Sunday, August 30, 2015

The New Disclosure Requirements for Oregon Conservators and Why they should be Putting the Money they Manage in Index Funds



The Oregon legislature recently changed what professional fiduciaries must disclose when they ask to be appointed conservator for an incapacitated adult, and what they must include in the annual accounts to the court. Once the law goes into effect, professional fiduciaries, in addition to the long list of disclosures already required, must disclose details about their money management skills, their fees, and the fees of those they will hire to manage the money of the protected person. In annual accounts they will have to disclose the fees paid from conservatorship funds to brokers and money managers. The new law focuses on the murky relationship between conservators, money managers, the prudent investment rule, and appropriateness of paying brokers to manage money for protected persons.

For a long time informed retail investors have known that actively managed funds do not and probably cannot outperform investments managed by a computer. Investment managers are not worth what they get paid and their fees can easily turn profitable investments into money losers. The new law forces professional fiduciaries to ask themselves why they are giving professional money managers a cut of the protected person's money.

The New Rule

Under the new rule a proposed conservator must now disclose the following:
  • The professional experience, investment credentials and licensing under ORS Chapter 59 of the fiduciary or person acting on behalf of the professional fiduciary. 
  • Any revenue sharing agreement between the fiduciary and another person and the manner in which those fees will be computed 
  • An acknowledgment that the fiduciary will invest money of the protected person according to the prudent investor rule (which is in the trust code
The new law then requires that conservators, in their annual accountings, disclose to the court any fees taken from the funds of the protected person by brokers or money managers. That means conservators are going to have to ferret out and reveal how much Edward Jones is charging the protected person for its sage advice and include that amount in the accounting. This has not always been done in the past and is not easy to do.

What problem does this new law solve?

The more cynical in Oregon’s elder law community see the new law as an effort by Allan Trust, our biggest home-grown trust company, to squeeze the competition. Businesses that have done the legwork and put together the capital to become trust companies (or banks) can serve as trustees of trusts without court appointment and can serve as conservators for incapacitated people without posting a bond. Non-trust company fiduciaries (I have written about them here and here and here) can only serve as trustees if they are court appointed and must post a bond in conservatorship cases.

Most non-trust company professional fiduciaries are social workers at heart who manage the protected person’s money as a sideline. Under the new law these social worker types will have to disclose their lack of experience in money management and tell who they intend to use for that purpose. I have never heard of fee-sharing between a non-trust company conservator and a brokerage house, but if it is going on it is going to have to be disclosed. Compliance with the new disclosure requirements will not be difficult and I don’t think it will have much effect. The new disclosures will be buried in the pages of disclosures a professional fiduciary must already make. I doubt that many clients considering a professional fiduciary have been fooled into thinking that their chosen fiduciary with a masters in social work it also a hedge fund manager.

In addition to disclosing their experience in investing, professional fiduciaries will be required to swear allegiance to the prudent investor rule. The rule comes from the trust code and conservators have always had an obligation to follow it. They now must swear under penalty of perjury that they will. The prudent investor rule has been around for a long time and simply requires that trustees invest prudently, diversify, and consider a variety of economic factors when investing. It is a commonsense rule that guides most reasonable investors whether or not they are professional fiduciaries. You can read it here.

Finally, conservators will have to disclose in their annual accounts the money taken from the funds of the protected person to pay brokers and money managers. This could be a problem for a lot of conservators and brokers, but requiring it is a good thing.

I have looked at a lot of brokerage statements when writing final accounts for a protected person. There is no line on these multi-page forms where the brokerage tells you how much it received for managing the funds. I survived college, law school, and a fair amount of post-doctoral work. I have practiced law for decades. Even with all this education, the statements sent to me by most brokerages are incomprehensible. I know from the practicing law that simplicity of expression requires intelligence and hard work. I could therefore conclude that the complexity of brokerage statements is because stock brokers are both dumb and lazy. I really don’t think that is the case. I think there is an intentional effort to disguise what is going on and how much is being charged. With the new requirement that has to change.

