Posts Tagged ‘guardianship’

Ward Seeks Court Permission to Marry His Girlfriend

JUNE 2, 2014 VOLUME 21 NUMBER 20

We have written before — earlier this year, in fact — about whether individuals who are under guardianship have the ability to get married. When this question comes up (and it should be said that it is rare) it usually is in a context like that of our January story about “Cynthia Madsen” — an older family member, usually a parent, gets married (often to a caregiver) and that marriage is challenged after the fact. Sometimes, though, the story can play out in a different direction.

Matt Obregon (that’s not his real name) is a 27-year-old living in Minnesota. His parents have been appointed as guardian of Matt’s person, because he lacks capacity to make his own decisions about medical care and living arrangements. Matt has diagnoses of bipolar disorder and severe attention deficit hyperactivity disorder.

Matt lives in a group home, where he has responsibility for his own general housekeeping duties but is mostly free to come and go as he pleases. He takes several medicines, and the group home staff manages his medication regimen. The court that appointed his parents as guardian specifically gave them authority to give or withhold approval of any contract Matt enters into other than one for “necessaries” (i.e. — food, shelter, medical care and the like).

When Matt was about 23 he began dating Eliza, a young woman who is in a day program for individuals with special needs. Eliza has a young child (not Matt’s), and Matt and Eliza spend a lot of time together. Matt sleeps over at Eliza’s residence about once a month, and they get together about twice a week.

After a couple years of dating, Matt and Eliza decided they wanted to get married. Matt’s parents (remember that they are his guardians) did not think it was in Matt’s best interest to marry Eliza, and so they withheld approval.

The way this story would play out for most of the contested marriage scenarios we see would have been for Matt and Eliza to get married anyway, though they might have to go to a different county, or even a different state, in order to get a license, since Matt has a guardian. Matt’s parents would then have to decide whether to seek to annul the marriage, or initiate a divorce proceeding as his guardian, or simply let the marriage stand. But that’s not the way this story played out.

Instead, Matt filed a petition with the guardianship court, asking permission to marry Eliza. He argued that even though he had a guardian, he had the capacity to understand the nature of a marriage and the responsibilities that he would be taking on. His guardians disagreed, insisting that Matt’s limitations made it impossible for him to consent to the marriage.

Note that the issue before the guardianship court was not whether it would be in Matt’s best interests to allow him to marry. Instead, it was whether he had the necessary level of capacity to enter into a marriage agreement. Both parties agreed that a ward under guardianship can marry if he or she has capacity; their only disagreement was about whether Matt had the capacity.

Matt’s parents testified in the subsequent court proceeding, telling the judge about several recent incidents indicating Matt’s limitations. In one, he had shot out windows at a cabin using a BB gun. In another, he had grabbed the wheel of the group home van while residents were on an outing. The court also considered letters, apparently from one of Matt’s doctors, saying he suffered from a variety of conditions and had an IQ of 71. According to Matt’s mother, his functional ability is about that of a seven-year-old.

At the end of the hearing the guardianship judge ruled that Matt did not have the requisite mental capacity to “make or communicate responsible decisions regarding his person, including the ability to enter into a marriage contract.” Matt’s request to marry Eliza was denied.

The Minnesota Court of Appeals next considered Matt’s request, and it disagreed with the guardianship judge. According to the appellate court, the question is not whether Matt’s mental state differs from the accepted norms — the inquiry should focus on whether Matt has the capacity to understand marriage and to choose a spouse. The findings of the guardianship court should have been focused not on his diagnosis or his behaviors, but on whether he can comprehend the nature of the marital relationship, the obligations he would be taking on, and the benefits he might obtain from marrying.

A marriage contract is indeed a contract, noted the appellate court. But it is a different kind of agreement than a commercial contract (to buy a car, say, or to rent an apartment). Because marriage is a fundamental right, and because wards should be permitted — and even encouraged — to exercise as much personal autonomy as possible, any restriction on the ability to get married should be sharply limited.

Does this mean that Matt and Eliza can now get married? Not yet. The Court of Appeals sent Matt’s request for what’s called a “declaratory judgment” back to the probate judge for further hearings and a final decision. The next hearing, though, must focus narrowly on Matt’s capacity to get married, not on his diagnosis and behaviors. And one other thing: the burden of proving that he does not understand the nature of marriage rests on his guardians — it is not his burden to affirmatively show that he has capacity, even though he does have a general guardian. Guardianship of O’Brien, May 27, 2014.

Would the same standard apply in an Arizona guardianship court? It’s not clear — there is not much case law, and no clear statutory authority. But the Minnesota decision does reflect modern thinking about personal autonomy and self-determination for people under guardianship, and it seems likely that it would be persuasive (but not controlling) in a similar Arizona proceeding.

