Posts Tagged ‘North Carolina’

Young Man’s Father Secures Guardianship After Summer Visit

OCTOBER 3, 2016 VOLUME 23 NUMBER 37
Sometimes a legal proceeding in another state can help illustrate the procedures in your own state — because they are different. A guardianship case in Georgia last week is a good example.

Melvin Peters (not his real name) is twenty-one years old, and he lives with his father in Georgia. Melvin has an autism diagnosis, which he first acquired when he was three. When Melvin was twelve, his mother was given custody in a North Carolina proceeding.

Every summer Melvin traveled to his father’s (and stepmother’s) home in Georgia for a long visit. That arrangement apparently worked well, until last summer. Melvin (then twenty) refused to return to North Carolina.

At the end of last summer, Melvin’s father filed a guardianship petition in Georgia. He alleged that Melvin need a guardian appointed; though he could make some of his own decisions, his father insisted that he “needs ongoing guidance.” Melvin’s court-appointed attorney met with him, confirmed that he wanted to live with his father, and reported to the court that it would be in Melvin’s best interest to stay with his father in Georgia.

Melvin’s mother objected, and argued that the Georgia courts did not even have jurisdiction. She argued that he was really a resident of North Carolina, and any guardianship proceeding should be brought there.

The Georgia court disagreed, and proceeded to appoint Melvin’s father as his guardian. Melvin’s mother appealed, and the Georgia Court of Appeals upheld the order. Melvin will, according to the court, continue to live with his father in Georgia. Estate of Pond, September 27, 2016.

How would Melvin’s case be different in Arizona? In several ways.

First, Arizona has adopted the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act (the UAGPPJA). That law mandates that a guardianship not be brought in a state where the proposed ward has lived less than six months (except in limited circumstances, none of which look like they would apply in Melvin’s situation). Well, actually, Georgia has also adopted the law — but not until this Spring. It became effective in Georgia on July 1, 2016 — well after the ruling in Melvin’s case.

The UAGPPJA is intended to reduce or eliminate guardianship filings in states where the subjects of the proceedings are just visiting. More importantly, it is intended to keep family members from taking an incapacitated person back to their home state before filing court proceedings. It has been adopted in almost every state (Florida, Texas, Kansas, Wisconsin, and Michigan are holdouts).

Another difference: in Arizona, as of August of this year, any custody order for a minor child would create a presumption about the child’s best interests after they turned eighteen. If Melvin’s father lived in Arizona, that would mean that he would have to show why the earlier custody arrangement needed to be modified, and the court would look to Melvin’s mother as the presumptive guardian.

Of course, if Melvin’s father had filed a similar proceeding in Arizona a year ago, that new law would not have been in place. Still, prior custody orders are supposed to be attached to any guardianship petition, and the guardianship court would probably have wanted to know why the same arrangement should not be continued after the incapacitated child’s majority.

That raises another likely difference: Arizona’s preference for limited guardianship. Although it is hard to be certain from the court’s description of Melvin, it seems likely that he would be viewed as pretty much able to make his own personal decisions in Arizona. If a guardian was appointed, it might well be a “limited” guardian — meaning that Melvin would be able to make his own decisions about where he lived (and who he lived with), and maybe even about his own health care decisions.

In fact, Melvin sounds like he might be a good candidate for the emerging notion of “supported decision-making“, under which he might avoid the guardianship process altogether. Arizona has no formal supported decision-making statutes — yet. That might well change as the system slowly shifts toward more autonomy and dignity for subjects of guardianship and conservatorship proceedings.

Would Melvin’s story have played out the same way if he had spent the summer with his father in Arizona? Almost certainly. But then he would have been spending his summers in Arizona, and that does seem unlikely.

Lawyers Continue Battle After Guardianship Dismissal

MAY 23, 2016 VOLUME 23 NUMBER 20
It will come as no surprise to anyone who has been involved in guardianship and conservatorship proceedings: the legal fees and related costs can often spiral out of control. Though most guardianship proceedings do not cost tens of thousands of dollars, some do. In fact, the battle can sometimes be about the attorneys’ fees, rather than the need for a guardianship.

A recent case in North Carolina illustrated this problem. It involved a woman we’re going to refer to as Connie, who was estranged from her brother Fred, her closest relative.

Connie knew that she was slipping, and that she was losing her ability to handle her own finances and personal decisions. She consulted a long-time friend, Harriet Hopkins. Ms. Hopkins was a lawyer practicing in the community, and she prepared the documents Connie needed — including a durable financial power of attorney. Because she had no one else to name, Connie chose to make Ms. Hopkins the agent under her power of attorney.

Some time later brother Fred learned that his sister was failing, that her attorney was managing her affairs and (most concerning to Fred) that the power of attorney included a provision that would have allowed Ms. Hopkins to make gifts to herself from Connie’s assets and income. Fred decided that he needed to file a court proceeding to get himself — or someone independent — appointed to take care of Connie’s finances and medical decisions. He hired lawyer James West to pursue the guardianship for him.

