Posts Tagged ‘guardianship of the estate’

Mediation in Guardianship Proceeding Can Be Effective, But Raises Questions

FEBRUARY 8, 2016 VOLUME 23 NUMBER 6

Sometimes court proceedings are necessary in order to resolve differences of opinion — but almost everyone recognizes that it is good to seek resolution by a simple agreement when the parties can resolve their differences outside court. Mediation, for instance, is a great way to resolve many legal disputes. The parties to a lawsuit (or a potential lawsuit) meet with a professional mediator, and they discuss (either in separate sessions or, sometimes, in a common meeting) how they might work things out short of a court hearing. The result can be positive, and is almost always less expensive than a full court process. If a mediation has been handled particularly well, both parties (or all parties, for sometimes there are multiple positions being espoused) think they got less than they really wanted but more than they might have gotten if the case had gone to trial.

But what about guardianship (and conservatorship) proceedings? How can someone who is alleged to be incapacitated participate in mediation? Assuming the mediation is successful, how can someone who lacks legal capacity even agree to the settlement reached after mediation?

Because of the particular nature of guardianship and conservatorship proceedings, it can sometimes be impossible to enter into a meaningful mediation. One other problem: after a court hearing appointing a guardian or conservator, the legal fees of the petitioner (the family member or professional bringing the action) and the subject of the proceeding are both usually paid from the subject’s assets. But how will the cost of mediation be shared, and what incentive does everyone have to participate?

Notwithstanding these problems, guardianship mediation can and does work. At Fleming & Curti, PLC, for example, we frequently encourage mediation, whether we represent the family member petitioning, the family member objecting, or the subject of the proceedings. Mediation can result in a less-restrictive outcome (perhaps the subject of the proceedings could create a trust, or sign a power of attorney, for example), and gives the subject of the proceeding a much clearer voice in making decisions (as, for instance, when the subject objects to the proceedings — but particularly objects to the possible appointment of one family member).

But guardianship mediation still can be problematic. A recent Florida case showed why that can be.

Arnold Gabriel (not his real name) is a paranoid schizophrenic living in Florida with his aunt. He knows that he has mental health issues, but he thinks he gets along pretty well with the help of his aunt and his cousin, Linda Freeman. But Arnold’s brother Walter does not agree — he thinks that Arnold is at risk in the community, and that someone needs to be monitoring his condition and care at all times.

Walter filed a petition with the Florida courts seeking to be appointed as guardian of Arnold’s person — he hoped to be given authority to determine Arnold’s physical placement, and he thought Arnold probably needed to go to a state facility. Arnold disagreed, and so did cousin Linda. Linda filed a counter-petition, seeking to be appointed as guardian of both the person and property (what we in Arizona would call conservator) over Arnold. The Florida court set a hearing on the competing petitions.

Meanwhile, the three parties and their attorneys agreed to try mediation. They set a time and met with a mediator, and everyone agreed to try a less restrictive alternative. Walter’s petition for guardianship of the person, and Linda’s petition for guardianship of the person and property, would both be dismissed. Linda would act as Arnold’s agent for both medical and health decisions, and both she and Arnold would agree to share medical and financial information with Walter so that he could monitor his brother’s care and condition. They also agreed that Arnold would be re-evaluated by a neutral care manager every six months to see if his care needed to be reviewed. Arnold and Walter would agree to communicate better about Arnold’s status and condition.

Both Walter and Linda dismissed their respective petitions, and things appear to have gone well for about a year. Then Arnold decided not to share information with his brother, and filed a court proceeding seeking a determination that the agreement was void and unenforceable.

Arnold claimed that he had felt pressured to enter into the agreement out of fear that his only alternative was to be committed to a state mental facility. Besides, he and Linda argued, Arnold lacked the mental capacity necessary to enter into an enforceable agreement. One piece of evidence showing he lacked the necessary capacity: the court evaluation undertaken in connection with the initial guardianship petition had resulted in a determination that he lacked capacity.

The Florida trial judge granted Walter’s motion for summary judgment, ruling that the mediation agreement was enforceable and Arnold would need to live up to it. Furthermore, the court ordered that Arnold’s estate should bear the legal costs incurred by Walter in pursuing the guardianship and enforcing the settlement agreement.

The Florida Court of Appeals upheld the trial judge’s ruling. There was no legal impediment to Arnold entering into the agreement, reasoned the appellate judges, because there had not been any court finding that Arnold was incapacitated. The trial judge’s interpretation of the agreement — and the award of legal fees — made sense in the circumstances. Gort v. Gort, February 3, 2016.

The appellate court noted that there is an earlier Florida case — Jasser v. Saadeh (Fla. App. 2012) — that appears to support the exact opposite holding. In that case, the mediation agreement had included a provision that the subject of the proceeding would sign a trust, and the trustee would manage her finances. The problem with that, said the appellate court in this later case, was that (a) the subject’s condition was dementia, not schizophrenia, and was therefore more related to her capacity, and (b) the issue in that earlier case was capacity to sign a trust, not capacity to enter into a settlement agreement.

