Posts Tagged ‘Washington’

Ohio Probate Judge Describes Court as “Superior Guardian”

DECEMBER 27, 2011 VOLUME 18 NUMBER 44
Carl Smith is a developmentally disabled young man living in Ohio. When he reached age 18, his mother Peggy Smith applied to the local probate court for appointment as his guardian. She was appointed, and Carl continued to live with her for the next several years.

In 2005 James Stewart moved into the Smith home. Mr. Stewart was a recently-released felon; he had spent fourteen years in the Ohio prison system after a rape conviction. Mr. Stewart and Ms. Smith later married.

In 2007 Carl Smith reported that his stepfather had slapped him. Without any further evidence of violence, authorities simply closed their investigation. In 2008 Carl reported that his stepfather had beaten him with a belt; caregivers at his day program observed cuts and bruises, and a report was filed. Mr. Stewart was charged with a felony for the alleged abuse, and he represented himself at trial. He was convicted.

Meanwhile, the probate court learned of the assault charge and scheduled its own hearing into Carl’s care and living arrangements. Concerned about his safety, the probate judge removed Mrs. Stewart (the former Ms. Smith) as guardian and appointed a private fiduciary to make placement and treatment decisions for Carl. Carl moved into a group home with two other developmentally disabled residents and a full-time caregiver.

Mrs. Stewart appealed her removal as guardian. The Ohio Court of Appeals agreed that her removal was premature as the criminal charges against Mr. Stewart had not yet been resolved. At about the same time, the same Court of Appeals also reversed the conviction of Mr. Stewart on the assault charge, finding that he should not have been allowed to represent himself in his criminal trial.

The county prosecutor made a decision not to re-try Mr. Stewart on the assault charge, since he had already served as much jail time as he would get if there was another trial. Mrs. Stewart then sought approval to return Carl’s guardianship to her, and to bring him back into her — and her husband’s — home.

The Ohio probate judge declined to make Mrs. Stewart the guardian for her son once again. After a court-appointed investigator reported that Carl was frightened of Mr. Stewart and happy in his current environment, the judge ruled that Mrs. Stewart had exposed her son to potential and actual harm.

In a guardianship case, ruled the probate judge, the court is the “superior guardian” and ultimately responsible for decisions about placement, care and welfare. The appointed guardian “is simply an officer of the court subject to the court’s control, direction and supervision.” With that responsibility, it is incumbent on the probate court to investigate and act on any concerns about the well-being of wards in guardianship proceedings.

Mrs. Stewart appealed again. She argued that the probate court had disobeyed the earlier Court of Appeals instruction by not returning Carl to her care, and that it had no jurisdiction to initiate its own investigation into Carl’s living arrangements.

In its second view of the guardianship matter (and its third look at the Stewart/Smith family) the Court of Appeals dismissed Mrs. Stewart’s allegations. It agreed with the probate judge that the court is the “superior guardian,” and that a guardian’s actions are always subject to the court’s review. The appellate court quoted a 2010 Ohio Supreme Court decision (In Re: Guardianship of Spangler) in which the state’s high court had ruled that “the plenary power of the probate court as the superior guardian allows it to investigate whether a guardian should be removed upon receipt of sufficient information that the guardian is not acting in the ward’s best interest.” In Re: Guardianship of Smith, December 16, 2011.

In addition to Ohio, courts in Mississippi and Washington have described their local probate courts as the “superior guardian” in recent guardianship disputes. What does that mean? As a practical matter, it means that court-appointed guardians — even when they are also the parents or other close family member — are responsible to the probate judge for their decisions about care and placement. The probate judge may investigate, may enter restrictive orders and may even remove guardians when it appears necessary for the ward’s safety or well-being.

Lawyer Suspended After Filing Guardianship Petition on Client

JUNE 22, 2009  VOLUME 16, NUMBER 45

A lawyer’s job is, of course, to help his or her client to accomplish the client’s goals. Sometimes, though, the client’s capacity may be diminished, and particularly in the elder law practice. What should the lawyer do when the client seems to be vulnerable to financial exploitation, or physical or emotional abuse? How far may the lawyer go to protect the client? When does the lawyer have a duty to take action?

The rules of ethics governing lawyers actually address the question. The American Bar Association has developed “Model Rules of Professional Responsibility,” which have been adopted (in some form) in nearly every state. One of those Model Rules, Rule 1.14, addresses how to deal with a client with diminished capacity. The central principle: a lawyer should strive to “maintain a normal client-lawyer relationship” with the client, despite the diminished capacity. The Rule specifically recognizes that sometimes it can even be necessary for the lawyer to initiate some sort of protective action — possibly including a guardianship or conservatorship proceeding.

Stephen Eugster, a Spokane, Washington, lawyer, thought he faced that question. An elderly widow had consulted him about the estate plan she and her husband had set up before the husband’s death. Although the plan gave considerable control to her son, the widow no longer trusted the son to handle her finances. She wanted to remove him as her agent and trustee, and try to make him return assets she thought had improperly been transferred into his control.

Mr. Eugster prepared new documents naming himself as agent and trustee, and had his client sign them. Then he approached the son about getting further information and transfer of assets. As it happened, the son was also a former client of Mr. Eugster’s.

After a brief inquiry Mr. Eugster decided that his client’s son was acting properly. He wrote to his client, suggesting that she should be willing to trust her son and let him once again take responsibility for all her finances. She responded by seeking advice from a different lawyer, and her new attorney sent Mr. Eugster a letter dismissing him and revoking his authority under powers of attorney and the trust.

