, and fantastically (and expensively). That won’t be you, though — right?

By the way, if you use software or a form you are giving up on the opportunity to have a conversation with someone who knows what they are doing. Maybe you don’t need to make provisions for your home, if you take advantage of Arizona’s “beneficiary deed” provision. Or maybe that isn’t the right choice for you. Will the computer chat with you about that, or about your wishes for end-of-life care, or — stuff you can’t even think of?

Trusts

Just talk with a lawyer, please. The forms and books you read will oversell trusts, and the number of steps you need to take will complicate things beyond most people’s ability to figure it out on their own.

If you insist on preparing a trust without a lawyer, once again we prefer software to books and forms. But don’t think you can prepare the trust using software and save a couple bucks by taking the completed form to the lawyer to review — it takes us just a little bit longer to review your document than it does to interview you, figure out what you need, and then prepare the right document in a format we’re familiar with. In other words, it actually costs more.

Probate

Can you handle the probate of your mother’s estate without a lawyer? Probably. Do you and your sister get along well? Is your mother’s estate all in Arizona? Is the will clearly valid (or are the heirs easy to figure out)? If so, the probate may not be that complicated.

Don’t expect to just drop by the courthouse and talk with the judge, or the probate clerk. You can talk with someone in the clerk’s office, but they won’t give you forms or any legal advice. They will tell you to go to the local bar office (or someplace similar) to pick up the forms (you’ll likely pay a few dollars for that) and fill them out.

The process won’t be any faster without a lawyer — in fact, it’ll probably take longer. It will be frustrating and you’ll feel like you’re having to do things that you shouldn’t have to do. But you’ll likely get through it just fine.

Planning on fighting with your brother, or your stepfather? Talk to a lawyer before filing a single thing.

Guardianship

The share of guardianships filed without a lawyer increases every year. That’s mostly OK — the process is complicated, but at least there are a couple of lawyers involved in most guardianship proceedings even if you don’t hire one. The judge, for one, is a lawyer. The subject of the guardianship will have a lawyer appointed to represent them. You’ll get feedback from those lawyers, and from the clerks and others in the system, that will keep you from going horribly wrong. Probably.

One piece of advice: if the court clerk stops, look at you quizzically and suggests you might want to talk with a lawyer — go talk with a lawyer. That is a clear indication that something about your case is out of the ordinary. While the court staff can’t give you legal advice, they are pretty good at body language.

Guardianships of minor children are even easier for most people to take care of on their own. In fact, lawyers are involved (in Arizona — very different answers might apply in other jurisdictions) in a minority of minor guardianship proceedings. But if things get peculiar, or you get anxious about whether you’ve done things right, talk with a lawyer. You might not need to turn the guardianship petition over to them, but make sure you’re in the clear.

Conservatorships

When handling someone else’s money is involved, you need legal advice. We’ve watched people actually go to jail for things that they thought were just fine — the court’s view of the conservatorship is much more restrictive than the view of many family members. Don’t risk it.

Remember that a conservatorship necessarily means that there is money to manage, and that your legal fees can likely be paid from that money. It’s just a good investment.

[Did we mention that we only mean this to apply in Arizona? Let us repeat that — and observe that even the words “guardianship” and “conservatorship” can mean something else in other states.]

We hope this helps. We really do favor people handling their own affairs when they can, and most lawyers agree: we will help you figure out whether you can do this yourself.

Not Every Cognitively-Impaired Senior Needs a Conservator

SEPTEMBER 28, 2015 VOLUME 22 NUMBER 35

We handle a lot of guardianship and conservatorship proceedings at Fleming & Curti, PLC. We also meet with a lot of clients (or potential clients) and help them figure out how not to initiate a guardianship or conservatorship proceeding — we subscribe to the modern view that court involvement ought to be avoided when possible, and that people ought to be allowed the greatest possible autonomy and self-direction.

The view that court proceedings should be used sparingly is shared by the judges we work with in Arizona. That has not always been the case, and it is not necessarily true in every courtroom. It is easy for judges to get protective about the individuals they see in court, and sometimes judges can overreact.

We read this week about such a case, from Michigan. It involved a 74-year-old woman we’ll call Martha and her three daughters Dana, Diane and Dora. Martha’s husband (and the father of the three girls) had died a year before the legal troubles began, and Martha had spent some time in a hospital and a brief spell in a nursing home. Although she had returned to her home, she was a little weak and confused.