I have often listed the opening and closing balances of a brokerage statement and then passed on brokerage the statement to the court. The annual accounts I have submitted like this have been approved. That is fine for the dead and disabled, but when it comes to my own money, I have no intention of paying the high fees for active money management. I let computers do the work.

The Prudent Investor Rule, Conservatorship Funds, and Actively Managed Funds

The prudent investor rule comes from the trust code and requires that a trustee invest funds using a set of common sense guidelines. I apply these same guidelines to my own investments. Being that I don’t want to pay brokerage fees, I could take the time buy stocks and bonds on my own based upon my risk tolerance and my financial goals. But I don't. Managing money is boring to me compared to the practice of law. I don’t want to do it and don’t want to pay high prices to have it done for me. So I invest in index funds.

Index funds are computer managed and track a market. The biggest provider of index is Vanguard. I bring it up by name only because it is the largest of the index fund providers. I have one fund that tracks the Standard and Poors 500. When the market goes up I make money. When the market goes down, I lose. I have other funds in a fund that mixes income, asset growth, and risk avoidance so that I can retire at a target date. The fee for having my funds managed is less than half a percent of the amount invested. There is no load (fee) for putting money into the fund and I do not incur capital gains because some bozo is buying and selling stocks in my account trying to beat the market. With little effort and little expense I meet my personal needs and, incidentally, the requirements of the prudent investment rule.

It has been a poorly kept secret for decades that money managers cannot outperform the market. There are two reasons to believe that professional money management cannot be worth its cost. One is empirical: the other is logical.

  • The Empirical Argument: Professionally managed funds available to retail investors have never beaten the market as a whole over any significant period of time. 
  • The Logical Argument: If the market is efficient, the price of an asset in the marketplace is its value. Thus, if your brilliant broker can buy an asset at a price below its value and sell at a price above its value, then either the market or the broker is corrupt. 
The proponents of managed funds depend upon tall tales and superstition. With millions of fund managers playing the market it is impossible that some of them will not beat the market for a period of time before returning to the mean. These stories of success are always trotted out to distract potential customers from things like math. Someone wins the lottery too. We do not, however, pay past lottery winners to pick our numbers for future lotteries.

The empirical evidence and economic theory are consistent. If the market is fair it will reflect the true value of an asset. If a stock picker can produce returns better than the market, it is either because the market is flawed or the picker has the kind of inside information that should put him in jail. When a decent return on investment in the market is three percent, the stock picker charging two percent for his efforts is taking almost all the return for himself. Managed money for average people in the modern world of big data is an elaborate scam.

The downside of managed money can be seen here. The web page is run by the Financial Industry Regulatory Authority (FINRA). Sign in and find the fund that your broker recommends and look up the costs. Then take a look at returns. Look up the Vanguard funds, or other index funds. Managed funds are simply not worth the money. Conservator’s have used and kept retail brokerage accounts for years because it was accepted and brokers advertise on television. We used to get our plane tickets from travel agents. It is time to change. With conservators now required to report and justify the high money management costs, perhaps the time to change is now.

Complying with the Prudent Investor Rule with Index Funds

In a nutshell the prudent investor rule requires the conservator to maximize net income while minimizing risk. Individual situations may require different balances of income and capital appreciation. Some conservatorships may have particular financial goals, and conservators will always struggle when they have come into possession of unusual assets. Many times, however, a conservator obtains possession of existing investments held by the protected person and is charged only with making sure that the funds are invested pursuant to the rule so that adequate resources are available for the protected person’s long term care.

Within a short time after being appointed, a conservator will be able to estimate the life expectancy of the protected person and care costs. If funds will exceed the cost of care, the conservator will have to consider the protected person’s estate plan and the interests of heirs. Other income, tax status, other assets and special goals will play a part in the investment decisions, but even non-trust company fiduciaries are familiar with balancing these factors.

