NOVEMBER 14, 2011 VOLUME 18 NUMBER 39
Let’s talk about guardianship and conservatorship proceedings. Before we do, though, let’s remember a couple of important principles:
We only know about Arizona guardianship or conservatorship. Well, OK — we might know a thing or two about other states’ rules and procedures — but we only practice in Arizona. Our observations are not universally applicable. They may not even be universally applicable inside Arizona’s borders.
As always, we simply can’t give specific case-based legal advice here, and you should not rely on this newsletter (or anything you read online or in books) to resolve your case. This is big-picture stuff. We can and do write about how the system works, what the rules look like, and what you might expect if you are involved in a guardianship and/or conservatorship matter in Arizona. Don’t expect to print out our articles, take them to court and argue with the judge, though. She won’t appreciate it, and neither will we. Plus it won’t work. Get good legal advice.
One thing we’ve learned from years of law practice: people think they understand their own cases, but they get blinded to the nuances (or maybe they aren’t told everything about the contrary evidence or opinions) and tend to overgeneralize. We don’t think that means they are stupid, or liars — they are just trying to put the best face on their case, and that’s human nature. But it also means that if you say “aha — he hit the nail on the head and that’s exactly what my worthless brother is trying to do” we’d be likely to tell you (if we were your lawyer): “slow down. It’s not that clear.”
We have written a lot about guardianship and conservatorship. Here’s one of our better (and most comprehensive) articles, a White Paper on guardianship and conservatorship. But it’s a difficult and confusing topic, with lots of information — and misinformation — out there.
Disclaimers aside, let’s talk about guardianship and conservatorship. Let’s start with some definitions of terms.
In Arizona, the word “guardianship” is applied to the court proceedings instituted to acquire legal control over another human beings’ person. In general terms, a guardian is authorized by the court to make placement and health care decisions for that other human being. Not every state uses the same word. Not every state has the same process to get a guardian (or whatever they call the office) appointed. But every state does have some kind of court proceeding in which a person can be appointed to manage the health care and living arrangements of another person.
In Arizona, the word “conservatorship” is applied to the court proceedings instituted to acquire legal control over another human beings’ finances. A conservator usually is authorized by the court to handle checking accounts, real estate, brokerage accounts, businesses, vehicles, horses, airplanes, family photographs, oil and gas leases — you name it. Just to keep the confusion level high, not every state calls this type of court-appointed person a conservator — some, in fact, call them guardians. But in Arizona, the person managing property and finances is a conservator.
Neither guardians nor conservators are “powers of attorney.” In point of fact, powers of attorney are pieces of paper, not people at all. But now we quibble. The person named to manage your property and/or your person in a power of attorney is properly called your “agent” or your “attorney-in-fact.” A guardian or conservator is neither an agent nor an attorney-in-fact. They usually have authority over agents and attorneys-in-fact, though it may require separate court action to make that clear, and it may be possible for the court to determine that the agent (or attorney-in-fact, if you prefer hyphenated names) still has authority even after appointment of a guardian and/or conservator.
Who can have a guardian appointed? Someone who is incapacitated. Their incapacity can be based on their age (minors — those under age 18 — are automatically incapacitated under Arizona law unless they are “emancipated”) or their circumstances. Generally speaking, parents are the natural guardians of their minor children, so they do not need to go to court to secure guardianship. The same is not true for any class of adults. So if your 18-year-old child has a lifelong disability that makes him unable to make responsible decisions, you do not automatically shift from being his natural guardian at 17 to being his legal guardian at 18. A court proceeding is necessary. Same thing if your husband or wife becomes incapacitated — you may need court proceedings to become guardian (if there is no power of attorney and there are things that need to be taken care of). “Incapacity” for adults requires a court showing of (a) a mental, medical or other condition that (b) affects the ability of the person to make and communicate responsible personal decisions and (c) makes it difficult or impossible for them to provide their own food and shelter without assistance. It is also necessary to show that (d) the appointment of a guardian will actually help accomplish that goal.