Martha had named Dana as agent in a power of attorney, and had made her co-trustee of the trust that held all of Martha’s assets. During the period of Martha’s illness, though, Dana had misused her position and had actually used some of Martha’s funds for her own benefit. Martha filed a court proceeding asking for an accounting from Dana. In the course of that family dispute, Dana asked the court to appoint a conservator to handle Martha’s finances.

Martha objected vigorously, but the judge ordered a psychological evaluation to address whether she could manage her own finances, and also appointed an attorney to act as Martha’s “guardian ad litem“. Both the psychologist and the guardian ad litem reported that Martha had memory limitations, but was not improperly using her funds or at any apparent risk of losing assets. Both noted that she had signed new documents naming another daughter, Diane, as her trustee and agent; that appeared to be appropriate and effective.

The judge hearing the dispute between Martha and Dana thought otherwise. He noted that the reports indicated Martha had “poor arithmetic and quantitative skills” and otherwise appeared to have diminished capacity. Michigan’s law (like Arizona’s) does not require a finding of incapacity before appointment of a conservator of the estate; the probate judge decided to appoint daughter Diane as conservator.

Diane did not think she needed to be Martha’s conservator. She thought that the trust and power of attorney were sufficient to allow her to help protect her mother. Martha also continued to believe that she did not need a conservator. Diane filed an appeal on behalf of her mother. Dana (still embroiled in her dispute with Martha over trust administration) disagreed, and argued that a conservator was necessary.

The Michigan Court of Appeals sounded a clear call for maximum individual autonomy and self-direction. It is not enough, ruled the appellate court, to show that Martha’s capacity is diminished by her memory and reasoning problems. Before a conservator can be appointed, it would also be necessary to show that Martha was unable to manage her own finances — or arrange for their proper management and protection.

Michigan’s conservatorship statutes (again, like Arizona’s) specifically direct the probate court to apply the law in a way that tends to “encourage the development of maximum self-reliance and independence,” noted the judges. In Martha’s case, she had appropriately chosen Diane to oversee her finances and had understood and signed the power of attorney and trust documents necessary to effect that change. Indeed, she had managed to monitor Dana’s handling of her finances sufficiently to observe that she had a problem that needed to be corrected. Appointment of a conservator was unnecessary and in fact impermissible in those facts. Bittner-Korbus v. Bittner, September 8, 2015.

The Michigan appellate court’s approach is consistent with what we see in Arizona, and what we like to implement in our practice. Is it possible to assist and protect the mildly impaired senior without recourse to the court? If so, we favor that alternative. Creating a trust, naming a trusted family member or friend as agent under a power of attorney, setting up a mechanism for monitoring finances — all of these approaches can help reduce the need for conservatorship or other court involvement.

It is worth observing that this is not just a matter of self-determination — it is also an issue of economics. Court oversight of a conservatorship tends to be an expensive undertaking. It can also be frustrating for both the subject of the proceedings and the conservator.

Of course conservatorship is an expense (and a frustration) that absolutely has to be incurred in many cases — but it should not be the default choice or even undertaken lightly or regularly. Our first effort is usually to try to figure out an alternative that provides both assistance, protection and even peace of mind.

[A word of warning about the principles we discuss in this article: not every state uses “conservator” and “guardian” the same way that Michigan (and Arizona) does. This case, and our observations about it, apply to conservatorship of the estate under Michigan’s law, which is very similar to Arizona’s.]

Conservator Properly Appointed for Missing Homeless Man

AUGUST 10, 2015 VOLUME 22 NUMBER 29

Late in 2012, Mark West was driving a car that struck and injured Don Barnes (both names have been changed) in the Phoenix area. Barnes hired an attorney to sue West, but because the attorney was unsure of Barnes’ ability to understand the proceedings, he sought appointment of a “guardian ad litem to represent Barnes’ interests in the lawsuit.

The guardian ad litem had a hard time staying in touch with Barnes, and eventually decided it was necessary to seek court appointment of a conservator for Barnes’ estate — which consisted solely of the personal injury lawsuit. Arizona law provides for appointment of a conservator for someone who has disappeared, and so a proceeding was initiated.

West (the driver), through his attorneys, objected to the conservatorship. He noted that Barnes was mentally ill and homeless, that he had claimed to be from Montana, and that he appeared to have returned to that state — or somewhere else. Barnes had criminal citations in six different states over the years, and West’s attorneys insisted that he had no significant connection to Arizona.