With the considerations in hand, the conservator can browse the various funds at a company like Vanguard that offers a smorgasbord of funds with asset mixes designed to meet particular needs. As I mentioned, my own asset mix is aimed at retirement. The asset mix for a particular protected person might be quite different from mine, but with a reasonable amount of attention the conservator could quickly have an investment mix that meets the rule.

Conclusion

The new Oregon disclosure statute may be a blessing, but not for the reasons the legislature had in mind. The disclosures themselves will be buried among the long list of disclosures professional fiduciaries must already make. I doubt anyone will be choosing their professional fiduciary based upon the fiduciary's commitment to the prudent investor rule. However, if fiduciaries start to take their obligations seriously and begin seriously looking at index funds as a way to satisfy the rule and reduce costs to the protected person, everyone in the system--with the exception of stock brokers--is likely to benefit.

Wednesday, August 26, 2015

Mediation, Mediators and Mediation Styles in Multnomah County Probate Mediation


The parties to disputes in Multnomah County protective proceedings (guardianships and conservatorships), estate administrations and trust cases are required to go through mediation before they can proceed to a court hearing. The requirement has been in effect for a couple of years now and Multnomah County’s probate judge assures me that it has been a success. A previous post on the Multnomah County mediation program can be found here.

I am approved as a probate mediator by the Multnomah County probate court. I took a forty hour course in mediation at Portland State. I took the shorter course in probate mediation and I did nearly two years of twice-a-month supervised mediation in the Multnomah County small claims department. These credentials qualify me to be on the list of approved probate mediators. I maintain my educational requirement by going to the annual two-day conference of the Oregon Mediation Association. I mediate cases and I represent clients who are having cases mediated by others. Thus, I offer you, dear reader, a brief guide to mediators and mediation styles in Multnomah County probate cases.

The lawyer who is a part time mediator.

This is me. I pay my mortgage being a probate lawyer and do mediation on the side. A lot of lawyers want someone like me to do mediation because, as a lawyer, I understand the law and the requirements of the local courts. If possible, I will move the parties quickly toward an agreement that can easily be turned into a court order.

I was trained in facilitative mediation. In that arm of mediation the mediator is to be non-directive and is there to assist the parties to the mediation in negotiating effectively. In a perfect mediation world, the parties will resolve their differences and leave the room hand in hand to live happily ever after. In this type of mediation, the parties are in the same room and face each other across the table. It is intense and difficult. Most part time lawyer-mediators quickly give up on it and move to the easier separate room/settlement conference style of mediation often used by judges. (More on that below.)

Several Multnomah County probate lawyers have taken the forty hour course and the shorter probate course in order to get work as a mediator. Not so many of them have done the supervised practice required for inclusion on the list of mediators approved by the court, but it is not required that you be on the list to be selected as a mediator. The parties to the dispute can choose any mediator they want. If the person making the choice is a Multnomah County probate lawyer, he or she is likely to prefer someone familiar. That will be another Multnomah County probate lawyer. In my cases, I am more often selected to mediate a case because of who I know rather than what I know.

The knock on lawyer/part-time-mediators is that they can’t take the pressure of same room mediation, all they care about is getting an enforceable judgment, and they manipulate rather than facilitate. For this reason they are mostly absent when the Oregon Mediation has its meetings and probably never finished the regimen of supervised mediation required for inclusion on the approved list of Multnomah County probate mediators. The advantage of having one of these mediators is that the mediation process will be shorter, less stressful, and more likely to result in a solution that is pleasing to the lawyers.

Retired Judges (and lawyers who thought they should have been judges)

In many courts today the parties to the case are required to go to a settlement conference as a condition of going to trial. The settlement conference is conducted by a judge. The lawyers go into chambers and a judge listens to the evidence that may be presented at trial and opines thereafter about what he thinks the outcome will be. With this input, the lawyers are encouraged to have their clients settle the case along the lines of what the judge thinks the ultimate outcome will be. Many judges like this process and, when retired, offer themselves up to help settle case just the way they did it when they were settlement judges. Sometimes, they are not judges, but experienced litigators who have given up the courtroom. In either case the experience is the same.