Appointment of a conservator is based on similar, but slightly different, grounds. First, minority is always considered a legally disabling condition, but parents are not the natural conservators of their children in the way that they are natural guardians. That means if a minor child comes into money, even if they live with both parents and all are harmonious and responsible, there is no way to manage that money without going through the conservatorship process. If an adult becomes unable to manage their money in order to prevent its waste or dissipation, they may have a conservator appointed, as well. Frankly, the definition of when a conservator can be appointed is a great deal less precise than that for guardianships, which can sometimes lead to problems.
An important reality for family members and friends to understand: if a guardianship and/or conservatorship proceeding is initiated, the court has been invoked and will not later simply step aside to let concerned — even appropriately concerned — family members take over. Once the courts are involved, they tend to stay involved.
That means that the cost of securing guardianship and conservatorship can be high. In Arizona, a lawyer is automatically appointed to represent the person who is alleged to be in need of a guardian or conservator. A medical report is required. A court-appointed investigator must go to the residence, conduct an investigation and file a report. There are significant court costs involved. Plus the process is complicated enough that the petitioner is almost always going to hire an attorney. That attorney’s bill is likely to approach half the total cost of getting the guardianship or conservatorship set up.
Much has been written, spoken and broadcast in recent years about the high cost of guardianship and conservatorship. The natural tendency of the system has been to make it more difficult to get guardians and conservators appointed, and to require them to provide more information, more frequently. Though that may be a positive development, it has the (presumably unintended) effect of making the process not only more difficult, but also more expensive.
So — guardianship and conservatorship can be difficult, expensive, even ineffective. Not always, of course, but there is a possibility and it proves to be the case too often. What can beleaguered family members do?
Most lawyers practicing in the field spend the first portion of any contact with a new client talking about how to avoid guardianship and conservatorship proceedings. Did your family member sign a health care power of attorney, a financial power of attorney, a living will, a living trust? Are there other ways to get done what needs to be done? What bad things will happen if we (that is, the family and the lawyers acting together) simply do not file a guardianship or conservatorship proceeding, even if one is warranted? Are there ways to get agreement from all the family members in advance, in order to hold down legal costs?
One important concern, at least in the case of adult guardianship and conservatorship: we will ultimately need to be able to prove that your family member has a medical, mental, emotional or other problem that prevents them from making their own personal or financial decisions. We will need medical evidence. Have you spoken with your family member’s physician, or psychologist, or other member of their treatment team? Can you get a letter from that person describing diagnosis, prognosis and any functional limitations? Without that, we may not be able to proceed. With that in hand, though, the process may be significantly streamlined.
Getting guardianship or conservatorship can be expensive, emotionally wrenching, and sometimes even ultimately unsatisfying. Sometimes, however, it is absolutely necessary. We just need to be sure you are prepared for the cost, the procedures, the limitations, and the possibilities in this type of legal proceeding. That’s why you hire a lawyer, after all.
Suppose for a moment that you are trying to get your financial affairs in order. You have been married for many years, and your spouse is gradually losing the capacity to make financial or planning decisions. You are pretty sure you know what your spouse would want, but he (or she) is no longer able to articulate those wishes. Is there anything you can do?
That was the dilemma facing Ollie Phillips, an Indiana resident. His wife Donna no longer had capacity to sign estate planning documents — or to manage her own affairs if anything should happen to him. The couple had earlier signed durable powers of attorney naming one another as agents, and both had identical wills leaving everything to one another and, on the second death, to charity (Mr. and Mrs. Phillips had no children).
In early 2008, 18 months after Donna Phillips had been diagnosed as suffering from dementia, Ollie Phillips signed a new living trust and transferred all the couple’s assets into the trust’s name. The trust named Mr. Phillips as trustee and a friend, Elizabeth Shoemaker, as successor. It provided that all the couple’s money would be used for the benefit of Mr. and Mrs. Phillips until both had died and, after the surviving spouse’s death, everything would be transferred to Ms. Shoemaker. Mr. Phillips signed all of the documents using his wife’s power of attorney.
