MAY 7, 2012 VOLUME 19 NUMBER 18
We have written about contracts to make (or not to revoke) a will before. The question comes up infrequently, and usually only in a handful of ways: can you and your spouse make an enforceable agreement that you will leave your respective estates to, say, your children no matter what? Yes, you can — at least in Arizona.
For John and Martha Lindford (not their real names), the question came up during their divorce proceedings. Martha wanted to make sure that the couple’s two children, John, Jr. and Paula, would receive at least a share of John’s estate when he died. When the couple negotiated a property division as part of the divorce, it included a provision that required each of them to “execute a Will leaving fifty percent (50%) of their respective estates in equal shares to the children and twenty-five percent (25%) to each other.”
Eleven years after the divorce was final they both agreed that it was time to modify their first arrangement. John and Martha both signed an amendment that eliminated the requirement that any share of each estate be left to the other, and instead provided that 75% of each ex-spouse’s estate would go to the two children. Six months after that modification, John remarried.
Five years after the second marriage John was diagnosed with cancer, and he began to seriously plan his estate. He amended signed a new will and modified his existing living trust; the new documents specifically left several business entities to his new wife, and provided that she would also receive an additional amount to bring her share of his estate up to 25% if it did not already amount to that much.
In the months after his cancer diagnosis, John also transferred several assets — the family home, several bank accounts and one of the businesses — to his second wife outright. When he died eighteen months after diagnosis, the effect had been to leave his second wife substantially more than one-quarter of his entire estate — although she had gotten a large part of that share by lifetime gifts, not in his will or the trust.
John, Jr., and Paula and first wife Martha filed a claim against John’s estate. They argued that the effect of his gifts and the terms of his will and trust violated the marital property agreement as it had been amended. His second wife acknowledged that she had gotten more than one-quarter of John’s assets, but argued that the agreement only required him to have a will leaving 75% to his children — and that lifetime transfers were not prohibited by the agreement.
After a two-day trial, an Arizona probate judge ruled that John’s actions violated the property settlement agreement with his first wife. The second wife was ordered to return all the assets she had received from John, so that a new division could be made and her share could be capped at 25%. She appealed the ruling.
The Arizona Court of Appeals agreed with the probate judge, and upheld his ruling. The appellate judges calculated that John had given about $2.5 million — amounting to more than one-third of his entire estate — to his second wife, and that he had done so in an attempt to defeat the agreement he had signed with his first wife. Estate of Lockett, April 26, 2012.
Should John’s and Martha’s original agreement, signed in the course of a divorce nearly two decades before John’s eventual death, effectively tie John’s hands indefinitely, and despite his later marriage, growth of his estate and changes in his family relationships? That question is larger than the legal question posed by his probate case. For good or ill, John and Martha had signed an agreement that compelled them each to leave three-quarters of their respective estates to their two children. That agreement might have turned out to have been unwise or constraining, but it was their agreement.
What formalities are required for such an agreement to be effective, and to bind the parties? Arizona law (and other states may have different provisions, so be careful about generalizing from Arizona’s example) requires a contract to make a will — or not to modify or revoke a will — to meet only very basic formal requirements. Paradoxically, it would seem that a contract which does not satisfy basic will formalities (e.g.: unwitnessed and not in the decedent’s handwriting) might qualify as an enforceable contract, thereby effectively creating a will.
What landmines and roadblocks might people considering such a contract (e.g.: the lawyers representing a couple in a divorce proceeding) reflect upon before signing? Well, the opinion in John’s probate case turned, among other things, on a letter he wrote before the agreement was signed. In that letter John reported that he intended to leave 75% of his “entire estate” to his first wife and children. When the second wife later argued that the agreement necessarily only covered his will and his probate estate (and therefore should exclude property he gave away before his death), both the probate judge and the appellate court pointed to his letter as proof that he meant the contract to include his entire estate. If that is true, it certainly would have been a good idea for the agreement to spell that out in more detail, and to cover the possibility of living trusts, lifetime transfers, creation of limited liability companies or family limited partnerships, and other arrangements.
AUGUST 8, 2011 VOLUME 18 NUMBER 29
Last March we told you a good story about revocation of a living trust, though we cautioned you not to use the same method. A year before that we told you about another colorful character and how he revoked his will. Both of those court cases made us scratch our heads about the behavior of the individuals, but it occurs to us that we might never have told you what you should do to revoke your will or trust. Let us take care of that oversight now.
Please remember that we only practice law in Arizona. What works here might not work, or might not work exactly the same way, elsewhere. Your best bet is always to talk with a competent local attorney about how (and whether) to revoke a will or trust — or, for that matter, a power of attorney or other planning document you might have signed. With that caveat, here are some thoughts on how it might be done:
Revoking a will
The usual way to revoke a will is to sign a new one. It is very uncommon for an individual to want or need to revoke a will without making new arrangements for disposition of his or her property. Somewhere in your will — probably in the first paragraph or two — there is probably language that says something like “I hereby revoke all other prior wills I have signed.” That’s all it takes.