That apparently set off Mr. Eugster’s alarm bells. He was convinced, he said later, that his client must not have been competent, and that the new lawyer and her new trustee must have exercised undue influence over her. Without consulting or even visiting her, he filed a petition seeking appointment of her son as her guardian.

Several months, one professional mental evaluation and $13,500 later, the client conclusively established that she was competent and acting on her own initiative. The guardianship petition was dismissed. The client, however, complained to the Washington State Bar Association.

After a lengthy investigation and hearing process the Disciplinary Board of the Bar recommended that Mr. Eugster should be disbarred. The Washington Supreme Court, in a 5-4 vote, softened the punishment to an 18-month suspension and an order that he repay the legal fees his former client incurred to defend the guardianship. Disciplinary Proceeding Against Eugster, June 11, 2009.

Mr. Eugster had argued that Rule 1.14 recognized that he might have an obligation to actually file the guardianship petition, and that he truly believed that his client was at risk. The Disciplinary Board pointed out that Mr. Eugster had not actually made an investigation to determine whether his client’s capacity had slipped since had last seen her several months before, and that in any event his Petition revealed extensive information obtained from his client during the representation. The Court agreed with the Bar that Mr. Eugster had violated his ethical duties in a number of ways, including acting against his client’s interest, seeking a resolution that ran counter to the purpose for which she had retained him, and disclosure of client confidences.

Four Justices dissented from the Supreme Court’s opinion. All four of them would have imposed permanent disbarment rather than the 18-month suspension of Mr. Eugster’s law license.

What might Mr. Eugster have done if he did think he needed to “protect” his client? The ABA’s Rule 1.14 actually provides several suggestions, none of which Mr. Eugster seems to have considered. As part of the Rules, the Bar offers detailed Comments that lawyers can look to when trying to resolve ethical dilemmas. Comment [5] to Rule 1.14 gives some useful guidance to lawyers who may be concerned about a client’s vulnerability. The basic idea behind the comment: a guardianship petition, while permitted, should be the last resort, after consultations with other professionals, family members, state protective services and other individuals or groups. Always the lawyer should keep in mind the client’s wishes, values, best interests and goals .

Ironically, the lawyer who took over Mr. Eugster’s client seems to have reviewed Rule 1.14 and the Comments — and acted accordingly. One of the suggestions made by the Comment is that the lawyer might seek out appropriate professional services and use powers of attorney and other protective arrangements short of court action. The new lawyer’s approach followed those suggestions perfectly: he had the client sign a new trust and powers of attorney, naming a professional fiduciary to manage her affairs. That allowed the client’s interests to be protected without compromising her desire not to extend her son’s authority over her personal or financial affairs.

Arizona Community Property Is Not Always Subject To Probate

OCTOBER 9, 2000 VOLUME 8, NUMBER 15

Arizona is one of nine “community property” states in the country, and that can be the source of some confusion about estate planning, taxes and property ownership rights for married couples. Recent changes in Arizona’s law make the “community property” designation a little more friendly and understandable, and the benefits to this unique property ownership choice are now clearer.

“Community property” concepts were not part of the English common law. Under the system imported to most of the American states, property was owned by one spouse or the other, though the non-owner might acquire some rights in his or her spouse’s property. The French and Spanish, however, understood the marital community to be a separate entity from either spouse individually, and permitted the “community” to own property. Each spouse then holds an equal interest in the community’s property.

Those American states with rich Spanish or French histories tended to adopt some version of the community property concept. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin are community property states, although the method of implementing the concept varies somewhat. Alaska also permits some trust assets to be held as community property.

In community property states a married couple is presumed to hold assets as community property regardless of the actual title on the asset. Couples may, however, choose to hold their property in joint tenancy or as tenants in common if they wish.

One important advantage to having assets titled as community property comes, oddly enough, from federal tax law. Although capital gains taxes are ordinarily due any time an appreciated asset is sold, the increased value of property held by a decedent at the time of death is not taxed. The property’s income tax “basis” is said to “step up” to its value on the date of the owner’s death, often resulting in substantial income tax savings for heirs.

Jointly owned property only receives a partial “step up” in basis. Property held in joint tenancy will usually only get half the income tax benefit on the death of one joint owner. Community property, however, is treated differently: the entire value of a community property asset gets “stepped up” to the value on the first spouse’s death, resulting in twice the income tax savings.

The main drawback to holding community property in Arizona has long been the requirement of a probate proceeding to pass the property to the surviving spouse. Although the long-term tax savings can be substantial, the probate costs are immediate and, in most people’s minds, too high. Since 1995 Arizona has permitted married couples the best of both worlds: property can be held as “community property with right of survivorship” and secure the favorable income tax treatment while still avoiding the probate process. The value of this type of property ownership is, of course, restricted to married couples.

One caveat: some commentators, relying on fairly arcane interpretations of the federal tax law, argue that the “community property with right of survivorship” designation could conceivably be found to result in no step up in tax basis at all. So far the federal government has not taken such a position, but there remains some slight possibility of a problem. In addition, the effect of titling separate property as community property (with or without the “right of survivorship” language) has more than just tax effects. In other words, you should consult an Arizona attorney before changing title on your existing assets or deciding how to title a new acquisition.

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