Did Ollie Phillips have the power to effectively change his wife’s estate plan using the power of attorney? The question would be moot if he had outlived his wife, but he did not — he died less than a year after setting up the trust.
Shortly after Mr. Phillips died, another friend was appointed as guardian of Mrs. Phillips’ person and estate. The new guardian moved to set aside the trust Mr. Phillips had created, but after two days of hearings the trial judge upheld the trust and ordered the guardianship estate to pay the trustee’s legal fees incurred in defending the trust itself.
The Indiana Court of Appeals agreed with the trial judge. Of particular interest to the appellate court was the evidence adduced at trial about Mrs. Phillips having told the lawyer who drafted the trust that Ms. Shoemaker was “like a daughter” to the couple. The judges also pointed out that Mrs. Phillips remained the sole beneficiary of the trust until her death, and that there was no evidence that the trust was being mismanaged in any way. Evidence that Mrs. Phillips had more recently said that she thought Ms. Shoemaker was “money hungry” was not sufficient to allow the guardian to revoke the trust. The appellate court also agreed that Ms. Shoemaker’s legal fees to defend the trust should be paid by Mrs. Phillips’ estate. Matter of Phillips, May 17, 2010.
Does the Phillips case stand for the proposition that an agent can change the principal’s estate plan using a power of attorney at any time? No, it certainly does not. But in a specific case, with some indication of the wishes of the now-incapacitated person, and with a broadly-drawn power of attorney, it might be possible to make at least some changes. Among the safeguards in this case: the fact that Mrs. Phillips, if she once again became able to make decisions, could change the trust, and the involvement of a lawyer who interviewed her and worked with her to try to figure out how much her capacity (and wishes) could be protected.
Washington State resident Shirley Crawford, then age 80, had a difficult problem to deal with. She had fallen in 2001 and was hospitalized. Her only child, Anne, was severely mentally disabled and lived in Ms. Crawford’s home. Ms. Crawford needed someone to help her with management of her financial affairs and care of her daughter.
Ms. Crawford turned to a long-time friend and distant relative, Judith Thompson. With the help of a lawyer Ms. Crawford signed a power of attorney form giving Ms. Thompson wide-ranging powers over her finances.
Within three months Ms. Thompson was trying to use the power of attorney to make gifts to herself. The broker where most of Ms. Crawford’s money was held refused to honor the power of attorney for that purpose, saying it did not include gift-making authority.
In the following year Ms. Thompson and her husband secured a new power of attorney from Ms. Crawford — this one specifically allowing them to make gifts to themselves. They sold her house and used more than $300,000 of the proceeds to pay off their own debts and to buy a $200,000 boat for their Alaska fishing charter business.
It took almost three more years before the state Adult Protective Services office and, ultimately, the Washington courts to begin to undo what the Thompsons had done. While investigations and court proceedings were pending, the Thompsons apparently thought it would be helpful to their cause if they had Ms. Crawford on videotape approving of the gifts they had made.
The videotape showed Mr. Thompson telling Ms. Crawford that he had compiled a series of statements from things she had told the Thompsons. The list included such items as “I wanted [the Thompsons] to have my house.” Ms. Crawford was shown nodding and agreeing with the statements as Mr. Thompson read them.
The Thompsons’ videotape never got introduced in the guardianship matter. It did, however, get used in court — in a criminal trial in which Mr. and Ms. Thompson were accused of tampering with a witness. At that trial Ms. Thompson testified that she and her husband had transferred Ms. Crawford’s assets to their name to protect her from thieves, and that the “investment” in their fishing charter business was safer than the stock market.
A jury found the Thompsons guilty of witness tampering, and the Washington Court of Appeals upheld their conviction. The appellate court ruled that the Thompsons had reason to believe that Ms. Crawford would be called as a witness in her own guardianship proceeding, and that they were trying to induce her to give false testimony. State v. Thompson, November 23, 2009.