It is also possible to revoke a will by physically destroying the original document. Actually, Arizona law says you can do this by committing a “revocatory act” on the document. That can include burning, tearing, or other physical acts of destruction on the will or on a part of it. There are two keys here: you must intend to destroy the will, and you must do it yourself (though it is permitted to instruct someone else to do it in your presence). It is not an effective approach to call up your brother on the telephone, ask him to go down to the basement where the will is located, tear it up and report back to you — it must be done in your “conscious presence.”
Another way to revoke your will is more subtle: you can misplace it. If after your death no one can find your original will, and it is apparent that it was once in your possession, the law presumes that you must have destroyed it. That is only a presumption — we might be able to overcome it by showing, for instance, that you told everyone your will was completed and in a safe place shortly before your death. Obviously, a better choice is to keep track of your original will, and tell your heirs and family where to find it.
Another way to “revoke” your will: get married, or divorced, or have children. Actually, these life changes do not really revoke your will under Arizona law, but they can effectively rewrite your will — and in some circumstances can change your entire estate plan. There is a presumption in either case that you just didn’t get around to making appropriate changes in your will. Once again, you can overcome that presumption by taking appropriate action. There is a high likelihood that the law’s presumption will not be accurate as applied in your facts, so after marriage, divorce or birth of a child you should get together with a lawyer to make sure your estate plan is in order.
Revoking a trust
When a client asks about revoking a revocable living trust, our first question is not about “how” but “why.” There are very few disadvantages to having a revocable living trust — the two primary problems are the cost of setting one up and the difficulty of transferring assets to the trust. If you have already incurred both the cost and the difficulty of funding, it probably does not make sense to revoke the trust. Instead, let us talk with you about revising the trust to remove whatever provisions trouble you. Is it just that you don’t want your former girlfriend’s name to appear in the document? OK — we can probably “restate” the trust, which will involve replacing the entire trust document with a new one without the offending name.
For whatever reason, perhaps you just want to revoke your revocable living trust. After all, “revocable” is in the name, right? How do you do it?
First, you look at the trust document. Does it tell you how to revoke it? Perhaps it requires a written revocation, and maybe even it calls for the signature of the trustee (these are common but not universal requirements). If the trust tells you how to do it, follow the trust’s instructions.
Is it enough to tear up the trust? No, not under Arizona law. How about misplacing the trust document? No, a missing trust does not create a presumption of revocation in the way that a missing will would do.
How about getting married or divorced, or having children? This one involves a little more nuance. Your trust might take care of the children part — a well-drafted trust will usually make provision for the later birth (or death) of a child, or even a grandchild. Sometimes that provision is by one of the legal shorthand terms “by right of representation,” “per stirpes” or even “per capita.”
Marriage may not be covered in the trust document or Arizona’s default law. Divorce is covered by the same default statute as we described above for wills — but with the added wrinkle that if your trust is a joint trust between you and your spouse, it is a little harder to figure out what happens in individual circumstances. The message here: if you have any of these big life changes (marriage, divorce, birth or death of a child or other beneficiary) get in to your lawyer’s office as quickly as you can to make the appropriate changes to your revocable living trust.
Powers of attorney
How do you revoke your power of attorney? If you have never shared the document with the named agent or anyone else, you can revoke it by simply tearing it up and throwing it away. If you have shared it, you should write a separate letter to everyone who has seen it indicating that you are revoking the power. Make sure any new power of attorney you sign deals with the older one(s): it may not be enough to just rely on the most recent document, since they don’t automatically revoke older powers of attorney in the same way that wills do.
Keeping track of power of attorney documents and formally revoking older ones is important for another reason. Unlike trusts and wills, revoked powers of attorney are still valid to the extent that your agent acts without knowledge of the revocation. Save everyone a lot of heartache, expense and confusion by having an attorney prepare your new powers of attorney and properly revoke older versions.
One final note: you can see that the effect of having older, revoked documents around can be serious and can vary between the different types of documents. Help us keep your estate plan straight, and your life uncluttered. We know that you paid good money for those old documents, and that it is hard to throw them away. Just do it. If we prepare your new estate plan, we will offer to help you revoke and destroy the old documents (and all those drafts and copies we lawyers sent you), and we’ll volunteer our shredder to make it discreet and effective.
MAY 30, 2011 VOLUME 18 NUMBER 19
Periodically we try to answer some of our readers’ frequent questions, which we enjoy receiving. Some more recent questions and our quick attempts at simple answers follow. Remember, please, that slight variations in fact patterns can lead to different answers; these are intended as illustrations and guidance, not as iron-clad answers to your legal concerns. Please consult your lawyer (and we’d be interested in taking on that role, if you live in Arizona and would like to call and make an appointment) before relying on this information.
Can I leave my IRA account to a third-party special needs trust for my daughter?
Yes, you can. It may not be the best answer, and it may raise a number of other issues and concerns, so please talk to your lawyer about your specific situation. But one of your choices is indeed to leave the IRA (or a retirement plan of any kind) to your daughter’s special needs trust.