As in some other states, in North Carolina initiation of a guardianship automatically results in appointment of a lawyer as “guardian ad litem” for the subject of the proceedings. A local lawyer, Lynn Andrews, was appointed; she immediately reported that she was close friends with Ms. Hopkins and should not be appointed. The local court appointed another attorney as Connie’s guardian ad litem, and Fred’s lawyer began to discuss the case with her.

Very shortly after the case began, however, attorney Andrews let the other two lawyers know that Connie had hired Ms. Andrews as her personal lawyer. She vigorously objected to the proceedings on Connie’s behalf, and filed a motion to dismiss the guardianship altogether. Her argument: there was no doubt that Connie’s capacity was in decline, but no guardian was necessary because Connie had taken appropriate steps to assure her care was supervised and her finances taken care of.

In the course of the controversy, and in order to make sure there were no concerns, Connie signed a new power of attorney. The new document still named Ms. Hopkins as her agent, but removed the authority to make gifts. Everyone agreed that no gifts had actually been made while Ms. Hopkins held that power.

Fred’s petition for guardianship was dismissed within about a month of its initial filing. There were some further skirmishes about the precise terms of the dismissal, but Connie was no longer at any risk of having the court appoint a guardian — Fred or anyone else. And that might have been the end of things.

After the dismissal was finalized, Ms. Andrews filed a new petition with the guardianship court. She alleged that Fred and Mr. West, his lawyer, had behaved improperly by filing a guardianship petition without any basis. She sought an order requiring, as a penalty, payment of Connie’s legal fees by both Fred and his lawyer.

Mr. West responded by filing a petition against Ms. Andrews, asking that she be sanctioned, and ordered to pay his attorney’s fees and costs. His argument: by filing the request for personal sanctions against him (and his client) for allegedly abusive legal proceedings, Ms. Andrews had herself abused the legal system.

After a three-day hearing (which, it is worth repeating, was not about Connie’s capacity or her possible need for a guardian), the trial judge decided that sanctions against Ms. Andrews were appropriate. He first ordered that she would be personally responsible for Fred’s legal fees; later, the judge found that the total fees and costs of $122,987.72 should be assessed against her.

The North Carolina Court of Appeals considered the judge’s order, and decided (by a 2-1 vote, incidentally) that the case did not warrant any punishment against Ms. Andrews. The attorney’s fee award was reversed, and each side ended up paying their own legal fees (though Fred was ordered to pay the cost of a multidisciplinary evaluation of Connie that had been conducted for the proceedings below). Matter of Cranor, May 17, 2016.

What does Connie’s case tell us about guardianship and conservatorship in Arizona? While the proceedings can be different from state to state, some rules do apply across most states. One of those is that the parties — and their lawyers — have a duty not to let the proceedings run up giant legal bills.

A leading Arizona case addresses somewhat similar facts, but with a slightly different result. In the Arizona case, our Court of Appeals ultimately ruled that the lawyer for a guardian and conservator has a duty to constantly recalibrate one question: is the legal representation justifiable considering the cost and possible benefit to the ward?

UTMA Account Is Treated Like a Trust Account

JUNE 11, 2012 VOLUME 19 NUMBER 23
The Uniform Transfers to Minors Act is almost universally known by its initials: UTMA. A version of the Act has been adopted in nearly every US state, and the few which have not adopted it have its similar predecessor, the Uniform Gifts to Minors Act (known, unsurprisingly, as UGMA).

The UTMA is intended to make it easy to put money aside for minors. It allows someone to create a sort of trust arrangement, just by including those magic initials in the title to a bank or brokerage account — or, in fact, on any property. The account title identifies the minor beneficiary, the custodian who manages the property, and the fact that it is a UTMA account. It’s simple: just title the bank account as “Jane Doe, custodian pursuant to the Arizona UTMA for benefit of Johnny Doe.” It’s not even essential that precisely those words be used (obviously, you wouldn’t want to use them unless you were trying to give money to a child named Johnny Doe).

That is the easy part. Then come a lot of questions. Such as:

  • Who owns the money in a UTMA account?
  • Whose Social Security number should go on the account?
  • How can the money be invested? What can it be spent for?
  • What accounting requirements are involved?
  • Does the money have to be turned over to the child when he or she becomes an adult?
  • What standards apply to the handling of the money?
  • Can anyone else demand money from the account, or information about it?
  • Are there limits on how much money can go into a UTMA account? Are there limits on what kind of money can go into the account?

Once set up, the UTMA account belongs to the minor. The custodian has the ability to manage it, but does not own the money and can not use it for his or her own benefit. It should be treated like a trust for the benefit of the minor. The minor’s Social Security number should be provided to the bank or financial institution, and the minor will need to file tax returns if the income is high enough to require returns. When the minor reaches a set age (in most states and most cases, the age is either 18 or 21 — check with a qualified attorney about your state and circumstance) the custodian must turn over the funds. The minor — and the minor’s parents or other close family members — have the right to demand account information, and the custodian has an obligation to provide that information.