The probate court disagreed, and appointed a conservator for Barnes. West appealed that order (technically, he filed what the courts call a “special action,” but that’s a distinction that only lawyers find interesting).

The Arizona Court of Appeals agreed to address the question, but upheld the appointment of a conservator for Barnes. The statute permits appointment of a conservator for someone who has “disappeared,” ruled the appellate judges, and the plain meaning of “disappear” includes a situation when someone used to be in Arizona and now can’t be found.

Conservatorship proceedings are supposed to be initiated in the subject’s home state or, if they do not have a home state, in a state with significant connections to the person. The facts that Barnes was in Arizona when he was injured, and that he has a lawsuit pending in the state now, amount to significant connections with Arizona. Furthermore, he hired an attorney in Arizona before he disappeared, and he has a sister living in the state.

The Court of Appeals ruling clarifies that a conservatorship (of the estate) can be initiated in Arizona even if the subject has disappeared — in fact, the disappearance is the basis for a conservatorship in a case like this one. Woestman v. Hon. Russell, July 28, 2015. Could the same logic allow appointment of a guardian for a missing person? Probably not, since “disappearance” is not itself a ground for appointment of a guardian (of the person).

There are also procedural problems with both conservatorship and guardianship over someone who can not be located — though the problems would be much more challenging in the case of a guardianship. The process requires appointment of a court investigator, who is supposed to interview the subject of the proceedings and visit the place where they would reside.

There is a potential exception to that requirement for conservatorships based on disappearance (or, interestingly, “detention by a foreign power”), but conventional practice still includes appointment of an investigator. Similarly, a medical evaluation is customarily required (though the court may skip the medical review). Obviously, it may be impossible for either an investigator or a medical expert to evaluate a missing person.

One other legal point arose in West’s challenge of the conservatorship: Barnes’ attorney argued that he had no standing to even participate in the probate proceeding. Both the trial judge and the appellate court agreed, however, that West was an “interested person” because he had a potential claim for court costs if Barnes’ lawsuit ultimately failed. That permitted him to raise procedural objections to the conservatorship proceeding.

How often are conservatorships required for missing persons (as opposed to people who have become incapable of handling their affairs because of mental health issues, or dementia)? Rarely, but still more commonly than you might think. In addition to homeless people who may be difficult to trace (and who may have financial assets), there are also crime victims who may have business interests to manage while their whereabouts are unknown. Not infrequently, of course, the “missing” person may reappear even as the proceedings are underway.

How to Get in Trouble for Your Handling of Your Child’s Money

JULY 6, 2015 VOLUME 22 NUMBER 25

Management of a trust can be difficult, and the responsibilities imposed on a trustee can be considerable. Sometimes that last part is not obvious, since trusts are often unsupervised — that is, no court is involved in the handling of most trusts, and there is no “trust cop” monitoring trustee decisions or expenditures. Even though there may not be immediate consequences, however, mishandling of a trust can lead to real problems for the trustee.

Handling any trust is a challenge. Let’s see if we can make it even more difficult:

  • If the beneficiary of the trust is a minor child, the trustee’s problems increase. Parents are expected to provide most of the support for their children, so the trustee should be looking to parents for expenditures before using trust funds. Does that mean the trust can not be used until the child reaches majority? No. The trustee must balance the current needs, the future expectations, and the ability (and, sometimes, the willingness) of parents to provide support.
  • Now let’s have a parent of the minor child act as trustee. The problems just got even more complicated. If the parent/trustee decides to use money from the trust for something that parents would ordinarily provide, does that mean that the parent/trustee is making the decision in his or her own interest? Perhaps — it’s at least enough of a problem to make trust administration more challenging.
  • Not content with that level of confusion, let’s add one more: the child who is a beneficiary of the trust also has special needs, will have very high future financial needs, and is currently receiving public benefits (like SSI payments, and/or Medicaid coverage). Everything just got more complicated again — the trustee’s decisions about distributions may well have consequences for those benefits, or for future care needs.
  • Difficult enough? Let’s add a final element: the trust is subject to the oversight of a court — we’ll call it the probate court (though that will not always be the court’s name). Now there are tax considerations for administration of the trust, the trustee’s choices (even when well-meaning) might be self-interested, trust language and/or distributions might have an effect on benefits eligibility and, as if all that were not enough, once a year the probate court will need to pass judgment on everything the trustee has done in the previous year.