If a significant portion of your wealth is tied up in an IRA, 401(k), 403(b) or other tax-deferred retirement plan, there is plenty of information out there about how important it is to name individual beneficiaries, how the plan ought to be divided upon your death into shares for each beneficiary, and how your beneficiaries should be encouraged to “stretch out” their withdrawals as long as possible. We agree with all of that — but if one of your beneficiaries has a disability, and particularly if she is receiving Supplemental Security Income, Medicaid or other means-based public benefits, it is also important to create a special needs trust for that beneficiary. There is no reason her share of your IRA can not be made payable to that special needs trust.
The notion of naming a trust as beneficiary of a retirement account is fairly novel. Not too many years ago it was absolutely to be avoided, and many investment advisers, accountants, lawyers and financial companies retain that anti-trust bias deeply embedded in their collective and corporate psyches. But the rules are different now, and it is much easier to name a trust as beneficiary. You just need good advice from someone who is familiar with those rules and can explain how they affect your retirement account in your family situation.
In general terms, the primary effect of naming a trust as beneficiary will usually be that the age of the oldest person who might ever receive benefits from the trust will be used to calculate the withdrawal rate. But let’s see if we can make the explanation clearer. Let’s assume that your daughter, Diana, is 47. You also have two sons, Steven (age 54) and Scott (age 43). You have named Diana’s special needs trust as beneficiary of 1/3 of your IRA. Sadly, you die this year (we don’t mean anything personal — we have to let you die some time in order to ever figure out the effect of your beneficiary designations).
Next year Steven will have to withdraw at least 1/29.6 of his share of your IRA (we figure that as about 3.38%). Scott has to withdraw at least 1/39.8 of his share (that looks like about 2.51%). Diana would have to withdraw at least 1/36 (2.78%) if she had been named as beneficiary outright, but she wasn’t. So how much will her special needs trust have to withdraw?
It depends on who is named as remainder beneficiary. If upon Diana’s death the remaining money in the special needs trust goes to Scott and Steven, then we use Steven’s age for the calculation and the trust will have to withdraw the same 3.38% that he had to withdraw from his share. If Diana’s trust goes instead to her two sons (ages 15 and 17) then Diana herself is the oldest beneficiary and we can use her age — and the withdrawal will be 2.78%.
Clear as mud? Yes, but you should have seen the rules before they were simplified in 2002. While the numbers are daunting, the current rules are actually pretty easy to figure out, and the ability to stretch out distributions from your IRA for another 36 years (or so) allows Diana’s share to continue to grow tax-deferred, despite the need to put her share in trust.
Want more information, or the numbers for your own children’s ages? Look at the IRS’s Publication 590. Appendix C is Table I, the Single Life Expectancy table to be used by IRA (and 401(k), 403(b) and other) beneficiaries.
Do alimony payments continue when someone goes on Medicaid long-term care assistance?
Short answer: yes. Now let’s parse the question a little bit more.
Assume husband and wife, married many years, were divorced five years ago. He was ordered to pay alimony of $1,000/month to her for the rest of her life. She has now gone into the nursing home, and has spent all of her own funds for her care. She has qualified for Arizona’s Long Term Care System (ALTCS — it’s Arizona’s version of the long-term care Medicaid program) payments toward her nursing home bills; she turns over her alimony payment and all but about $100/month of her Social Security, and ALTCS pays the balance of her nursing home bill.
If her ex-husband could legally stop paying the alimony payments, ALTCS would simply increase the payment to the nursing home by $1,000. She would be no worse off and he wouldn’t be subsidizing her nursing home care any more.
Because he is legally obligated to continue the alimony payments, however, ALTCS will continue to count them in its calculation of how much to pay to the nursing home. And if he went to court to argue “changed circumstances” and no continuing need to pay alimony, he might find that her attorney argues that the changed circumstances justify increasing the alimony payments so that she is not on ALTCS at all. Even if that didn’t happen, ALTCS might be inclined to view the proceeding as a sham just to get him out of paying the support payments. So it is far from certain that he would be better off by going back to the courts.
What about the reverse situation? Let’s imagine for a moment that it is the ex-husband who has gone into the nursing home. He has spent down all of his assets and applied for ALTCS. He receives $2,800/month in Social Security another $1,500 in private retirement; ALTCS says that he must turn over all but about $100/month of that income to the nursing home, and it will pick up the (small) difference.
Can he stop paying alimony? Well, no. The divorce court has ordered him to pay, and he needs to go back to argue “changed circumstances” as a way of getting out of having to make the payments. Will ALTCS, then, reduce his contribution requirement, recognizing that he is under a legal obligation to pay the alimony? Well, no. They say that his care comes first, and the entire income (minus his small personal needs allowance) has to go toward his care — and their payment to the nursing home will reflect that calculation.
What should he do? He needs to get legal help and get his support order modified. He should not simply ignore the outstanding alimony award.
Please note that “alimony” is not called that any more, and “divorce” is also an old-fashioned word. They are common in the vernacular, but the legal terms — at least in Arizona — are now “spousal maintenance” and “dissolution,” respectively. We know that, but we fear that it makes the explanation so much harder to read.
The exact dimensions of the question, of course, vary with each asking. Sometimes there is familial anxiety about a late-life romance blooming in the assisted living facility or nursing home where a parent has been placed. Sometimes the concern is over a developmentally disabled 17-year-old about to acquire, at least theoretically, the legal right to make foolish decisions. Sometimes the question is focused on a particular dangerous suitor, and sometimes it is more generalized.