These mediators do evaluative mediation. They evaluate the strength of each side’s case using their own expertise and advise the parties on a settlement that approximates what might happen in court. They almost always separate the parties into different rooms and move back and forth between rooms nudging the litigants toward an acceptable settlement.

The personality characteristic that make a person want to be a judge, almost completely foreclose that person from doing facilitative mediation. Judge’s want to judge and direct because they believe they know, in the final analysis, the best outcome. These mediators, whether judges or litigators, never belong to the Oregon Mediation Association. They are most comfortable around lawyers and they advertise in the Oregon State Bar Journal. Lawyers like these kinds of mediators because they do something familiar.

The knock on the retired judge is that he is expensive and overly directive. You pay a premium price for the experience the judge brings to the mediation. And like the lawyer/part time mediator, a judge tends to see the solution and a court order that everyone can live with. It is a low goal with a high cost. If you are involved in a high emotion family dispute, you might want to aim a little higher than this.

Real Mediators

I call them “real mediators” because these folks mediate full time and make their livelihood doing it. They do not do it part time while their real income is from practicing law. They do not do it part time while collecting retirement pay from their career as a judge or a litigator. They mediate and only mediate. They are active in the Oregon Mediation Association and they spend a lot of time on the touchy-feely aspects of mediation. They go to courses on mindfulness.

These are the real facilitative mediators. They do not direct the parties or predict what the outcome may be in court. Instead, they facilitate the litigants in a search for a solution that works for them. It is tough and stressful business in which of the parties to the dispute face each other, say what they have to say, and hear what need to be heard. The theory is that the disputing parties then approach a solution that will be one of their own making and not one based upon a legal framework that has been imposed upon them.

These mediators are idealistic and hopeful. They don’t think much of lawyers and at the OMA conferences tend to belittle the very mindset of lawyers. Those who have practiced law in the past are inclined to introduce themselves as “recovering lawyers.” In mediation they put the parties to the dispute in the same room and expect the lawyers to keep quiet. The lawyers’ job, as they see it, comes at the end and consists of translating the settlement into a form acceptable to the court.

The knock on ream mediators is that they fail too often. I don’t mean they fail to get a settlement agreement. Through tenacity alone they tend to get more agreements than the other types of mediators, but often those agreements are not truly facilitated agreements, but rather the same one you might have gotten from a retired judge or a practicing lawyer. Facilitative mediation can be long and stressful. It is simply not worth it if the result is no better than one could have gotten at a judicial settlement conference.

There are a whole lot of good things about having a real mediator. Being a hopeful guy, I am usually willing to go for the gold. In mediation that means a solution designed by the parties with little, if any, attention paid to the law, lawyers and judges. Mediators are cheap. They charge a lot less than either lawyers or judges and tend to bring far greater mediation skills to the table. Unless, you have a good reason not to, I suggest going with the real thing.

Conclusion

If you are involved in a Multnomah County probate dispute, the chances are you are going to mediation. In my experience, the local lawyers are still not all that comfortable with the requirement. They try to get it waived and if forced to mediate would rather hire a buddy to do the mediation than spend the time finding the best mediator for the case. My suggestion is to give it some serious thought and quiz your lawyer as to what consideration are going into the choice of mediator. If the lawyer is recommending against a “real” full-time mediator, make sure the reasons are clear and that the lawyer is not simply choosing the path that is easiest for the lawyer.