That’s the background for a recent case that illustrates how things can go wrong. As it happens, this week’s case study does not actually involve a special needs trust (the money was held in a guardianship account — what we would call a conservatorship account in Arizona — subject to the court’s oversight) or a minor child (though the beneficiary was the disabled adult child of the person who got in trouble for mismanagement of the funds). In other words, the facts weren’t even as complicated as those sketched out above — and yet there were serious consequences.

What went wrong?

Sandra Ochoa (not her real name) was injured at birth. A medical malpractice case resulted in a substantial net settlement — part of which was used to purchase a structured settlement annuity that paid over $15,000 per month. A court in Illinois had approved the settlement and, after Sandra turned 18, the probate court appointed her mother Vivian as guardian of her estate (again, in Arizona we would call Vivian “conservator,” but the rules would be pretty much the same).

At the time of Vivian’s appointment, Sandra lived with her in her home in California. Vivian’s husband (Sandra’s stepfather) and Vivian’s son (Sandra’s brother) also lived in the home.

Two years later Vivian’s husband changed jobs, and the entire family moved to Florida. Vivian used Sandra’s money to make a down payment on a house in Florida, and then to make the monthly mortgage payments. She also paid herself a salary of several thousand dollars per month to take care of Sandra, and charged expenses related to her vehicle to Sandra’s funds, as well.

When Vivian filed her first annual accounting with the Illinois court, the judge raised questions about all the expenditures Vivian was making. Vivian prepared a proposed budget, under which she would pay herself $4,000 per month for caretaking, another $1,500 per month to a relief caregiver, about $1,000 per month for vehicle expenses, and $3,800 per month for the mortgage payment.

The probate court appointed someone to review Vivian’s accounting and her use of her daughter’s money. The report filed with the court noted that Vivian was using Sandra’s money to support not only Sandra, but the entire family. The court removed Vivian and appointed the public guardian (a government office in Illinois; not every state has a similar office) as the new guardian of Sandra’s estate. The public guardian then sued to recover money from Vivian. That process ultimately resulted in a $421,621.73 judgment against Vivian.

The Appellate Court of Illinois upheld the judgment after Vivian filed an appeal. Vivian argued that her job as guardian of Sandra’s estate should be to make Sandra’s life “as comfortable and pleasurable as possible.” The appellate court agreed with the probate judge: Vivian’s use of Sandra’s money was improper to the extent that it benefited other family members, and she is liable for repayment of the considerable sums expended. In Re Estate of O’Hare, June 11, 2015.

To be clear, Vivian was tagged for two different kinds of violations: she spent her daughter’s money on things that benefited other family members (including herself) at least as much as Sandra, and she kept poor records that made it difficult to support how she had spent the money. What could she have done differently to avoid getting in trouble?

  1. A conservator (or guardian of the estate, or trustee) must keep good records. This requirement can not be overemphasized.
  2. If a non-family guardian had been appointed from the beginning, some of the expenditures might have been approved after they had been reviewed by that guardian. Vivian’s obvious self-interest (in setting her own salary, deciding on housing costs, etc.) made it much more difficult to approve payments.
  3. Vivian should have asked for prior court approval for the kinds and amounts of payments she was making. Explaining how proposed expenditures would benefit Sandra would have given the probate judge a chance to ask questions, weigh in on the appropriate approach, appoint someone to represent Sandra’s interests (and/or to make home visits to determine what would be best for Sandra) and consider all the evidence and options.
  4. Most importantly, Vivian needed to understand that Sandra’s personal injury settlement — and the monthly annuity payments — were for Sandra’s benefit, not for hers or for any other family members’. Yes, it would be more convenient for Vivian if she could use those funds for housing, pay herself a salary and just focus on taking care of her seriously ill daughter. It’s not permissible, however.

Attorney Representing Incapacitated Adult Ordered to Refund Fees

JUNE 22, 2015 VOLUME 22 NUMBER 23

How much does it cost to establish a guardianship or conservatorship? Is there any limit on the possible legal costs? These are questions that we deal with on a regular basis.

The short answer, at least in Arizona, is that the attorneys and other professionals in a guardianship/conservatorship proceeding can only charge a “reasonable” fee, and that the Court almost always has the authority to review — and, in appropriate cases, reduce — the fees charged. But that doesn’t help identify what a “reasonable” fee might be.