The short answer to the question: the mere fact of a guardianship probably will not prevent the ward from getting married, or the marriage from being determined to be valid. The level of capacity required to enter into a marriage agreement is not exactly the same as the level of capacity required to make one’s own placement or medical decisions — or even to enter into other kinds of contracts. But the facts underpinning the guardianship proceeding are likely to be the same facts utilized in any later challenge of the validity of a marriage.
Take the recent example of Christopher C. Oakley, who lives at Lamplight Village, an assisted-living facility in West Plains, Missouri. Mr. Oakley suffered a childhood traumatic brain injury in 1986, and has required supportive assistance with bathing, housekeeping and personal care ever since. His father was apparently appointed as guardian of his person in a Florida proceeding in 1995. A professional fiduciary was appointed as conservator of Mr. Oakley’s estate at the same time, and continues to manage the proceeds from settlement of a personal injury lawsuit filed in connection with the original accident.
As Mr. Oakley reached his early 20s he became involved with Melissa Warren, another resident of Lamplight Village. She, too, had a guardian and conservator — the Howell County, Missouri, Public Administrator was appointed to handle her finances, medical and placement decisions after the probate court determined that she was unable to do so herself.
In 2006 Mr. Oakley and Ms. Warren decided they wanted to get married. They each asked their respective guardians for permission, and both refused. They then had a friend drive them to a neighboring state, where they were married. Upon their return they began to live together in a shared apartment at Lamplight Village, and they identified themselves as a married couple.
The two guardians responded quite differently. The guardian for Ms. Warren (now Mrs. Oakley) did not initially approve, but sat down with the couple and discussed what they had done. The guardian decided that they really did want to get married, that they understood the emotional and financial meaning of their decision, and that the marriage should be allowed to stand. In fact, she told the judge, if the marriage was annulled she would intend to immediately file a petition to secure court approval for a new marriage.
Mr. Oakley’s guardian reacted to the news of the wedding by filing a petition to have the marriage annulled. He argued that his original Florida guardianship was based on a finding that his son was incapacitated, and that the marriage therefore was invalid in the first place. In testimony, he explained himself by asking, rhetorically: “what happens if he decides ten years from now that if somebody else — another girl comes into his life and it’s better and bigger and everything than what he had?” He also filed a Missouri guardianship proceeding, which was granted while the annulment proceeding was pending.
The judge hearing the annulment petition denied Mr. Oakley’s father the relief he sought. The fact of a Florida guardianship, reasoned the judge, did not prevent the ward from having the capacity to understand the meaning and effect of marriage. Neither did the fact that his intellectual functioning was well below “normal” intelligence, with an IQ estimated at about 70.
The Missouri Court of Appeals agreed, and allowed the marriage to stand. The burden of proving that Mr. Oakley lacked capacity to marry was on his guardian, ruled the appellate judges, and he had failed to carry that burden. The existence of a Florida guardianship was not adequately shown, and neither was the effect of that order. The evidence considered by the trial judge was sufficient to support his finding that Mr. Oakley, despite any guardianship order, understood the nature and effect of marriage well enough to enter into this most personal of contractual arrangements.
There are a number of other interesting side-issues involved in Mr. Oakley’s marriage annulment proceeding. At least, they are interesting to lawyers — everyone else might find them less bracing. One such issue: the lawyers, the trial judge and the appellate judges all agreed that Mr. Oakley’s capacity to marry should be assessed under the law of Arkansas, where the marriage took place, rather than the law of Missouri, where the couple lived and the legal action was filed. Meanwhile, Mr. Oakley’s father insisted that the law of Florida should govern the question of whether a ward automatically loses all capacity to marry upon the appointment of a guardian; that argument was lost, however, when the Missouri courts decided that he had not proven the existence of a Florida guardianship as required by Missouri law. In Re Marriage of Oakley, April 27, 2011.
FEBRUARY 28, 2011 VOLUME 18 NUMBER 7
The issue arises with some regularity. A married couple, perhaps in their second marriage. Adult children. One spouse becomes ill — often, but not always, demented. The other spouse, unable to cope, turns the care of the ill spouse over to one of the children. That child figures out that, financially, at least, the ill spouse would be better off divorced. That way, control of the ill spouse’s share of the couple’s property could be managed for the sole benefit of the ill spouse, and care could be assured. But can the guardian file a divorce petition?
In most states, the answer is not clear. A handful of states have explicitly addressed the question, with mixed results. The latest state court to face the issue is the Supreme Court of Vermont.
Catherine and Philip Samis had been married for almost a quarter century when Mrs. Samis began to show signs of dementia. Mr. Samis, a Canadian citizen, withdrew across the border to one of the couple’s homes, taking most of their personal effects with him. Mrs. Samis’ son from a former marriage stepped in, secured a guardianship of his mother’s person and estate (in Arizona we would call it a guardianship and conservatorship), and began overseeing her care.