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State Court Does Not Control Social Security Payments

MAY 12, 2014 VOLUME 21 NUMBER 17

At Fleming & Curti, PLC, we do not handle divorce cases. From time to time, though, a divorce case raises the same kinds of issues that we see in the guardianship, conservatorship and probate cases we do handle.

A recent Arizona Court of Appeals decision is a case in point. It involves the divorce of a Navajo County, Arizona, couple, Donna and Edward. When the couple divorced in 2009, Donna was awarded custody of their four children. Edward was ordered to pay child support.

When Edward began collecting Social Security benefits on his own account, the children were entitled to receive $362 each per month. Social Security named Edward as “representative payee,” which meant that the children’s checks were made payable to him and he was required to account to the Social Security Administration each year.

Donna filed a petition with the divorce court to modify the support and visitation orders. She also alleged that Edward had been taking the children’s Social Security money and spending it as he saw fit — and that she should be the representative payee since she had sole custody of the children. At some point she apparently applied to Social Security to become the payee, and the payments were switched to her name. Still, she wanted Edward to account for — and return — the payments received for a nine month period starting right after the divorce.

The judge in the divorce court agreed, and entered a judgment against Edward (and in favor of Donna) for the amount of the payments he found to have been “misappropriated.” The judge also held Edward in contempt for failing or refusing to turn over the Social Security.

Edward appealed, and the Arizona Court of Appeals briefly reviewed the interrelationship of Social Security, state law and state courts. According to the appellate judges, Arizona state courts do not have any jurisdiction to review the management of Social Security payments made to a representative payee. The proper place to challenge Edward’s use (or possible misuse) of those funds was before the Social Security Administration itself. Peace v. Peace, May 8, 2014.

The Arizona appellate court, incidentally, was very candid in its assessment of the legal principles. It noted that some state courts (not in Arizona) have decided that they do have jurisdiction over Social Security representative payees, and others have held that state courts are preempted by federal law from intervening. The Arizona opinion specifically mentions a minority opinion in a 2013 Vermont case, LaMothe v. LeBlanc, which reviewed the holdings in several states — including Alaska, Maine, North Carolina, Ohio, Iowa and Tennessee.

What is the significance of the recent Arizona holding in probate court? An analogous situation arises frequently. Suppose that a parent with a disability receives Social Security benefits, and that his or her minor child is entitled to Social Security benefits. Now suppose that a grandparent or other family member has become guardian for the child, or that a professional fiduciary has become conservator to handle a personal injury settlement. Can the Arizona probate court order the parent to turn over Social Security payments, or to prove that they were expended for the child’s benefit, or even to relinquish authority as representative payee? The Peace decision would seem to say that none of those decisions are within the purview of the probate court — the guardian’s, conservator’s or custodial parent’s dispute is with Social Security, not the state courts.

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Arizona Legislative Changes Effective September 12

AUGUST 26, 2013 VOLUME 20 NUMBER 32

The Arizona legislature meets every spring, and in most years adopts changes that affect elder law attorneys, estate planners, guardians, conservators and trustees. The changes become effective nine months after the end of the legislative session, which means that late summer is the time for annual review of new laws about to become effective.

For 2013 the effective date for most new legislation will be September 12. There are a handful of changes affecting our practice area, including:

Fingerprints. The legislature decided to make it a little bit harder for most people to get appointed as guardian or conservator for a family member or other person needing assistance. It has long been the law that unrelated guardians of minors had to submit to fingerprinting; now anyone seeking a guardianship or conservatorship over an adult (related or not) can be required to undergo fingerprinting. Not every person will be required to provide official fingerprints, and it is not yet clear how the courts will implement the new law.

If the courts require fingerprinting, the change will primarily affect family members, since professional fiduciaries already have to go through a fingerprint review to get licensed in the first place. The cost is modest; probably most important for petitioners will be the half-day it usually takes to get to the fingerprinting office, wait in line and get the card. Then it will be submitted for a criminal record check.

This change continues the trend of the past several years to make court proceedings more difficult, and to discourage concerned family members from initiating protective proceedings. While the effect will probably be small, there is a cumulative shift making it more expensive and difficult to seek legal help for a failing family member. It also increases the importance of advance planning to avoid having to turn to the courts for that help.

Simplified probate proceedings for small estates. It has long been possible to avoid probate in Arizona for smaller estates. If personal property in the decedent’s name does not total more than $50,000 (and that does not include joint tenancy property, property held in a trust or property with a valid beneficiary designation) then the person entitled to the property can collect it with a simple affidavit. Even real property can be subject to a simplified probate proceeding, up to $75,000 in value.