Wednesday, June 24, 2015

Types of Professional Fiduciaries in Oregon Guardianship and Conservatorship Cases



Family battles over inheritances are the stuff of great novels. In the courts, however, the family battles over the appointment of a guardian or conservator can be as contentious and difficult as any will contest. The cases arise because there is an elder who is alleged to need help in managing care or money. Sometimes the battle arises because the elder has lawyered up and opposes the appointment of anyone to take charge of his or her affairs. More commonly, however, these conflicts end up in the courtroom because the children of the elder are battling each other for position and control within the family. Whenever squabbling siblings are at the center of the dispute someone will propose that a professional fiduciary be appointed. (A fiduciary is someone who works for the benefit of another, and I use the term here to mean the person nominated to serve as a guardian or conservator.) Court visitors are fond of this option, and judges—who often want quiet as much as they want justice—often prefer appointing a professional to sorting out the conflicting accusations of the elder’s children.

Professional fiduciaries come in a variety of shapes and sizes. At one end of the spectrum are the trust departments of large financial institutions. Most bank and investment houses have a trust department that will serve as fiduciary for grandma if the money is right. The banks are neither uniform nor transparent about how much they charge for these services, but you should not expect a financial institution to accept your case unless grandma has at least half a million. Each year, these fiduciaries charge a percentage of the amount being managed. A common charge is two percent of the value of the trust per year. Thus, if you put in the minimum amount of $500,000, the bank will charge at least $10,000 for managing grandma’s money. They may charge additional fees for financial management and investment advice. Bank trust departments and dedicated trust companies claim great skill in managing money and bringing in large returns. These claims had more weight prior to the recent recession. In any case, they employ professional money managers and produce long incomprehensible quarterly statements of profit and loss.

There is some question these days whether actively managed investments can ever return more than computer managed index funds, particularly when the manager is scraping off at least two percent every year for his efforts, but that is a subject for another post.

Banks have special exemption that allows them to be serve as a trustee of trusts without a court order or court oversight. Thus, the banks and investment houses occupy the world of large trusts, more so than the world of guardians and conservators.

The next candidates for the job of professional fiduciary are fiduciary firms. These are small businesses, usually partnerships or sole proprietorships, made up of social workers with a head for bookkeeping. They can serve as guardian, conservator, or both. The firms consist of one or more certified professional fiduciaries and a staff of case workers, bookkeepers, and office professionals. These folks are always appointed by a court, and specialize in attempting to both protect the elder and stabilize the battling family. They manage money by stopping the bleed out to greedy relatives and attempting not to lose it thereafter. They are more likely to leave the elder’s money with the people who are currently managing it than to take up active management of investments. What they do well is protect the elder’s physical well being and make sure the elder’s money does not disappear.

This group of professional fiduciaries gets paid by the hour rather than by commission. The partners tend to charge about a hundred dollars an hour with case workers and office staff charging substantially less. Their charges must be court approved.

The last rung on the ladder of professional fiduciaries consist of sole practitioners. These folks are certified professional fiduciaries who practice out of their homes or out of small offices. They may contract with case workers and even have a small office staff, but when you get one of these you are depending on the skill of the person appointed to serve, not on a functioning bureaucracy. They are not money managers and don’t pretend to be. They are social workers willing to protect the elder's money. These people are the most “hands on” of the bunch and are likely to have the most interaction with the families. This intimacy is good if you get along with the fiduciary and not so good if the relationship goes sour.

Every professional fiduciary comes with a lawyer. Professional fiduciaries develop relationships among elder law lawyers and use the same two or three lawyers whenever the can. They refer work to their favorite lawyers and those lawyers refer work to them. Lawyers and law firms have personalities. Some firms are grumpy; some are friendly; some are humble; and some are pompous. If you are considering inviting a professional fiduciary into your family, it is worthwhile inquiring who will be doing the legal work.

Professional fiduciaries also have reputations for being good at certain kinds of cases. Some work hard to bring fighting families together; others are known for being tough and whipping misbehaving families into line. Some are great at forensic accounting, and others are good at locating publicly funded social services. It can be hard to tell what kind you are getting. Online reviews are useless, because no matter how skilled and compassionate the fiduciary is, at least half of his or her clients are going to hate her. The haters write the online reviews. The best bet is to have an elder law lawyer you trust recommend someone. Your lawyer is likely to recommend someone he or she likes, but because the lawyer knows several different fiduciaries, this biased recommendation is better than none at all.