Mrs. Samis is a U.S. citizen, and would be entitled to Social Security benefits under her first (now deceased) husband’s account if she were not married. Since Mr. Samis is a Canadian citizen, there are no Social Security benefits payable to her while she remains married. Her son decided it would be in her best interest — financially, at least — to get divorced, and to divide the couple’s property so that he could control how her share was spent.
Once a divorce proceeding was filed, however, Mr. Samis objected. He argued that Vermont law did not permit a guardian to petition for divorce on behalf of a ward. As with most states, the Vermont statutes were silent on the subject; there was a single reference in Vermont court rules to guardians signing divorce petitions, but no indication how the Vermont legislature felt about the possibility.
After the divorce court denied Mr. Samis’ objection, granted the divorce, divided the couple’s property and ordered Mr. Samis to make a lump-sum support payment of about $300,000, he appealed. The Vermont Supreme Court was thus faced with determining whether Mrs. Samis’ guardian had the authority to initiate the proceeding in the first place.
Ruling that a guardian’s powers are limited to those spelled out in the guardianship statutes, the state’s high court reversed the divorce court’s orders. The justices considered the holdings in a handful of states, including Arizona, and concluded that most do not permit guardians to file divorces.
The ability to file for divorce is intensely personal, said the justices. The only Vermont precedent that addressed the issue at all, an 1877 Supreme Court case, agreed; in that case, a person who had been placed under a guardianship of the estate (what would be a conservatorship in Arizona) was permitted to file his own divorce proceeding despite the guardianship. Now it is clear that in Vermont, at least, the guardian can not file the divorce petition for a ward who has become incompetent.
What about the other states? The Vermont decision cites several that agree with its holding, including appellate courts in Kentucky, New York and South Carolina. Courts in Massachusetts and New Hampshire have allowed guardians to petition for divorce, but have done so based on specific state statutes. According to the Vermont justices, only two states, Arizona and Washington, have permitted guardians to file for divorce even without the support of statutes clearly authorizing the action. Samis v. Samis, February 18, 2011.
As the Vermont Supreme Court notes, Arizona is one of the minority of states clearly permitting the guardian to file a divorce proceeding, even without express statutory authority. That is the holding of the Arizona Court of Appeals in the 1993 case of Ruvalcaba by Stubblefield v. Ruvalcaba, which we reported on at the time (yes, Virginia, there was an Elder Law Issues in 1993/1994), and which we have since described in more detail for our readers.
NOVEMBER 1, 2010 VOLUME 17 NUMBER 34
It doesn’t happen often, but it does happen. An elderly couple, with one spouse slipping mentally, contemplates divorce. Perhaps the well spouse is simply unable to cope. Perhaps both are compromised mentally and/or medically. Perhaps there are long-term care issues involved. Perhaps the spouse with mental failings has simply decided — and maybe even as part of his or her delusional mental system — that the marriage must end.
How does the divorce court deal with a mentally impaired spouse? One way is for someone to secure appointment of a guardian and/or conservator. Arizona law, like the law of many states which have considered the question, permits a guardian to prosecute a divorce proceeding for the ward. That question was settled in a 1993 Arizona Court of Appeals decision (Ruvalcaba by Stubblefield v. Ruvalcaba, which we reported on at the time–in the very first year of Elder Law Issues). The Ruvalcaba case raised but did not answer a number of related questions:
If a guardian (of the person) can bring the divorce action, does it require a conservator (of the estate) to negotiate a property settlement?
What if the incapacitated person objects to the divorce? What if he or she has no opinion in favor or opposed?
Is it important that the divorce be financially or personally beneficial to the divorcing spouse? For instance, is it relevant to determine whether the other spouse has been abusive, or taken community assets wrongfully, or would benefit because of a prenuptial agreement?
These and a number of other questions are unanswered in Arizona, though the 1993 case described earlier suggests that the possibility of abuse might be relevant in determining how much authority to give to a guardian. That case also raised questions of child custody — the guardian (the wife’s mother) sought custody of the couple’s children for her disabled daughter, who lived with her. The court acknowledged that the practical result of the divorce order would be that the grandmother/guardian would get custody, which she could not have obtained directly.
A recent California case provides at least a little insight into the kind of divorce proceeding involved in guardianship matters — though the California court gave authority over the divorce to a conservator of the estate. Despite that difference, the California case probably gives some guidance for similarly situated Arizonans.
Evelyn Straczynski filed for divorce in 2005, alleging (among other things) that she and her husband had been married since 1950. Her husband answered that the marriage had only been in place since 1986, that his wife suffered from dementia, and that her three decade mistake was symptomatic of her condition.
After the divorce proceeding had been moving, albeit slowly, for about a year, the California probate court appointed a conservator for Mrs. Straczynski. The judge also interviewed Mrs. Straczynski directly to determine whether she understood what was happening and whether she wanted a divorce; the judge decided that, though she was impaired, she could express her opinion that she wanted a divorce from Mr. Straczynski.
Three years later the divorce proceeding had not been concluded. The family court judge scheduled a hearing on Mr. Straczynski’s motion to dismiss the divorce; he maintained that the couple had reconciled. His basis: although he had not been allowed to see his wife for several years, when he was permitted to visit she recognized him immediately, expressed her attachment to him and generally manifested a desire to be with him.