Now both of those figures are set to increase. The personal property limit will go from $50,000 to $75,000, and the real estate limit from $75,000 to $100,000. This one will affect a small number of estates, but can save significant costs for those who fit under the increased limits. More good news: the valuation figures are for estates as of the date of collection, not the date of death. In other words, for a decedent’s estate worth more than $50,000 but less than $75,000 the best strategy will likely to be to wait another month before taking action.

Trusts created by married couples. This change is a little bit arcane, but could have broader impact than was probably intended. Many married couples establish trusts that become irrevocable (or partly irrevocable) after the death of the first spouse. Typically, those trusts permit the surviving spouse to manage the assets and, in some circumstances, to even withdraw the principal for their own use. The new law will make it a little harder for surviving spouses to legitimately withdraw money from those trusts — though another family member acting as trustee will not face the same limitations.

With the significant increase in federal estate tax exemption levels (there is currently no tax until the estate is more than $5 million in most cases), many of our clients want to eliminate irrevocable trusts set up by a now-deceased spouse when the estate tax figures were very different. This new law will make that a little more challenging, but not impossible in most cases.

Section 529 plans. Most lawyers have long assumed that money set aside for education of children and grandchildren probably was protected in bankruptcy proceedings — but the law was not explicit. It is now, at least for Arizona. If the education account is a “Section 529 plan” account, then it is not an asset of the person who set it up if they later file for bankruptcy — provided that the bankruptcy filing is at least two years after the account was set up. Incidentally, the beneficiary of a 529 Plan account is also protected in the event of bankruptcy.

It was a slow year at the legislature for those of us involved in estate planning, trust administration and elder law. That’s OK with us.

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Should a Guardian Follow the Wishes of Her Ward?

We read about an interesting Washington case recently.  Raven v. DSHS, a Washington Supreme Court decision handed down on July 18, 2013, indirectly dealt with a guardian’s duty to consider the known wishes of the subject of the guardianship. If the evidence is clear that the ward would not want to be institutionalized, for instance, is it elder abuse for the guardian to keep her ward at home past the time when the state’s Adult Protective Services workers think she should be placed in a nursing home?

It’s an interesting question, and more than just academic. You can read one analysis of the case, and the facts giving rise to the case, at the newsletter/blog of Washington lawyer John S. Palmer. We hope and expect to hear more from Mr. Palmer in the future.

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Mental Illness and Guardianship in Arizona

JANUARY 7, 2013 VOLUME 20 NUMBER 1
A recent blog entry from the Special Needs Alliance (two of our lawyers are members) addressed the common problems encountered when family members seek guardianship over someone with a mental illness. The very same day we received a call from a prospective client, asking if he could secure a guardianship over his mentally ill son in order to assure that his son received psychiatric care. In fact, the question comes up regularly, and the unfortunate truth is that guardianship is seldom very helpful. It seems like it should be a good solution; why then is it not?

For several reasons. Let’s start with the limitations on guardians. In Arizona, at least (we suspect but do not know that similar limits will encumber guardians in other states), a guardian may have the legal authority to place a person in a treatment facility, but not the power to chain them down. We mean that figuratively, of course. Mental health patients can leave a residential setting, can resist cooperation and can refuse to participate in treatment. A guardian may have the theoretical authority to return the patient to the care setting, but the cycle of refusal and departure would keep the treatment from being consistent.

Coupled with that is an important reality of modern psychiatric treatment: it is not usually thought of (by the professionals) as keeping the patient safe but as actively improving their mental state. In fact, most psychiatrists we have talked with insist that placement in a treatment setting for more than a few days — a week or two at most — most likely makes treatment less effective rather than more effective. The idea of “asylum” — a safe place for the incurably mentally ill to be housed indefinitely — simply has no role in modern treatment. One might reasonably argue that there should be such a place, but there is not. Put more prosaically, being someone’s guardian will not help create a place for them to stay.

A related problem: our society seriously underfunds mental health care. That means that there may not be an available program — even as an outpatient or outreach program — to treat your family member. Being his or her guardian will not make additional resources available.

Though guardianship may sometimes provide a small marginal benefit, there is another problem: the mentally ill subject of a guardianship proceeding may be very intelligent, very articulate and able to appear quite logical on at least some occasions. That means that it may be uncommonly difficult to “prove” the guardianship is necessary. Furthermore, the mentally ill subject of a guardianship is more likely to be upset, and to become uncooperative, than a person with, say, dementia.

It often seems obvious to family members: our relative is mentally ill, treatment would afford them significant benefit, and they do not understand the value of treatment precisely because of their mental illness. For better or worse (we think “better,” but we appreciate that it gets in the way of the best interests of some patients), our legal system starts from a different place. Guardianship is the state taking away the individual’s powers and transferring them to the guardian; we should not be able to take that step unless we can show that the person is not just mentally ill, but also incapable of providing their own necessities of life.