A recent case from the Washington Court of Appeals sheds a little light on attorneys’ fees in guardianship cases. It also helps make clear that the court’s review includes fees incurred — and paid — before any finding of incapacity was entered.

Kamiko Davis (not her real name) came to the attention of state officials because she had apparently been the victim of financial exploitation. She was an elderly woman who had, years before, immigrated from Japan, and she was more comfortable speaking Japanese. She was suspicious and uncooperative with authorities, and, after the financial exploitation she had suffered, she had an estate of about $700,000. When the investigating agency filed a petition asking for appointment of a guardian (of the person and the estate — what we would call guardianship and conservatorship in Arizona), it was evident that she would benefit from having a lawyer who spoke at least some Japanese, and who would be familiar with Japanese culture and traditions.

That’s how attorney Daniel Quick was appointed as Kamiko’s attorney. In the initial appointment the judge ordered that Mr. Quick’s fees should be limited to $250/hour for a maximum of 10 hours — or about $2,500. Over the next few months, as it became apparent that Kamiko would strenuously object to the legal proceedings at every turn, the court increased the maximum number of hours that could be billed — to a total of 50 hours.

Kamiko signed a durable power of attorney naming her attorney as her agent (for both medical and financial purposes), and a fee agreement with no limitation on the number of hours which might be billed. At some point the probate court decided that Kamiko had not had the capacity to sign the power of attorney, and eventually a limited guardian (of Kamiko’s person and of her estate) was appointed.

The attorney then filed his request for approval of fees charged for his representation. The application showed that he had received $118,110.65 already, and requested an additional $17,137.50 in fees and costs.

The probate court declined to approve Mr. Quick’s additional fees, and ordered that he return all but $30,000 of the fees he had already collected. The judge’s reasoning: whether or not Mr. Quick legitimately put in all the time he claimed, the total amount of fees was simply unreasonable. The $30,000 approved worked out to about 120 hours of legal work (assuming the same $250/hour), and the judge was critical of the attorney’s failure to limit litigation costs, even if his client was difficult to deal with and required special attention.

The Washington Court of Appeals upheld the limitation on attorney’s fees. Even though Kamiko had not been adjudged incapacitated at the time she signed a fee agreement, she was ultimately found to need a limited guardian — and a finding of incapacity was entered at that time. Besides, the appellate court noted, Mr. Quick had been ordered to limit his hours in earlier court rulings, and the amount ultimately approved actually exceeded those limitations.

The bottom line, according to the Court of Appeals: “The court, in overseeing guardianships, must weigh the competing concerns of individual autonomy and protection of incapacitated persons.” That meant that the reduction in allowed fees, and the order for return of over $80,000 in fees already collected, were appropriate in the circumstances. Guardianship of Decker, June 16, 2015.

Would the same result be reached in an Arizona proceeding? Very likely (although, of course, very small changes in the fact pattern might yield very different results). Arizona’s statutes expressly give the probate court the authority to review fees — for attorneys and for other professionals — in guardianship and conservatorship proceedings (Washington’s statutes were held to give that authority, too, but not as clearly or explicitly as Arizona’s laws).

Arizona also has an existing appellate decision which clearly enunciates some of what the Washington Court of Appeals articulated. In 2010, in Sleeth v. Sleeth, the Arizona Court of Appeals ruled that the litigants in guardianship and conservatorship proceedings must pay attention to whether legal fees are ultimately in proportion to the benefit enjoyed by the estate. The underlying facts are strikingly similar: the Arizona case involved assets of slightly more than those in the new Washington case, and legal fees that were larger by a similar proportion. One important difference: the lawyers whose fees were challenged in Arizona represented the guardian/conservator, not the subject of the proceeding.

 

Conservator Not Required to Unwind Protected Person’s Estate Plan

JUNE 8, 2015 VOLUME 22 NUMBER 21

When an aging parent begins to fail, and a scheming caretaker appears to take advantage, what should concerned children do to respond? Should they consider a report to Adult Protective Services (in Arizona, 1-877-SOS-ADULT, or 1-877-767-2385), or file a court proceeding, or take some other action?

The short answer is “yes.” That is, the children of a vulnerable adult victim of abuse, neglect or exploitation should make a report to Adult Protective Services (the above phone numbers or APS’s online site give more details), and consider stepping in to protect the parent with court proceedings, judicious use of existing powers of attorney and family support.