The family court judge denied Mr. Straczynski’s motion to dismiss the divorce proceeding, but dismissed it anyway, on different grounds. He found that there is way a divorce can be granted on the request of a now-incapacitated person, that she could not testify that there were irreconcilable differences, and that divorce would not be in Mrs. Straczynski’s best interest for personal and financial reasons.
The California Court of Appeals reversed the judge’s dismissal on those grounds and returned the case for further consideration. The key question, according to the appellate court, is whether Mrs. Straczynski now has the mental capacity to express an opinion about whether the divorce should be completed. If she does, then it should go forward; if she does not, then the divorce should be dismissed. By inference, if Mrs. Straczynski has the capacity to express her opinion and that opinion is that she would like to stay married, the divorce proceeding should be dismissed. In re Marriage of Straczynski, October 22, 2010.
Mrs. Straczynski’s case only deals with the situation in which the spouse seeking a divorce is incapacitated — and the decision may not be persuasive in Arizona on that narrow question. More common is the situation in which the spouse seeking the divorce is fully competent, and the other spouse is incapacitated. The answer in that situation is fairly clear in Arizona, though it remains uncertain what relative role a guardian of the person and conservator of the estate should play in such cases.
Older individuals often get married, of course, and sometimes face legal issues as a result of separation or divorce. The legal problems associated with the end of a late-life marriage are not necessarily different from those faced by younger divorcing couples. A recent Arizona Court of Appeals decision addresses one difference that often occurs.
When Norman and Judy Flower married he was 76 and she was 55. She had a son from a former marriage, and each of them owned a home. Mr. Flower promptly transferred his home into joint ownership with his new wife; Mrs. Flower’s son was already on the title to her home, and she did not add Mr. Flower.
The couple lived together in Mr. Flower’s home for six months, while they fixed up Mrs. Flower’s residence. They took out a line of credit secured by Mr. Flower’s home and spent a total of at least $32,000 on Mrs. Flower’s home. They accumulated a total of $61,000 of debt during the marriage. After the work was done on Mrs. Flower’s home they moved into it, and her son moved into the jointly-owned home that had originally belonged to Mr. Flower.
A year after the marriage, Mr. Flower decided that his wife had been interested in him only for financial reasons and he filed a petition seeking an annulment. Mrs. Flower responded by asking for a divorce, and insisted that she was entitled to a half interest in what had been Mr. Flower’s home, all of her own (now improved) home, and no obligation to repay any of the costs of improvements to her home.
Arizona law, like that of many jurisdictions, assumes that the property division in a divorce proceeding will usually be roughly equal. The legal term, however, requires that it be “equitable,” and in rare cases that can mean something other than an equal division. The trial judge decided this was such a case.
Although the trial court denied Mr. Flower’s request for an annulment, it did grant the couple a divorce. The judge also returned Mr. Flower’s residence to him, although it required him to pay the majority of the debt the couple had accumulated. Mrs. Flower was awarded her home without any claim for the improvements made during the marriage, and she was ordered to pay $16,000 of the couple’s debts. Mrs. Flower appealed.
The Court of Appeals affirmed the unequal division of property and debts. Given the unusual facts of this case, ruled the appellate judges, the usual requirement of “substantially equal” division need not be applied. The appellate court noted that though Mr. Flower received his home, he was also required to pay most of the community’s debt incurred during a relatively brief marriage. Flower v. Flower, February 25, 2010.
Arizona, of course, is a “community property” state. Does that mean that the result in a state that did not apply community property rules would be different? Perhaps, but not necessarily. Most states apply some version of Arizona’s requirement that property division be “equitable” and assume that usually means “equal.” While Mr. and Mrs. Flowers did initially transfer his residence into “community property with right of survivorship,” the result in Arizona would not have been different if they had transferred it to “joint tenancy with right of survivorship.”
Is the result in the Flower case unusual based on unusual facts? Not really. The same day that the Arizona Court of Appeals decided the Flower property division issues, it also handled another, similar case. Retirees Carolyn and Lowell Inboden (the opinion does not give their ages) had married and purchased a vacant lot as joint tenants, but using $90,000 of Mrs. Inboden’s separate money from before the marriage. They then built a home on the lot, using $67,000 of her money, $46,500 of his, and a lot of sweat (they acted as their own general contractors).
When Mr. and Mrs. Inboden divorced a little less than two years after the marriage (and just a few months after the house was completed), the trial judge awarded her about three-quarters of the value of the home to reimburse her for her disproportionate contribution to its purchase and construction. The Court of Appeals reversed that result and returned it for further consideration.
In the case of the Inbodens’ property division, the appellate court was clear that the final result might well be an unequal division. The basis for any deviation, however, must be based on “equitable” principles, and not on a simple calculation to reimburse each spouse for their contribution of property that was previously separate. There is a presumption, difficult to overcome, that changes of title or transfers of assets are intended to be gifts, and those gifts can not be reversed if the marriage later falters. Inboden v. Inboden, February 25, 2010.
Why are these divorce issues “elder law” concerns? They are not, really — except that when older couples marry they are more likely to have property that they bring into the marriage, and less likely to have minor children. Consequently, if their later-in-life marriages fail they are perhaps more likely to present complicated property division issues and less likely to focus on child custody and support problems.