Once a professional fiduciary has come into your family, you might as well accept that the fiduciary will be there until the elder dies. Courts who find a family so dysfunctional that a professional is warranted almost never turn around and rule that the professional is no longer needed. If you truly need to get rid of a professional, consult the article I wrote on the subject here.

Another concern about professional fiduciaries is that they tend to favor the party that selected them. When I am trying to recruit a professional fiduciary for a case, I sell my case in the same way that clients sell their cases to me. I explain how this is an easy case with plenty of assets to pay their fees. If the fiduciary likes the case, and thinks I may well bring more just like it in the future, the fiduciary is going to make close call decisions that favor my side. That is a fact of life. The fiduciary is going to answer my calls a lot faster than the calls from the lawyer who opposed his or her appointment. If you have a choice, it is better to be from the side of the family that supported the appointment of the fiduciary than from the side that opposed it.

Having a professional fiduciary managing the care of grandma can be a blessing or a curse. I have seen a relationship between a mother and children destroyed because the children were put in charge of her money, and then repaired when the children turned the job over to a professional. On the other side, I have seen fiduciaries trample family feelings and run roughshod over existing family systems in pursuit of some mythical “best interests” of the elder. There is a saying the social service world that a “barely adequate” family member produces better results when it comes to care taking than does a well trained professional outsider. Professionalism has its advantages and its dark side. When considering a professional fiduciary a family must balance risk and reward; not an easy thing to do when enmeshed in the high emotions of a protective proceedings.

Sunday, June 7, 2015

Pointers for Evaluating Your Case in Oregon Will and Trust Contests



Being a probate litigator, or litigator of any stripe, for that matter presents the lawyer with a conflict of interest. His job is to advocate for his client and argue in favor of the client’s position. Were a trial a football game, the lawyer would be both the coach—designing the game plan, and the quarterback—charged with leading the team to victory. Simultaneously, the lawyer is expected to be giving the client smart, unbiased advice on the client’s chances of winning or losing the case. He is not just the coach and the quarterback, he is also the bookie—expected to handicap the case and give his client the best information possible about the potential outcomes. This allows the client to make intelligent decisions about settlement and trial. In this post I will pass over the lawyer as the coach and quarterback. I want to concentrate on the lawyer as bookie.

Predicting is hard. In the second election of Barack Obama major polling organizations, with all their computers and highly paid actuaries, failed miserably in predicting Obama’s easy victory. Predicting the outcomes of civil trials is more difficult than predicting the outcome of elections, and the lawyers who must do the predicting are not as skilled, informed, or as objective as the statisticians at the Gallup company.

Most of the mistakes made by lawyers and clients in predicting the outcome of civil trial arise out of confirmation bias ("the tendency to search for, interpret, or recall information in a way that confirms one's beliefs or hypothesis). The lawyers and parties give more emphasis and credibility to the evidence that supports their side than they do to the evidence that supports the other side. We interpret the world around us in a manner that supports or beliefs about it, and discount those facts that don’t support that view.

Trial work takes massive preparation—probably five to ten hours of lawyer time for every hour of court time. There is an old saying that the lawyer who wins a lot of cases spends as much time preparing his opponent’s case as he does his own. The wisdom in this legal aphorism is that the lawyer must understand and appreciated the case the other side will be making in order to competently oppose it. He must avoid confirmation bias in all its insidious forms so that he can make intelligent decisions while at the same time being a cheerleader for his team. It is a difficult job.

In my years practicing law, my clients and I have learned some hard lessons about confirmation bias and many other errors in prediction. I have some suggestions.

You Have a One in Four Chance of Losing Any Case that Goes to Trial

A prominent Portland litigator suggested to me that no case that goes to trial has a better than eighty percent chance of winning. That means the chances of losing are one in five. I think he overestimates. When the odds of losing get greater than seventy-five percent, the defendants move to Paraguay or declare bankruptcy. If you have a trial date in a civil case and settlement negotiations have broken down, you have at least a one in four chance of losing.