Sometimes court involvement will be necessary, and family members may be ill-equipped, or uncomfortable, about acting. In Arizona and in a number of other states, there is an industry of private, professional fiduciaries who can act to help protect the vulnerable senior. [In the interest of fair disclosure, Fleming & Curti, PLC, and several of the individual lawyers frequently act as conservator, trustee, agent under a power of attorney or personal representative of an estate — though we had no connection with the case we describe in this week’s Elder Law Issues.]

Mark Simpson (not his real name) was just the kind of aging parent described above. In the course of about a year, he had given his car title to a new caretaker, named her as joint owner on his bank accounts, included her as a beneficiary on his annuities and gave her a general, durable power of attorney. When the caretaker tried to use the power of attorney to change the “payable on death” designation on Mark’s remaining accounts from his sons to the caretaker, someone at the bank called one son (let’s call him Scott) to let him know something was amiss. Scott contacted Entrust Fiduciary Services, Inc., an Arizona company which acts as fiduciary in similar cases, and they began an investigation.

Entrust Fiduciary asked the court to be appointed as temporary conservator a few days later. Once appointed, they fired the caretaker and filed a report alleging that she had been exploiting Mark. They also gave formal notice of the proceedings to Scott and to Mark’s other son, Louis — who had not, up to that point, responded to their requests.

Louis objected to Entrust Fiduciary’s petition to be appointed as Mark’s permanent conservator, and so the temporary appointment was continued long enough for a hearing on the permanent petition to be scheduled and conducted. Six months later, and before that permanent hearing, Mark died.

Louis opened a probate on Mark’s estate, and objected to Entrust Fiduciary’s final report in the conservatorship. According to Louis, a conservator has a duty to protect heirs from the loss that might occur if estate planning decisions are not unraveled. Entrust Fiduciary argued that their only duty was to Mark, and that they protected his assets from loss during his life. The probate judge agreed with Louis, and ruled that a conservator has “a duty to protect the estate assets and the estate plan … includ[ing] not only the protected person but the beneficiaries of the estate plan.”

The Arizona Court of Appeals disagreed. While it is true that a conservator is required to consider the protected person’s estate plan, it does not follow that a conservator must protect the interests of ultimate inheritors. The conservator’s duty is to manage the protected person’s assets to help prevent waste and dissipation, and to use the property for the benefit of the protected person. It is not to protect heirs.

Louis had also argued that Entrust Fiduciary had not timely recorded its conservatorship documents, apparently believing that such a recording would have voided the beneficiary deed signed by Mark in favor of the caretaker. The court correctly notes that even if Entrust Fiduciary had recorded the proper documents before Mark’s death, it would have taken more actions to invalidate the existing deeds, and a conservator is not obligated to initiate those proceedings (though they are permitted to do so).

After Mark’s death, his son Louis had filed an action against the caretaker to undo the transactions she had initiated before being fired. That action resulted in a settlement, and an unspecified portion of the assets she had gotten were returned. That, notes the appellate court, is the proper way to determine the validity of questioned documents — not to have a court-appointed conservator favor one possible beneficiary (or group of beneficiaries) over another. Entrust v. Snyder, May 28, 2015.

Financial Exploitation Case Leads to Judgment, Disinheritance

MARCH 2, 2015 VOLUME 22 NUMBER 9

We hear variations on this same story once every week or so. Dad (it might be Mom, or Aunt Bridget, or a long-time family friend) seemed to be adrift after his wife (her husband, her long-time companion) died. Then he met this woman who moved in with him (or moved her to his town), cut off family contact, got a power of attorney signed and proceeded to transfer assets.

Too often there’s not much we can do about the story. The money may be all gone (the people who take advantage of seniors in this fashion are often drug users, gamblers or marginal characters themselves). The family member might actually want to live with the person everyone sees as an exploiter. Sometimes it’s hard to even locate the victim.

Once in every few cases, though, it may be possible to protect the elderly victim, improve their situation and even secure a judgment against the exploiter. That’s what happened in a case that finally (after a decade of litigation) seems to have gotten resolved by the Arizona Court of Appeals.

Bridget Greene (not her real name) was 99 when she first came to the attention of Tucson lawyer (and professional fiduciary) Denice Shepherd (her real name) in 2005. Based on a report from Adult Protective Services, Denice filed a guardianship and conservatorship proceeding to extract Bridget from her “deplorable” living situation, and to begin the process of recovering some or all of her assets.