Of course, divorce is not the only venue for property division concerns. Even the popular press has begun to consider the possibility that later-in-life marriages might create property disputes between surviving spouses and children from prior marriages or relationships.
Laura F. is a 28-year-old autistic woman. She has always lived with her parents, and they have provided for her care. In the past decade she has worked several part-time jobs at sheltered workshops, but she has never held a full-time job, never even earned minimum wage, and never been able to work without a job coach. Now her parents are getting divorced, and questions arise about who will be responsible to support her.
Joanne F. and Eugene F., Laura’s parents, have been married for 31 years, and now live in California. They have substantial wealth and have lived an affluent lifestyle. Joanne has now filed for divorce and asked the courts to award her both child support and spousal support payments. She asked for the support payments to start immediately, and to continue while the divorce itself is resolved.
The divorce court heard testimony from both parents, from an accountant and from Laura’s psychologist. At the end of the hearing Eugene was ordered to pay $3,750 per month in support for Laura, and an additional $3,070 to Joanne as spousal support.
California’s statutes make provisions for child support awards for adult children with disabilities. The law allows an award of support if the child “is incapacitated from earning a living and without sufficient means” to provide for his or her own support.
The California Court of Appeals ruled that the law does not require someone in Laura’s position to be completely destitute and living on the streets before qualifying for a support award. The fact that she had worked for several brief periods in sheltered workshops did not show that she could support herself, and the child support award was upheld. The spousal support award was also approved, with the court noting that both assessments should be based on Eugene’s ability to earn a good living rather than just his actual employment income. Marriage of Falk, December 15, 2003.
Arizona’s law governing support of adult disabled children is similar, but not identical. It is likely that Laura F. would have been awarded at least some support if the case had been brought in Arizona.
Under our state statute the divorce court may order support payments for a mentally or physically disabled child to continue past the age of majority. The court may, as in Laura F.’s case in California, order payments to begin even if the child has already reached the age of majority. As was true in California, the Arizona courts will consider the standard of living the child would have had if the marriage was not being dissolved.
Just one day after Elder Law Issues wrote about the Laura F. case, the Maryland Court of Special Appeals released its opinion in a similar case involving court-ordered support for an adult child with disabilities. Kelly M. is 23 years old, and has been identified as “mildly mentally retarded.” According to earlier court testimony, she functions at about a 4th or 5th grade level, and she has worked part-time at the Department of Veterans Affairs, earning about $400 every two weeks.
Kelly M.’s mother (Bonnie) and father (Daniel) divorced when she was two years old, and her father was ordered to pay child support at the time of the divorce. When Kelly turned 18, Bonnie requested that the child support order be extended. Over Daniel’s objection he was ordered to pay $634 each month in support for Kelly.
A few months later Bonnie sought to increase the child support figure, arguing that she was no longer able to contribute to Kelly’s support because she had become disabled herself. Bonnie also noted that Daniel could better afford to support her–his income was then in excess of $60,000 per year.
In return, Daniel argued that the child support should be ended altogether. He pointed out that in the intervening time, Kelly had obtained full-time employment with the Department of Veteran’s Affairs, and her income had risen to $16,600 per year.
Although Kelly’s income had increased, she had lost her eligibility for Supplemental Security Income (SSI) and Medicaid coverage for her medical needs. Based on the totality of those circumstances the trial judge, ruling in 2000, determined that Daniel should still have to pay child support, but at the much lower figure of $100 per month.
Both Bonnie and Daniel appealed. Bonnie argued that the child support should have remained at the $634 figure or even increased, according to Maryland child support tables, to $681 per month. Daniel argued that he should not have to pay any child support, because Maryland law imposes an obligation of support for adult children only if they are “destitute.” Kelly’s full-time employment, argued Daniel, made it impossible to call her destitute. The result of that appeal was that Daniel was ordered to pay support at the rate calculated by the child support tables, as if Kelly was still a minor child. His support order was increased to $702 per month beginning in 2002.
Almost immediately, Daniel once again sought review of the child support award. In the third trip through the lower court process, his child support was reduced to $150 per month. This was based, according to the trial judge, on the notion that Kelly’s support should be based on what would be reasonably necessary to supplement her inadequate income, not based on the child support guidelines used by Maryland for minor children.
The Maryland Court of Special Appeals considered how to set support for adult children with disabilities for a second time in Kelly’s case. Its ruling: the child support guidelines should be the starting point for setting the amount of parental support. The case was returned to the trial court for another calculation of the amount to be awarded in support, with the clear instruction to reduce the level of support from the guideline amount only if the facts warranted deviation from that figure. The final outcome is not yet known, but it is likely that Daniel will be ordered to pay substantially more than the current $150 per month. Corby v. McCarthy, December 30, 2003.
It is a common problem facing lawyers and litigants. What can be done if one of the parties to a lawsuit is a minor, or an incapacitated adult? Who makes decisions about the litigation if one party lacks legal capacity to handle their own financial and personal decisions?