Those are the basic rules, but of course specific answers will depend on the details of each question. But a recent North Carolina case gives some guidance to help analyze UTMA accounts — and it provides a cautionary tale about the use and misuse of UTMA funds.

In 1996, when shares in the family business were sold, Elwood Blake (not his real name) set aside a portion of the sale proceeds for the benefit of his granddaughter, then three years old. He named his son Richard Blake as custodian of the funds, pursuant to the North Carolina version of the UTMA.

Five years later Richard Blake and his wife Elaine separated, and a bitter and protracted legal struggle ensued over property division, custody of their children and, eventually, administration of the UTMA account for the benefit of their daughter. Elaine Blake demanded an accounting from her ex-husband and ended up filing a court proceeding to secure it.

After a court battle the judge hearing the case decided that Richard Blake had mishandled his daughters funds in a number of ways. He had been unreasonable in his refusal to provide accounting information. He had made speculative investments (including putting more than $50,000 into a venture capital fund). He had used his daughter’s funds to pay her medical and dental bills, when he should have been responsible for them himself. And he had used $5,000 of his daughter’s money to make a contribution — in his own name — to a local Republican Party cause.

The judge ordered Richard Blake to return $73,269.80 to his daughter’s UTMA account. It also ordered him to repay another $58,944.24 in lost investment earnings occasioned when he misused his daughter’s money. Then it ordered him to pay his ex-wife’s legal bills for having to bring the action — her legal fees totaled another $138,531.85. Finally, it removed him as custodian from all the UTMA accounts, finding that his mishandling precluded him from being in charge of the remaining funds or the money he must put back.

The North Carolina Court of Appeals reviewed the trial judge’s rulings, and found nothing wrong. There was plenty of evidence to support the judge, the appellate court ruled, and Mr. Blake should have treated his daughter’s UTMA account like a trust. When he did not, he became liable for the misused funds, the lost interest and the legal fees incurred in protecting his daughter’s interest. Belk v. Belk, June 5, 2012.

An interesting side note: “Richard Blake” already had a checkered history with the law. A lawyer and prominent businessman, he had won a seat as a local judge after criticizing his predecessor — the judge who handled a part of his divorce proceeding. When he refused to step down from his position on the Board of Directors of an auto-parts company the North Carolina Supreme Court removed him from his judicial office and banned him from serving in any future judicial position.

Attorney’s Position on Ending Guardianship Case Approved

MARCH 8, 2010  VOLUME 17, NUMBER 8

{Ed. Note: this week’s Elder Law Issues was written for us by our friend, and nationally-known elder law authority, Prof. Rebecca C. MorganProf. Morgan holds the Boston Asset Management Chair in Elder Law at the Stetson University College of Law, and she is the Director of Stetson’s Center for Excellence in Elder Law.]

The ethical rules for attorneys (the Rules of Professional Conduct) impose a number of duties upon lawyers in their dealings with clients. Sometimes the rules require an attorney to take protective action on behalf of a client who has diminished capacity, even when the client disagrees with the attorney doing so.

Janet Clark suffered a traumatic brain injury as a result of a serious car accident. She was subsequently determined to be incapacitated and a North Carolina probate judge appointed a guardian of the person and property for her. A little over eighteen months after her accident her husband petitioned to end her guardianship, arguing that she had been returned to competence.

In the meantime a personal injury case filed on her behalf settled for $4,000,000, and after the payment costs and fees the balance was to be paid to the trustee of a special needs trust to be established by the attorney’s firm. The attorney had earlier created a pooled special needs trust, and he sat on its Board of Directors. He used that trust for Ms. Clark’s settlement funds.

During the case the attorney had come to the conclusion that the husband was attempting to influence Ms. Clark while she was incompetent. The attorney concluded that the pooled SNT would be the best way to ensure that funds would be both protected and available for Ms. Clark’s future needs. Because of this concern, the attorney opposed the proceeding filed by Mr. Clark to terminate the guardianship, and he sought a new evaluation of Ms. Clark’s competency.

Ultimately Ms. Clark was restored to competency and motions were filed, included motions regarding attorney’s fees. The appellate court rejected the Clarks’ argument that it was wrong to award the fees, especially in light of the guardian’s and attorney’s opposition to efforts to end Ms. Clark’s guardianship. After reviewing state law the appellate court concluded that the attorney’s fees should be paid.

The appellate court noted that the facts supported the guardian’s concerns regarding efforts to end Ms. Clark’s guardianship. The trial judge had found that the attorney had a good faith belief that terminating Ms. Clark’s guardianship was not in her best interest and the attorney had a duty to “exercise his best judgment” which, according to the trial court, is exactly what he did.

The appellate court also upheld the trial court’s finding that there was no conflict of interest because the attorney had fully disclosed his relationship with the pooled trust. According to the court, the Clarks failed to prove that this relationship in any way adversely affected the attorney’s representation of Ms. Clark. In re Clark, February 2, 2010.

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