Put another way: though treatment might make a mentally ill patient happier, more productive, less disruptive and healthier in every way, our legal system will not impose that treatment unless the patient is completely unable to provide for themselves. Or, in a separate but related process, dangerous (or totally disabled).

That’s another reason guardianship so often does not work for the mentally ill. Years ago we (as a society and as a legal system) resolved to establish a “gatekeeper” approach to involuntary mental health treatment. That means that we have delegated the decision-making authority to (in Arizona’s case) medical directors of mental health treatment facilities, and we have given them sharp limits on when they can impose treatment. Generally speaking, the patient must be dangerous (either to themselves or toward others) or seriously disabled by their mental illness. And commitment to involuntary treatment does not usually involve long inpatient stays — typically, involuntary commitments include an outpatient treatment regimen of up to about a year. Guardianship may sometimes actually get in the way of that treatment cycle.

Then there are some of the practical problems arising from the population of patients with mental illness. Often those patients self-medicate — with alcohol or illegal drugs. The commitment process requires that their problem must be primarily mental illness, not drug or alcohol use. The guardianship process requires that the person be unable to make responsible decisions at the time of the hearing, and it is often easy for them to forego drugs or alcohol for the week or two before an examination, and to appear to be much better on the actual hearing date.

Speaking of drugs and alcohol, there is the related problem of treatment for the chronic abuser (who may also have mental illness — or even, after years of abuse, a dementing condition). There is effectively no involuntary treatment option for the chronic alcoholic or drug addict. Addiction programs are premised on the patient’s recognition of a problem, and so guardianship is not an effective way of getting into the treatment system.

For all of those reasons, we often discourage family members from pursuing guardianship over their mentally ill loved ones. That is not to say that it never helps; it sometimes does. But it is not the easy solution that hopeful family members are looking for.

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How Much Does It Cost to Get a Guardian and/or Conservator Appointed?

OCTOBER 22, 2012 VOLUME 19 NUMBER 39
We are frequently asked how much it will cost to get a guardian and/or conservator appointed for a parent or other relative. It is hard to answer with precision, but it is a fair question. Let us see if we can give you some guidance.

First, a few important assumptions. We need to be clear about this: we can’t tell you very much about what it will cost in Ohio, or California, or … you get the point. In fact, we can’t tell you with too much precision how much it will cost in Phoenix, Arizona. We practice in Tucson, and we frequently file proceedings in most of the other counties in Arizona. We do not do much in Maricopa County (Phoenix), partly because the costs and procedures are so difficult to predict there, and partly because there are plenty of lawyers who know how to do this kind of work in the big city.

Second important assumption: this is 2012. Like all our newsletters, this information will remain available on our website indefinitely. We don’t know how things might change next year, much less in a decade.

Third important assumption: that there is no wild peculiarity. If you file a guardianship petition as to your mother and she responds by filing a federal court action alleging that you are part of a conspiracy to violate her civil rights, the cost is going to go higher. Things like that don’t happen very often, but we can’t tell you that everyone will agree, that the evidence will be clear, or that the process will be smooth. So we are assuming here that there are not significant bumps in the road toward guardianship or conservatorship.

And our last assumption: we are only talking about the cost of getting you (or someone) appointed as guardian and/or conservator. You may need legal assistance after the appointment, as well (in fact, you probably will). That will depend on the complexity of your family member’s guardianship and conservatorship — and that can increase for a variety of reasons.

Enough disclaimers. How much will it cost to get a guardianship and conservatorship established?

The costs and fees are broken into several pieces. The breakdown is important, because some will be paid out of your family member’s estate, some can be waived if there is little or no money, and some will be your responsibility even if there are no assets or income from they can be paid. Here is a quick rundown:

  1. Court filing fees, certified copies and service of process (the petition and notice have to be handed to your family member by an authorized process server). Assume about $300-40o here. Most of that is the filing fee itself, which has to be paid before things get underway. It can be waived, but based on your inability to pay (in addition to your family member’s lack of resources or income).
  2. Your lawyer’s fees. If you hire a firm like us to represent you, your legal fees are likely to be $1500-2000 for an uncontested guardianship/conservatorship. This fee will be your responsibility regardless of how the proceeding turns out. It can be reimbursed from your family member’s resources if you are successful, but most lawyers will expect to be paid up front, or soon after proceedings are initiated, and not wait until you have been appointed and can get access to funds.
  3. The court-appointed lawyer’s fees. Unless your family member already has a lawyer (and you can’t select one for him or her — it would have to be someone they already had a relationship with or they hired after the proceeding began) the court will appoint an attorney to represent them. The lawyers who accept these appointments come from a rotating list, and they mostly charge their regular hourly rates. Some do more extensive investigations and pursue different lines of inquiry. The bottom line: don’t be at all surprised if the court-appointed lawyer’s bill exceeds $1,000, but that’s a pretty good maximum figure for a rule-of-thumb approximation. This one can be paid by the court itself if your family member has no resources.
  4. The court-appointed investigator. Another list of court appointees yields someone who has a social work, medical or legal background, and who is appointed to report to the court about your family member’s circumstances. The cost for that investigation and report is frequently in the range of $500-1000. As with the court-appointed attorney, these charges can be collected from the court if there are no assets available.
  5. In addition to the investigator, the court reviews a report from a medical provider. That is usually your family member’s primary care physician, but there are others who can qualify. Still, that is likely to add another $100-200 to the cost. In the real world, you will have to pay this up front to get the doctor’s opinion letter, though sometimes it might be included in a general check-up under Medicare or private insurance.
  6. Bond premiums are due if you (or someone else) are appointed conservator (of the estate). The premium for this insurance policy can be paid from your family member’s assets, and if they have no assets then it is unlikely that they need a conservator in the first place. The cost of the bond varies by the size of the estate being managed. Surety bonds can be difficult to purchase at any price, and the availability of bonding companies is often limited.

Add all that up and you can see that the cost of getting a guardian and conservator appointed will probably exceed $3,000, and can quickly grow to more like $5,000. And remember: that only gets you to the starting point. Additional costs for lawyers, accountants and court proceedings will add more to that figure over the years after your appointment. You need to be able to clearly articulate what benefit you will get from the guardianship or conservatorship to incur that kind of expense.

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What Is “Elder Law”?

OCTOBER 15, 2012 VOLUME 19 NUMBER 38
At Fleming & Curti, PLC, we practice “elder law.” But what does that mean? Are all our attorneys elderly? (No) Are they all senior members of a religious group? (No) Are all our clients above a certain age? (No) Then what is the significance of the term “elder law”?

Sometimes we rebel against the term. When asked what kind of law we practice, we might say something like: “We limit our practice to guardianship, conservatorship, estate planning, probate, long-term care planning, trust administration and special needs planning.” The problem with that formulation is obvious: it seems oxymoronic to “limit” your practice to seven items — and to be complete we probably should thrown in two or three others.

No one practicing “elder law” likes the term. It is not descriptive of our clients: a significant number of the cases we handle involve children — often even toddlers — and many of our clients are middle-aged children of aging parents. It is not easy for clients to relate to: when asked what constitutes an elder or senior citizen, most of our clients immediately think of someone just a few years older than themselves.

All elder law attorneys think from time to time about better descriptions they might use. The problem with that effort, though, is that no one has come up with a better label, or even one that comes closer to describing what we do.

What do we (elder law attorneys) do? For that matter, what do we (Fleming & Curti, PLC) do? Here’s a sampling:

Guardianship and Conservatorship. In Arizona, a guardian is a court-appointed person who makes medical and placement decisions for an incapacitated adult or a minor child whose parents are not available to handle those duties. A conservator fills a similar role, but handles money; a conservator can be appointed for an adult who is unable to manage his or her finances because of a disability, or for a child. Note that there is no requirement of a finding that the child can not handle money, or that the child’s parents can not do so; a child is legally incapacitated no matter how capable he or she might be, and the child’s parents do not have any automatic right to make financial decisions for him or her (as they do for medical and placement decisions). So that means guardianship and conservatorship may be necessary for the very young, and for adults who are incapacitated — whether by dementia or by other illness or condition.

Getting a guardian and/or conservator appointed is only part of the battle. Once appointed, a guardian or conservator is answerable to the courts, and must file annual reports and accounts. It is an intensive exposure to the legal system, and very difficult to navigate without the help of counsel. Like us.

Estate Planning. We write wills, trusts, powers of attorney and other estate planning documents. Most of our clients in this area are older than, say, their mid-50s — but not because that’s who needs estate planning. Younger people (including the parents of minor children, anyone who drives a vehicle, anyone who has ever seen a doctor) also need to complete estate planning. They just tend not to until they reach an age where they see the value. As one of our clients wisely said: “the two kinds of people you hate to deal with are doctors and lawyers — and when you get older you spend a lot of time with both.”

Older people may have more complicated estate plans. They may have larger tax concerns (because they have had time to acquire more assets). They may have others (children with disabilities, spouses with failing abilities, long-time friends they have helped over the years) who rely on them and need their consideration. They also may feel somewhat more mortal. And so they tend to be the ones who get to the lawyer’s office — and hence the estate planning business seems to be (but should not be) an issue for elders.