As the story developed, it became apparent that Bridget had befriended one Andrew Brice almost two decades earlier, after her husband’s death. She and her husband had no children; her closest relatives were nieces and nephews. Just two years before the guardianship/conservatorship proceeding, Bridget had moved back to Arizona after a short stint living near her nieces in Virginia. She had then signed a power of attorney naming Andrew as her agent, and transferred her home into Andrew’s name. She had also signed a new, handwritten will leaving everything to Andrew.

Denice promptly initiated an action against Andrew, seeking return of the money he had moved from Bridget’s account to his own. She recovered over $60,000 from three bank accounts, and then initiated a complaint against Andrew claiming that he had exploited a vulnerable adult.

Under Arizona law at the time (it has since been softened), a person found to have exploited a vulnerable adult would automatically be liable for three times the amount taken, plus being disinherited from receiving anything from the victim’s estate. Denice secured a judgment against Andrew for $247,531.23 (three times the amount he had taken); the handwritten will and power of attorney were also invalidated. The judgment was reduced by $65,155.99 that Denice had collected from Andrew by that time.

Bridget lived another five years after being removed from her filthy home and the “care” she had been receiving. After she died in 2010, Andrew tried to reassert the handwritten will naming him as beneficiary. He also challenged Denice’s appointment as guardian and conservator, and the award of damages and attorneys fees.

The probate judge ultimately found that Andrew had been disinherited by his exploitation, that he had no basis for seeking Denice’s removal as guardian and conservator, that Bridget’s prior will (which had left nothing to Andrew) was valid, and that the judgment against him was proper. When Andrew appealed, the Court of Appeals agreed on every point.

It is worth noting, as the Court of Appeals does, that much of probate court’s ruling against Andrew is based on his failure to proceed properly in the underlying lawsuit. He answered the complaint with a general denial, but without specific allegations that would support his argument. His response to a motion for entry of judgment against him did not challenge the factual allegations, which were thus assumed to be correct. He filed numerous pleadings and motions, but apparently without good legal advice.

The final resolution of Bridget’s guardianship/conservatorship/probate case, though, was clear. Bridget was a vulnerable adult, impaired by her diminishing mental capacities. Andrew was her caretaker (he claimed that they held themselves out as a married couple, but he acknowledged that they were never actually married), and owed her a duty not to commingle their assets or take advantage of her. He breached that duty by transferring her assets into his own name. He might have also neglected her, though the probate court never had to reach that question.

Arizona law at the time provided for automatic disinheritance of someone who exploits a vulnerable adult (it has since been changed to permit, but not require, the court to order disinheritance). It also provided for damages automatically set at three times the amount actually exploited (it has since been changed to allow the court to enter judgment of up to two times the amount of damages). The Court of Appeals upheld the orders entered by the probate court under the “vulnerable adults” statute. In Re Garner, Deceased, February 25, 2015.

Even though Arizona’s law has been relaxed somewhat, it remains stronger than the similar provisions in many other states. Although it is often hard to recover damages for abuse, neglect or exploitation of vulnerable seniors, sometimes the legal tools actually work fairly well. Similar stories might be told in other states, though we don’t hold ourselves out as experts on other states’ laws or practices. But if you know someone who has been taken advantage of in similar circumstances, we strongly suggest that you get good legal advice to consider whether there might be some recourse to recover lost assets and, much more importantly, protect vulnerable seniors and improve their lives.

Lawyer Has Responsibility to Monitor Conservatorship Administration

OCTOBER 27, 2014 VOLUME 21 NUMBER 39

Guardianship (of the person) and conservatorship (of the estate) cases pose special problems for lawyers. Usually, a lawyer involved in such a case will have responsibilities to several different persons. To name three obvious choices, the lawyer will have duties to: the guardian or conservator the lawyer represents; the ward or protected person subject to the proceedings; and the court itself. State law varies as to how the responsibilities are divided, and what the lawyer’s duty actually is — especially when the guardian / conservator misbehaves. But there is little doubt that there is significant responsibility for the lawyer to oversee the actual administration of the guardianship or conservatorship.