As often happens in exploitation cases, the Thompsons insisted vehemently that they were following Ms. Crawford’s wishes, and that they intended to take care of her developmentally disabled daughter. The facts did not bear out that assertion, however — over the course of their involvement, virtually all of Ms. Crawford’s money went to the Thompsons, and none of it went to the care of Ms. Crawford’s daughter.
The Thompsons were also charged with (and convicted of) theft. That much makes an all-too-common story of exploitation of a vulnerable elderly woman. It is even common for exploiters to try to enlist their victims in an attempt to whitewash the evidence of misbehavior. What makes the Thompsons’ case stand out is their successful prosecution for what that attempt was: tampering with a prospective witness in a contested court proceeding.
Is one who has been determined legally incapacitated and in need of a guardian able to revisit the court’s determination or challenge her guardian’s actions? Yes, wards may request the restoration of capacity and/or challenge the fitness of the guardian. In at least one state, however, wards are not entitled to legal representation unless a proceeding has been brought to terminate a guardianship or remove a guardian. Guardianship of Lon Hocker, July 10, 2003.
In August 1999, Priscilla Claman petitioned the Barnstable Division of the Family and Probate Court to be appointed permanent guardian of her 88 year-old father, Lon Hocker, Jr., who contested the need for a guardian. The court appointed attorney Kathy Pett Ryman to represent Mr. Hocker. After a trial the court found that Mr. Hocker suffered from multi-infarct dementia and was unable to care for himself by reason of mental illness. Ms. Claman was appointed to serve as guardian. The court admonished family members not to interfere with the guardian’s ability to implement a treatment plan for Mr. Hocker.
Over a year later the court vacated Ms. Ryman’s appointment as Mr. Hocker’s attorney. The next day, Ms. Ryman entered a notice of appearance on his behalf with no other pleading—she did not seek to remove the guardian or end the guardianship. Mr. Hocker’s guardian moved to strike the notice of appearance.
Ms. Ryman and the ward’s son opposed the guardian’s motion. After a hearing the court made note of Mr. Hocker’s diminished level of cognitive function and granted the guardian’s motion to prohibit Mr. Hocker’s attorney from appearing on his behalf. The judge, who seemed to think that the ward’s son was just trying to keep tabs on his sister, noted that any concerns about the guardian’s fitness could be addressed in an action to remove her pursuant to state statute. Ms. Ryman and the ward’s son appealed this ruling.
The Massachusetts high Court ruled that apart from an adversarial action “due process does not require that a ward be able to consult with counsel about his guardianship.” The Court emphasized, however, that the ward and his family members “remain free to challenge Claman’s fitness as guardian or the ward’s continued need for a permanent guardian …” Left unanswered was how he might accomplish that task without the aid of counsel.
In Arizona attorneys for wards (especially those with mental health issues) often have extended appointments. It is unlikely that a lawyer’s attempt to appear for even an incapacitated ward would be rejected.
When a person is no longer able to manage his or her own affairs, it may be necessary for a court to appoint a guardian (of the person) or conservator (of the estate). Who should be appointed? In most states the courts start from the presumption that family members should serve—but the highest priority usually goes to the person selected by the incapacitated person. That is not always the way things turn out, however.
There are at least three ways an incapacitated person might have input on the selection of a guardian or conservator. Once a petition is filed an attorney, a court investigator or the court itself might ask the proposed ward who he or she prefers to have act as guardian and/or conservator. In some cases the ward might have expressed a preference well before the need ever arose. And in some states, simply signing a durable power of attorney is taken as a preference by the signer for who should be appointed if the need later arises.
All three standards applied to Karla Iwen, a Minnesota woman. She had named her son Heinz Iwen as her agent in a durable power of attorney, and had specifically included a request that he be appointed if a conservatorship was ever contemplated (at the time Minnesota used the term “conservatorship” to encompass both personal and financial matters, but has since adopted the same language used in Arizona–guardianship is over the person, conservatorship over the estate). She also told the court that she wanted Heinz appointed.