Long-term Care Planning. Nursing home costs will likely bankrupt most families if someone has to spend more than a few months in a care facility. Planning for how to deal with that should start early, and include (among other things) long-term care insurance. But most people don’t plan for possible institutionalization. Instead, they bravely insist that “I am never going into the nursing home.” Many of them turn out to be wrong, but most of those won’t know how wrong they were until they are, well, elderly. Most (but certainly not all) of the residents of nursing homes and assisted living facilities are elderly. So the practice of preparing people for that eventuality, and of helping spouses and children get ready to place a loved one in such a facility, has come to be thought of as “elder” law.

Trust Administration. While creating and funding a living trust may avoid the probate process, that is not the same as saying that your (successor) trustee will not need any contact with lawyers or accountants. In fact, your trustee will probably need both. But even your trustee will probably be elderly by the time you die. Odds are that you will be, too. So this tends to look like a legal problem involving the elderly, though plenty of trustees are younger and a lot of people sign trusts when they are younger, too.

Probate. Some people don’t plan for probate avoidance, either because they didn’t get around to it or because they consciously engaged in a cost/benefit analysis and decided it wasn’t worth the expense (to them, at the time). Whatever. Probate administration, like trust administration, is an area of practice that often — but not always — involves people who are elderly.

Special Needs Trusts and Planning. This one has the most tenuous link to the elderly. The beneficiaries of most special needs trusts are young — often infants or toddlers. Even the parents of special needs trust beneficiaries may be young — perhaps even in their 20s. So how does this become an “elder law” issue? It’s simple: the government programs and rules that are involved in special needs trust planning, establishment and administration are the same programs and rules involved in long-term care for the elderly. But saying “I’m an elder and special needs lawyer” just doesn’t trip lightly off the tongue, and it begins to sound like we are trying to describe our own circumstances, not those of the people we strive to help.

So that’s what we do as “elder law” attorneys. Is that all we do? No, we also have a few other areas we might work in — like guardianship of minors, advance directive preparation and interpretation, or recovering from abuse, neglect or exploitation. But that’s the bulk of our work.

Feel free to come up with a better, shorter, more user-friendly term. We’ve been working on it for years, but we are confident that there is a good answer out there. Somewhere.

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Living Trust Does Not Prevent Court Involvement After Misuse of Funds

JULY 16, 2012 VOLUME 19 NUMBER 27
Living trusts are increasingly popular and common. One of the principal attractions for most people who execute living trusts is that they can avoid the complication, cost and oversight of the courts and of lawyers. That usually means the trust signer’s family can save money and hassle.

Lack of oversight, of course, can sometimes lead to problems, including abuses. A recent Arizona Court of Appeals decision, though involving a dispute over a relatively small amount of money, can help illustrate the procedural hurdles and complications involved in providing the necessary oversight when trusts do not work out as planned.

Glenda Harrison (not her real name) had created a living trust, naming her daughter Candy and her son Jack as co-trustees. As she became increasingly unable to manage her own finances a guardianship (of the person) and conservatorship (over her estate) were initiated; Jack was appointed as sole guardian and conservator.

Among the reasons Jack was appointed as guardian and conservator was his allegation that Candy and her husband had dealt with the trust improperly. His chief complaint: Candy’s husband had loaned Glenda’s trust $9,264 but had gotten a note for $16,000, and had secured an interest in Glenda’s residence (what we all, inaccurately, call a mortgage) for the higher amount. Though the $9,264 had been repaid, Candy and her husband had not released the mortgage, claiming they were still owed the balance of the $16,000 note. As trustee of Glenda’s trust, Jack then brought a lawsuit against Candy and her husband to force them to release the mortgage, and for damages.

Candy insisted that the lawsuit in the trust’s name should be consolidated with the guardianship and conservatorship proceeding, which was granted. She did not, however, file a formal answer to the complaint itself, and Jack applied for entry of a default judgment against her and her husband. They then filed an answer, but did not hire an attorney.

About two months later, Jack asked the probate court to order Candy and her husband to transfer Glenda’s property to him as conservator, to prepare an accounting for what she had done as trustee, and to return money taken as part of the improper note and mortgage. Jack’s attorney scheduled a deposition for Candy, in order to ask her questions and get her responses on the record.

Candy asked that her deposition be put off, and reported that she had been in an auto accident and was under a doctor’s care. She included a note from her doctor saying that she should be excused “until further notice.” The probate judge agreed and ordered a thirty-day delay of the deposition, but warned Candy that she needed a more precise explanation if she wanted any further delay. She did file a request for another continuance before the new deposition date, but she neither included an updated doctor’s report nor set the request for hearing; as a result, she simply failed to attend her deposition.