Candidly, though, those distinctions have to be seen as difficult to support — the real issue, we submit, is whether the courts can be comfortable with an allegedly incapacitated person signing a given settlement agreement. Our position: the law should be made clear that the courts should support non-judicial settlement, and mediation in these difficult, emotional cases should be encouraged.

Guardians’ Fees for Advocacy Work Disallowed by Court

DECEMBER 12, 2011 VOLUME 18 NUMBER 42
Last month we saw an interesting variation on fee requests for guardianship and conservatorship proceedings. A Washington State Supreme Court case dealt with the payment from wards’ estates to a professional fiduciary organization in unusual circumstances.

James R. Hardman and his mother Alice Hardman are certified professional guardians under Washington State’s guardianship regulation program. As in Arizona, the program is operated by the state Supreme Court, and requires testing, training and reporting to a court-operated agency. In addition, Washington professional guardians are required to report to the local probate judge once each year on the finances and welfare of each individual ward — just as all other guardians do.

The Hardmans are guardians of the person and the estate (in Arizona we would say guardians and conservators) of “more than 20” developmentally disabled adults residing at a state-run residential facility known as Fircrest School. They handle their wards’ finances, make health care decisions and determine the proper placement for each ward, and no allegations were raised that they do that work anything other than conscientiously and well. Because they are so deeply involved in the developmental disability community, they are also very active in advocacy efforts. They lobby state, local and federal agencies and elected officials and they vigorously oppose efforts to transfer Fircrest residents to residential placements that they believe provide inadequate care.

The Washington guardianship regulation scheme assumes that guardians like the Hardmans should be paid no more than $175/month from their wards’ funds for guardianship services. There is a mechanism for seeking more fees, however, when it is required because the ward has unusual issues. The regulation particularly describes the possibility of convoluted property transactions, interaction with criminal courts for a ward who has gotten into legal trouble, extensive or emergency medical services, or similar complications.

The Hardmans estimate that their advocacy work consumes 80-100 hours per month. They believe that it benefits all of their wards. They sought approval of not only the ordinary $175/month payment in each case, but an additional $150/month from each ward to compensate them for advocacy for the residents of Fircrest.

The effect of approving the higher fees would have a direct effect on the state programs for the developmentally disabled. Because reasonable guardians fees are deductible from a resident’s share of cost under Washington law (this varies from state to state, and would not be handled the same way in Arizona, for instance), the $150/month per ward would effectively reduce the total amount paid by residents to the state by as much as about $50,000 paid to the Hardmans.

Although the first judge hearing the matter agreed and allowed the Hardmans their higher fees in a single case, the next two times it was considered their request was denied. The case ended up before the state Supreme Court, which ruled that the Hardmans could not collect fees from their individual wards to fund their general advocacy work.

There are a number of problems, in the state high court’s view, with the Hardmans’ request. The actual amount requested, and the justification of the amount of time spent, was different in the two cases considered by the court. The direct benefit to individual wards was not clear to the Justices. The advocacy work might arguably benefit the class of guardianship wards, but the high court did not believe it was “necessary” to the actions of a guardian — a requirement of the state law governing fee requests.

One of the more intriguing ideas promoted by the Hardmans was that denial of their request would effectively deprive their wards of their constitutional rights to free speech and to petition the government for redress of grievances. Not so, ruled the Justices — they could still speak out through advocates provided to them by the system, and nothing prevented the Hardmans from continuing their own advocacy work. It was just not required that their guardians should be compensated for that advocacy — particularly since that would put the probate judge in each individual case in the untenable position of having to decide which “speech” would need to be protected and paid for. In the Matter of the Guardianship of Lamb, November 23, 2011.

Appellate Court Upholds Orders in New Jersey/Texas Guardianship

JULY 25, 2011 VOLUME 18 NUMBER 27
We have told you about Lillian Glasser before. She is a wealthy New Jersey woman with two children who disagree about where she resides, who should manage her health care and finances, and what should be done about financial actions taken in the months before court proceedings were begun. Much of the dispute centers over whether Texas or New Jersey courts should hear her case. That issue seems to have been put to rest, with New Jersey the victor.

To recap: Ms. Glasser, then worth about $25 million, lived in New Jersey. She occasionally visited her son in Florida (where she also had a rented home) and her daughter in Texas. In 2002, Ms. Glasser was persuaded to execute a new estate plan. She signed a will putting her daughter in charge of her estate, and a new power of attorney in favor of her daughter.

In 2004 and 2005, Ms. Glasser’s daughter fired her mother’s caretaker in Florida, moved Ms. Glasser to Texas, and initiated a Texas guardianship proceeding. In the meantime, she used her power of attorney to create a family limited partnership which she controlled, and transferred the bulk of her mother’s assets into the partnership’s name.