If you are a client and think that you can’t lose, you are wrong. Confirmation bias has probably so fogged your mind that you cannot see the truth. If your lawyer tells you there is no chance of your losing, then that lawyer has let the role of coach and quarterback impair his ability to accurately handicap the case. The courtroom is an unpredictable place. Witnesses fail to show up or testify as expected. Judges can be grumpy or prejudiced.

The same lawyer who gave me the eighty percent rule also observed that trial strategies conducted in the months before seldom last longer than the first witness. Yogi Berra said, “Prediction is hard, particularly about the future.” If you find it easy and it is about the future of your case, you are doing it wrong.

Witnesses Count and Count Your Witnesses

Judges (we don’t have juries in probate cases) want to hear from witnesses who were present and paying attention when the important events in the case took place. A good witness has four qualities: He or she was present when the crucial events occurred, will testify truthfully no matter what the question, doesn’t have an axe to grind, and shows respect toward all the people in the courtroom. A single quality witness can carry a case and overpower several witnesses who do not pass the four part test. When the witnesses for both sides are of equal quality, more is better.

Lawyers and clients should count witnesses before they even file the case. The lawyer must ask who will testify for him and how convincing will they be. How many people will testify for him and how many will testify against him. I am often approached by potential clients who tell me that his or her grandmother was unduly influenced to give the family home or some other large asset to a family member who is not them. I ask how it is that they know the gift was the result of undue influence. The response is that grandma never would have done it without there having been undue influence. I ask if my potential client saw anything else or knew of any witnessed to the undue influence. The client responds that she didn’t actually see it because she was out of state and hadn’t seen grandma in years and that all her relatives who might have been witnesses are aligned against her. So I add up the witnesses. I have one—my client who was out of state the whole time, didn’t see or hear anything, and is estranged from the entire family. Grandma may well have been subject to undue influence, but the witnesses are not there. Which brings me to a related rule.

The Other Side is not Going to Produce the Evidence You Need to Win

In civil cases lawyers get to do what is called “discovery.” That means that the lawyers can make the other side produce documents related to the case and question the witnesses for the other side in sworn depositions. My clients are often quite certain that the other side will produce incriminating documents that will allow me to win. Trust me, that never happens.

Depositions are generally more useful than requests for documents, because depositions let me know whether the person will qualify as a “good witness” according the four tests I set out in the paragraph above about witnesses. The witnesses for the other side never give me in deposition the evidence I need to win: they simply let me know how strong the evidence against me will be.

Cases that go to trial are won or lost on the quality of the evidence that the parties can produce on that day, in that room, before that judge. As lawyer and client, we have to find that evidence and make sure it appears on the day of trial. The other side is not going to do it. So, if lawyer and client are proceeding on the theory that their version of events is the truth, and the truth will magically appear at trial because they are the good guys, the good guys may end up going home losers.

Clients need to understand that they need to bring to court both a legal theory upon which the court might award them some money and some evidence to prove that the events that make the other side responsible actually happened. Suspicion, rumor, and hunches will not suffice.

You Will Not Win By Calling the Other Side Names.

Will and trust cases are emotional. The parties don't like each other and there is a tendency to want to make the character of the participants the issue. The reasoning is loosely as follows: the will should be overturned because Joe gets all the money and Joe is a bad person. Unfortunately, inheritances, like sunshine, fall on saints and sinners alike. The issue is not who deserves it, but who the decedent wanted to have it.

This is not to say that character plays no role. The courts mirror society in general. Good looking people are treated better than ugly ones. Polite people fare better than rude ones and people of good character do better than swindlers. On the other hand, if you point Joe's bad character once, you may be doing the court a favor. If you point out Joe's bad character another time, you are being emphatic. However, if you do it a third time, you are being an ass, and people think you are the person with bad character.