In many courts, the civil litigation rules permit appointment of a “guardian ad litem,” an “attorney ad litem” or a “next friend” to guide lawyers and the court itself on how to proceed. One problem with those rules, however, is that they seldom make clear how such a person is to be appointed, who would qualify or what authority they might have. A recent case in Texas illustrates the confusion.
Alejandro Saldarriaga filed for divorce from his wife Debra Ann in late 1999. Both spouses had lawyers, and the litigation proceeded for three years without resolution of child custody, child support or property division issues. Finally Debra Ann Saldarriaga’s attorney, Lin Zintsmaster, decided her client was mentally incompetent to complete the divorce.
Ms. Zintsmaster filed a motion asking for appointment of someone to make decisions about how to proceed with the divorce litigation. The judge appointed local attorney Jerry Jones to be Ms. Saldarriaga’s “next friend,” and to make decisions about how the divorce should be completed.
Mr. Jones, in turn, filed a petition for appointment as Ms. Saldarriaga’s guardian, and yet another lawyer was appointed to represent her in that proceeding. Meanwhile Mr. Jones went ahead and negotiated a resolution of the remaining child custody, child support and financial decisions in the divorce proceeding.
Ms. Saldarriaga’s doctor wrote that she was not incapacitated, and the guardianship proceeding was dismissed. Meanwhile, however, the divorce court accepted the settlement negotiated by her “next friend” Jerry Jones, and the divorce was finalized. Ms. Saldarriaga appealed, arguing that the court never had authority to appoint someone to take over handling her case.
The Texas Court of Appeals in Austin agreed, and set aside the negotiated settlement. The court noted that there is a mechanism for appointment of a guardian, and the procedure must be followed in order to protect the rights of people who are alleged to be incapacitated. Since the powers of a “next friend” look so much like the authority given to a guardian, said the judges, the procedures must be similar. The divorce court simply did not have authority to name someone to take over Ms. Saldarriaga’s case. Saldarriaga v. Saldarriaga, November 13, 2003.
Although Mr. Jones testified in the divorce proceeding about the difference between the titles “guardian ad litem,” “attorney ad litem” and “next friend,” there is no clear consensus among practitioners about the distinctions. A “guardian ad litem” is someone, not necessarily an attorney, appointed to be an incapacitated person’s “guardian” for the limited purpose of a pending legal proceeding. Most practitioners think that a “guardian ad litem” should counsel the attorney as to what would be in the client’s best interests, although many would argue that the proper role is to help figure out what the incapacitated client wants to accomplish, and whether those goals are reasonable. An “attorney ad litem,” a term not used in most jurisdictions, fulfills a similar function but is necessarily an attorney; the role implies that the “attorney ad litem” will argue for what is in the patient’s legal best interest, not just his or her personal best interest.
Finally, the “next friend”–the choice used by the divorce judge in the Saldarriaga case–is the least well-defined of all. Many states permit a lawsuit to be brought by a “next friend” (Arizona is one), but the term is usually used for litigation filed on behalf of minor children by their parents. As Debra Ann Saldarriaga’s case makes clear, neither it nor either of the other designations should be used as a substitute for a real court determination of the ability of a client to make his or her own legal decisions.
The guardian of an incapacitated adult is often said to have all the powers that a parent would have over an unemancipated minor child. That legalism, however, fails to give much guidance about any limitations on the guardian’s power. For example: can a guardian pursue a divorce proceeding for his or her ward?
Some definition of terms is in order. Many states (particularly those in the east) continue to use the old-fashioned distinction between “guardian of the person” and “guardian of the estate.” The former, generally speaking, has authority over the ward’s living arrangements and medical care; the latter has control over the ward’s finances.
A handful of states (notably California) use the terms “conservator of the person” and “conservator of the estate,” with the same effect but a different title. Most of the eighteen states adopting the Uniform Probate Code and a few other states have adopted the terms “guardian of the person” and “conservator of the estate.” All that leads to a certain lack of clarity in the use of the term “guardian” without more explanation.
Like Arizona, Montana has adopted the Uniform Probate Code. When Judy Deck was appointed as guardian and conservator for her father George Everett Denowh in Billings, the title and powers were similar to those she might have been given in Arizona.
Shortly after the initial appointment, Mr. Denowh filed a divorce action to end his five-year marriage to Agnes Denowh. Mrs. Denowh objected, arguing that her husband was not competent to seek the divorce, and Judy Deck sought to intervene, as guardian, to finish the divorce. The trial judge allowed her to take over her father’s divorce action as guardian.
Mrs. Denowh appealed, insisting that a guardian does not have the power to maintain a divorce action. The Montana Supreme Court agreed, ruling that there are some things that are simply too personal for a guardian to do for her ward. The state high court struck an ironic note—the power of a parent over an unemancipated minor (the Uniform Probate Code’s formulation of the relationship) can never include the power to divorce, since marriage “emancipates” a child. Marriage of Denowh, September 11, 2003.
As the Montana court notes in its opinion, Arizona is one of a half-dozen states that has ruled exactly the opposite. Under a 1993 case, an Arizona guardian does have the power to file for divorce, or to maintain a divorce action brought by the ward. It probably, however, requires appointment of a conservator to resolve property division issues.