The Texas guardianship proceeding spawned a variety of legal actions. Ms. Glasser’s son, a nephew who was close to her and a family friend all objected in Texas. The litigation costs in Texas exceeded a million dollars, with much of the cost being paid from Ms. Glasser’s assets. The result: the Texas courts authorized her return to New Jersey, where there was more legal action pending.

After Ms. Glasser’s nephew filed a separate New Jersey guardianship proceeding, that state’s Adult Protective Services agency weighed in with a complaint alleging that Ms. Glasser had been subjected to exploitation. Those two actions were consolidated. Meanwhile, the Texas courts decided to wait until New Jersey had completed its review of Ms. Glasser’s situation.

In 2007 the New Jersey court held a 34-day trial on Ms. Glasser’s condition, the transfers of her assets, and the actions of the various players. The result: a judgment finding that Ms. Glasser’s daughter exercised undue influence and behaved in her own interest rather than her mother’s best interest, ordering return of all of the assets transferred into the family limited partnership, and appointing a bank as guardian of Ms. Glasser’s estate and an independent party as guardian of her person. That ruling was the subject of our 2007 update on the Glasser litigation. Ms. Glasser’s daughter appealed that ruling, as did two of the other litigants; much of the appellate argument focused on who should pay the extensive legal costs of the proceedings. The New Jersey Superior Court Appellate Division (that state’s intermediate appellate court) has now — four years after the original court findings — ruled on those appeals.

Spoiler alert: the appellate court affirmed the extensive trial court decision without modifying a single finding or order.

The appellate judges approved the trial judge’s finding that Ms. Glasser’s daughter had exercised undue influence over her mother. They agreed that she should be ordered to put all of her mother’s assets back into Ms. Glasser’s name, to be managed by the bank named as guardian of her estate (what we in Arizona would call her conservator). They confirmed the daughter’s history of inappropriate and evasive actions with regard to Ms. Glasser’s placement and care, and agreed that she was not suitable to manage her mother’s personal OR financial matters.

Then the appellate judges turned to the extensive fees incurred in the various legal proceedings in two states. They confirmed the trial judge’s decisions that:

  • Ms. Glasser’s daughter should pay her own legal fees in both New Jersey and Texas. That meant that she would have to repay the money she had taken from her mother’s assets to fund the Texas proceedings, for which she had paid her attorneys at least $1 million.
  • Ms. Glasser’s estate should pay the legal fees of the lawyer she selected to represent her (the court having found that she had the capacity necessary to hire an attorney of her own choosing). It should also pay the legal fees of her nephew, who filed the guardianship action in New Jersey, without forcing her daughter to reimburse those fees.
  • Ms. Glasser’s son argued that his mother’s estate should pay most or all of his legal fees; the trial judge decided that it would not order her to pay all of his legal fees in Texas, and that (since he hadn’t filed a guardianship petition in New Jersey) he was not entitled to reimbursement for his New Jersey expenditures. The appellate judges agreed, noting that his sister had no standing to object to the amounts allowed in any case.

In the Matter of Lillian Glasser, July 21, 2011.

So how much did Ms. Glasser’s legal predicament cost her, and what was the total cost paid by all of the litigants in protracted proceedings in two states? It may be impossible to calculate exactly, but it is obviously several millions of dollars — after all, her daughter’s legal fees in Texas alone exceeded one million dollars.

Assuming (and the evidence is good) that the outcome is correct, was there a way to prevent the absurd expenditure of millions of dollars, the delay of half a decade, and the angst and anguish associated with this case? A few things might have helped:

  • A carefully created and well-documented estate plan, drafted at a time when Ms. Glasser was clearly competent, might have headed off some of these problems. It might not, however. Ms. Glasser did have an estate plan in place in 2002, at a time when she was competent to make her plans. Her daughter’s undue influence and over-reaching upset that plan over the next few years.
  • If both Texas and New Jersey had adopted the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act prior to 2005 then considerable cost might have been avoided. That Act would have made clear that New Jersey had jurisdiction and Texas should not act — the very conclusion that the respective judges reached, though only after more than a million dollars in legal fees. Unfortunately, the Jurisdiction Act did not exist in 2005. Since it was first proposed in 2007, about two-thirds of the states have adopted it (including Arizona). So far neither Texas nor New Jersey has. In fairness, adoption of the Jurisdiction Act might have sped the proceedings up by only a few months, and saved only a fraction of the many millions of legal costs.
  • Mediation of the family disputes might have been effective — but it might not have. The appellate judges made reference to Ms. Glasser’s son adopting a “‘take no prisoners’ approach to anyone who disagreed with his views.” Her daughter’s intransigence is pretty clear from her actions and her legal posture. Perhaps they could not have ironed out their differences.

 

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