Jack’s attorney filed another request with the probate court, this time seeking an award of attorney’s fees, an order that Candy and her husband actually respond and participate in the pending litigation, and payment of the costs associated with the missed deposition and court hearings involving that deposition. Candy filed a written response requesting additional delays, but the court denied the request. Neither she nor her husband showed up at the hearing.

Without any meaningful participation by Candy and her husband, the probate judge had little choice but to grant Jack’s attorney’s request that they be ordered to turn over everything they had relating to management of the trust and Glenda’s care and that they pay costs and attorney’s fees as well. After the order was entered, Candy  wrote to the court asking for reconsideration, arguing that she had not known her request for delay had been denied until the day of the hearing itself, and that she would need to appear telephonically for future hearings. The court denied this request, pointing out that Candy had “a long history” of seeking delays and failing to file required court pleadings. Judgment was entered against Candy and her husband for the underlying debt, for costs and attorney’s fees and for all the relief requested in Jack’s complaint and motions.

Candy appealed (interestingly, her husband did not). The Court of Appeals was not persuaded by her arguments, and upheld the probate court’s decision and judgment. It also added an award of additional costs and attorney’s fees incurred in connection with the appeal itself. Matter of Guardianship and Conservatorship of Horrigan, July 12, 2012.

So what does Glenda’s family’s dispute tell us about trusts, guardianships and conservatorships? Perhaps not a lot, but it does offer a chance for a few relevant generalizations:

  • Signing a living trust does not guarantee that there will be no court involvement in your affairs later. It just makes the precise nature of court proceedings — when they are necessary — a little more complicated.
  • Those of us dealing with family disputes would probably generally agree that lack of court oversight can sometimes encourage abuses by the very people — your family — whom you rely on to protect you. We don’t mean to overstate this, but we will speculate that Glenda would have told her lawyer that HER children got along well and were entirely trustworthy. We hear that a lot.
  • Relatively small disputes (in Glenda’s case, only about $6,000 was involved) can lead to large judgments. The court record does not indicate, but let us guess that the total costs and fees added up to several times the amount originally in dispute.

It might be that there was no way Glenda could have avoided the problems that arose. Perhaps her daughter and son-in-law would have done the same thing regardless of her planning or lack thereof, regardless of her son’s involvement, and regardless of court oversight. It is hard to be sure about what might happen. But when we ask: “do you completely trust your daughter (or son, or grandchild, or whomever you propose to name as trustee) to behave responsibly?” please think of Glenda and understand that we are not impugning your loved one’s integrity or honesty. We have just seen too many variations on this same story.

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Guardianship May Suggest Lack of Testamentary Capacity

MARCH 19, 2012 VOLUME 19 NUMBER 11
Can a person under guardianship sign a new will? After all, in order to have a guardian appointed (in Arizona, at least), the court must first have found that the person is impaired by a mental disorder (or some other cause) and that he or she “lacks sufficient understanding or capacity to make or communicate responsible decisions concerning his person.”

This is a question we have addressed before, in discussing a 1996 Mississippi case. It comes up from time to time and in different circumstances. The Mississippi case described earlier, for instance, involved a conservatorship rather than a guardianship proceeding, though the principles are the same in either circumstance. The bottom line, as described in our earlier article, is that a person may be able to sign a new will in Arizona — even if they have been determined to be incapacitated, or in need of (financial) protection.

A recent Arizona Court of Appeals decision revisited the question, with a slight twist. John Bartlett (not his real name) had been the subject of both a guardianship and a conservatorship order since 2004. On May 28, 2008, the probate court held a hearing on his request to terminate his guardianship. He maintained that he no longer needed a guardian, but the probate judge decided that he continued to be incapacitated — that is, that he was still unable to make responsible decisions regarding his own care.

That very same day John signed a new will. In it, he disinherited his daughter (his only child) and left his entire estate to his grandson. The document also revoked an earlier will, signed before the guardianship proceedings were begun, which had named his daughter as his personal representative and left his entire estate to her.

When John died a few months after signing his new will, a probate court dispute ensued regarding which document was valid. Did John have the capacity to revoke his old will, and to disinherit his daughter? Both wills were submitted for consideration, and the probate court found the new will to be valid and admitted it to probate.

When the personal representative of the estate filed a final report with the court, John’s daughter objected that her challenge to the new will (and to a trust signed the same day) had not been resolved. The estate’s personal representative disagreed, and filed motions to strike the daughter’s pleadings, enter summary judgment in favor of the later will, and close the estate. In a series of hearings, the probate court granted all of those requests.