A recent California Court of Appeals case describes the dilemma facing lawyers in conservatorship cases. When Deborah Delmonico (not her real name) became ill, her son Daniel hired Alameda County attorney Monica Dell’Osso to help him get control of her assets. Deborah had already signed a revocable living trust (naming Daniel as successor trustee), and most of her assets were titled to that trust. Ms. Dell’Osso filed a petition to get Daniel appointed as conservator of both the estate and person of Deborah (in California, conservatorship of the person is equivalent to what we in Arizona would call guardianship of the person). No court action was required with regard to the trust; Daniel just took over managing trust assets.

In an apparent attempt to save costs and simplify administration, Ms. Dell’Osso asked the court to waive any requirement of a bond for the conservatorship of the estate. She argued that there were no assets outside the trust, and that the trust did not require court supervision (or bonding). The court agreed, and Daniel was appointed conservator of his mother’s person and estate, without any requirement of bond.

As it turned out there were assets outside the trust — extensive real estate holdings and several  Individual Retirement Accounts, at least. The total value of assets in Deborah’s name individually exceeded $1 million. According to the later complaint filed with the conservatorship court, Ms. Dell’Osso not only knew about those assets, but her office helped Daniel to collect them and administer them. She never told the probate judge about the extensive individual holdings, and so they were never court-controlled or subjected to a bonding requirement.

Eventually, Daniel simply took a million dollars worth of assets from his mother’s conservatorship estate. Once the probate court learned of his misappropriation he was removed, and a professional fiduciary was appointed to take over Deborah’s estate.

The professional fiduciary filed a lawsuit against Daniel for conversion of his mother’s property and for elder abuse. She also sued Ms. Dell’Osso for legal malpractice, arguing that she had a responsibility to Deborah and the court to inform them of the assets outside the trust, and to oversee Daniel’s administration as conservator.

Ms. Dell’Osso moved for dismissal of the complaint, making these two arguments (in addition to others not relevant here):

  1. Since she represented Daniel, she argued that the successor conservator could not sue her for malpractice — only her actual client (Daniel) would have a cause of action against her.
  2. Even if the new conservator could sue her, they would stand in Daniel’s shoes — and because Daniel had himself misbehaved, he could not have brought an action against her. Hence, the malpractice lawsuit would fail.

The trial judge agreed, and dismissed the lawsuit against Ms. Dell’Osso. The California Court of Appeals reversed that decision and sent the case back for a trial on the merits.

First, the appellate court ruled that a successor conservator can sue the prior conservator’s attorney for malpractice — at least under California law (the answer may differ in other jurisdictions). This is different from the circumstance where a family member, or intended beneficiary of a trust or estate plan (to cite two common examples) is attempting to sue the attorney for malpractice in representation of the original client.

In this case, according to the court, the successor conservator essentially stands in the original client’s shoes, and can bring the malpractice lawsuit. In fact, the court takes this analogy one step further and notes that the attorney’s confidential communications with the prior conservator will not be privileged as to the successor conservator — the professional fiduciary in this case holds the privilege, and can ask Ms. Dell’Osso about her conversations and correspondence with Daniel.

Second, the appellate court strikes down any argument that the professional fiduciary is restricted by her predecessor’s bad actions. While the court agrees that (under California law, at least) Daniel would not be able to sue for malpractice because of his own misbehavior, that restriction does not extend to his successor. In this sense she does not stand in the prior conservator’s shoes.

Two observations by the Court of Appeals seem particularly apt. One is that “an individual who is a fiduciary wears two distinct and separate hats — one as a fiduciary and one as an individual….” This complicates the relationship between a fiduciary and his or her lawyer, since the lawyer is often wearing (to continue the analogy) as many as four hats: one as attorney for the fiduciary individually, another as attorney for the fiduciary as fiduciary, a third as a protector of the interests of the subject of the proceedings, and a final hat as representative of the court and legal system.

On a very practical level, the court decision notes that any other outcome would make a successor conservator’s job impossible. “[W]hy would any competent individual agree to take over as a successor fiduciary if he or she were tarred with and shackled by the malfeasance of a prior fiduciary?” asks the court. The opinion’s answer: the successor fiduciary is not so restrained. Stine v. Dell’Osso, October 17, 2014.

Would the Stine case be decided the same way in Arizona? Probably, though there is a recent change in the law that makes it less than completely clear. Arizona’s Court of Appeals decided the landmark case of Fickett v. Superior Court in 1976, which clearly would have created a potential liability for the attorney for a conservator. Recent changes in Arizona statutes muddy the question somewhat, but probably not enough to prevent the imposition of liability in facts like these.

©2017 Fleming & Curti, PLC