The reason the issue even came before the probate court was that her other son, Thomas, had filed a petition to be appointed as her conservator. He had watched her decline while living at home, and was concerned for her safety and welfare. He did not think his brother Heinz was taking good care of their mother, and he cited the presence of mouse droppings in her bedding, a dead mouse in her fireplace, and the fact that she could not climb the stairs to the only bathroom in her home.
At the conclusion of the all-day hearing on the brothers’ competing requests to be appointed, the judge decided instead to name Karl Bushmaker, an independent professional, as guardian and conservator. Heinz appealed, arguing that his mother’s choice should be given first priority. The Minnesota Court of Appeals agreed, but nonetheless upheld the appointment of a professional.
The priority given to the ward’s preference to serve as guardian and conservator is just a priority, ruled the appellate court, and not a guarantee. When the ward’s best interests require appointment of someone else, the probate court is permitted—and indeed required—to deviate from that priority. Evidence of the living conditions at Ms. Iwen’s home supported appointment of someone else. Matter of Iwen, May 6, 3003.
Arizona law agrees with the Minnesota result. Under the guardianship and conservatorship statutes in Arizona, the probate court is specifically instructed to consider the proposed ward’s choice of guardian and conservator, whether made in a document previously signed or by current statement of the ward. The court is, however, permitted to bypass the ward’s choice if it determines that doing so would be in the ward’s best interest. It is because of the Arizona statute that powers of attorney prepared by Fleming & Curti, PLC, usually include a provision nominating the agent to serve as guardian and/or conservator if it should ever become necessary to involve the court in the process of selecting or supervising a fiduciary.
Two years before Erwin W. Schlueter died in 1997 at age 85, he had completed his estate planning. He had signed a will, a durable power of attorney for financial matters and a durable power of attorney for health care. When his relatives contested the validity of the will, they pointed to the powers of attorney as evidence that Mr. Schlueter knew he was already incompetent to make his own financial decisions.
Mr. Schlueter and his wife Frieda had watched neighbor Chris Bowers grow up, and they were particularly fond of him. In 1994, Mr. Schlueter even named the youngster as alternate agent in his power of attorney, to take effect if Frieda should die before him. Mr. Bowers was only seventeen years old at the time.
There was no doubt that Mr. Schlueter suffered from dementia at the time he executed his powers of attorney and (later) his will. His relatives asserted that the mere fact of the dementia diagnosis should be evidence of incapacity, and that they should be permitted to make the case for invalidating his will to a jury. In addition, they argued, when Mr. Schlueter signed the immediately effective power of attorney he tacitly admitted his own incapacity even before the will was signed.
Mr. Schlueter’s doctor and the witnesses to the will all agreed that he was confused, and that his short-term memory was poor. Mr. Bowers argued that the mere fact of a dementia diagnosis was not enough to get the case before a jury, and that the family had to show more specific evidence of lack of capacity.
Mr. Schlueter’s relatives pointed to the will itself. It identified his mother as his mother-in-law, and vice versa. It also described him as the “testatrix,” which would have made Mr. Schlueter a female. In response, Mr. Bowers submitted the affidavit of the secretary who prepared the wills for the Schlueters; she explained that she had prepared Mrs. Schlueter’s will first, and then switched names to make the identical will for Mr. Schlueter, and that the failure to switch “mother” and “mother-in-law” and to change “testatrix” to “testator” were her mistakes, not Mr. Schlueter’s.
The Wyoming Supreme Court reviewed the affidavits submitted and decided that there was insufficient evidence of incapacity to even submit the matter to a jury. The mistakes in the will, said the court, “demonstrate clerical carelessness rather than incapacity,” and the mere diagnosis of dementia did not preclude a finding that Mr. Schlueter had sufficient capacity to sign his will. Finally, granting a power of attorney, even an immediately effective power, can not be construed as an admission of incapacity. Estate of Schlueter, January 11, 2000.