The Arizona Court of Appeals disagreed. Although John’s daughter had not put on any evidence — indeed, she had not even filed any pleadings expressly objecting to the summary judgment request — the probate court should have been on notice that there was substantial evidence of John’s incapacity. The fact of a guardianship proceeding was enough to raise doubts about his ability to sign a new will, and summary judgment — entered without taking any evidence — was improper, according to the appellate judges.

The Court of Appeals takes pains to make clear that it is not holding that John’s will is invalid, or that people under guardianship can not sign new wills. In fact, the mere existence of a guardianship does not (in Arizona, at least) even create a presumption of incapacity to sign a will. But the existence of the guardianship proceeding, and especially the guardianship finding on the very day John signed his new will, should have alerted the probate court that there was some evidence in support of a challenge to that will. Estate of Blackford, March 13, 2012.

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“Vexatious Litigant” Title Takes On Real Meaning in Phoenix Case

MARCH 5, 2012 VOLUME 19 NUMBER 9
We have written before about changes to Arizona guardianship, conservatorship and probate proceedings adopted in the past year. Changes involved both probate laws and court rules. One thread running through both sets of changes: the notion that proceedings in probate court could be unnecessarily complicated by “vexatious litigants.”

The problem of a vexatious litigant should be obvious. In a court environment focused on thorough investigation — especially when there are allegations of wrong-doing — the costs can easily spiral out of control. There needs to be some mechanism to stop repetitive filings that impede, rather than advance, the cause of justice.

As it happens, the Arizona Court of Appeals has been dealing with just such a vexatious litigant for a year now. Five separate cases test the probate court’s ability to control multiple and frivolous filings by someone who has been tagged as vexatious. The vexatious litigant in those cases? The subject of the guardianship/conservatorship.

Mark Peterson (not his real name) first came to the attention of the Arizona court system after a party where, he alleged, he assaulted by several other individuals. He filed lawsuits against several people who were at the party. He sued the attorney who represented some of the partygoers. He harassed family members of others in attendance.

The Arizona courts ordered Peterson not to harass any of the people involved. It dismissed his lawsuits. It even entered a $30,000 sanction against him. The court’s presiding judge declared him a vexatious litigant, and ordered that he could not file any more lawsuits without the judge’s permission. He kept harassing his victims.

In an attempt to deal with Peterson, the judge appointed an attorney as his “guardian ad litem,” and authorized her to file a guardianship, conservatorship and/or mental health petition on him. She did, and the court appointed the Maricopa County Public Fiduciary (a public guardianship agency in Arizona). Peterson filed a petition to terminate the guardianship and conservatorship. The court did end the conservatorship, but maintained the guardianship; it also approved an order his guardian ad litem had obtained, ordering him not to harass her or go to her office at all. The Public Fiduciary filed a final conservatorship accounting, and the court approved their account.

Peterson appealed, and in January of last year the Court of Appeals upheld everything the probate court had ordered — partly on the basis that Peterson’s appeal was improperly filed. The appellate judges approved the court’s process for limiting Peterson’s ability to file motions and court actions.

Meanwhile, Peterson had already filed a request with the probate court that he be permitted to file a lawsuit against AHCCCS, Arizona’s Medicaid agency, and a malpractice action against his treating medical team. The probate court had conducted two hearings on his request, and had denied him the authority to file additional lawsuits unless he first met with his guardian ad litem, convinced his court-appointed attorney or guardian to file the lawsuits. Peterson appealed this denial, even as the appellate court was still considering his first (actually his third — but his first guardianship-related) appeal.

The Court of Appeals dismissed this appeal, too. It found that Peterson had failed to provide an adequate record (he had not ordered and paid for transcripts of the probate court hearing), and that the order finding him to be a vexatious litigant was proper.

That was not the last appeal, however. While the other two appeals were pending, Peterson filed a petition asking the probate court to terminate his guardianship and lift the pre-filing limitations on his access to the courts. The probate judge denied his petition, and — you probably guessed this — he appealed.

The Arizona Court of Appeals denied Peterson’s most recent request, just as it had denied the earlier appeals. It is well-settled by now, ruled the appellate judges, that Peterson is a vexatious litigant, and the restrictions on his ability to file multiple petitions, motions and lawsuits are appropriate in the circumstances.

One interesting item to note about the three probate-related appeals orders covering Mr. Peterson: the first was a 12-page opinion, the second 11 pages and the most recent down to 10 pages. Apparently the Court of Appeals is having less trouble upholding Peterson’s status as a vexatious litigant with each visit he makes to their court. In Re Petramala, January 14, 2011, May 5, 2011 and February 23, 2012 (unpublished memorandum decisions).

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