The lawyers have a list of things they must prove in order to win the case. The judge has the same list in front of him or her up on the bench. The evidence is supposed to be about something on the list, not the character of the parties. If you veer too far from the list trying to show that the other side is made up of slime balls you can end up looking like a slime ball yourself.

When calling the other side names, keep it short, sweet and to the point. Then move on to the real evidence.

Monday, February 23, 2015

Being Mortal


I am not by nature a big picture/policy king of guy. I get quite enough satisfaction reading the law and trying my best to get the details right. When clients complain to me about the unfairness of this or that law, I seldom have anything to say about it. "Write your congressman," I suggest. "As your lawyer I deal with the way the law works today in the county where you live."

On the other hand, I do try to stay current on new popular literature that deals with aging and end of life issues. Most of the new books dealing with aging and death are not that great. One of the exceptions is, Atul Gawande's, Being Mortal. The book contains the author's reflections as both a doctor and a son on the ways in which we die and the ways we have been doing it wrong.

In certain respects, Being Mortal, reiterates the themes addressed in Sherwin Nuland's, How We Die. Nuland's book is a masterpiece and deserves the Pulitizer it received. I enjoyed How We Die immensely, but I like Being Mortal even better.

Gawande's reflections on death and dying are less technical than  Nuland's. Missing are the detailed biological mechanisms by which the major causes of death take us out. In its place are many wise and nuanced observations about the decisions the dying and their families face. Two of the things he discussed were of particular interest to me.

First, he talks about the change in values that appears as we get old. We become less competitive, less acquisitive, and more attached to family. In my gerontology classes this was explained as a developmental stage of adult development, but that is not really an explanation. Gawande reports studies showing that everyone's values--expressed as life goals--change when the time is short. Young people, for whom the future seems like an eternity stretching before them, would rather meet new people than spend time with family and old friends. Old people, who know that their time on this earth will not be long, opt for time with family. However, when young people are told that the end is near--their lives will soon be completely disrupted--they do opt for the family and friends. The change in values is a matter of perspective. Making a career and saving for old age is no longer a value when old age is already upon you.

Second, Gawande finally made clear to me how hospice works. It is not a substitute for treatment. When I go to the hospital I give up my quality of life temporarily so that I will have a great quality of life when I get out. The short term stint of bad quality life is made worth it by the amount of good quality life I will have thereafter. As we age, however, and our bodies begin to fail, the stints of bad quality life in the hospital become longer and the times of good quality life thereafter become shorter and more unsure. The tragedy it the person gives up everything in hope  of a full and active life once he or she is out of the hospital only to die in the hospital bed after months of being kept alive by experts and machines.

Hospice is the choice to have quality of life today. He points out that with some fatal disease people on the average live longer in hospice than they do in the hospital. It is not so much that they are killed by the cure, but rather that quality of life gives them a reason to live. And that, maybe is Gwande's point. Doctors, nurses and social workers need to play a role in giving their patients a reason to live, for without that all the high tech medical procedures will be of no avail.

The book is thoughtful, intelligent and and often poignant. I recommend it to anybody who is mortal.

Friday, February 20, 2015

SAVO and the Training of Non-Professional Guardians and Conservators in Multnomah County.


I deal with a lot of fiduciaries. A fiduciary is someone who acts for the benefit of another. In the world of probate, the fiduciaries are guardians, conservators, trustees, and personal representatives. Guardians and conservators look after incapacitated people. Trustees look after the beneficiaries of trusts, and personal representatives administer the estates of people who have died.

Some fiduciaries do it for a living. They are the professional fiduciaries. Most fiduciaries are volunteers who do it for family. These are the non-professionals. Each group presents a unique set of problems, but it is the non-professionals that have gotten recent attention.

Some of the movers and shakers in the world of elder law and probate got together and created SAVO -- Special Advocates for Vulnerable Oregonians. The organization is designed to shore up some of the weaknesses in the system. One of its activities is to recruit and train people to check up on guardians to ensure that guardians are actually guarding. Another is to give non-professional fiduciaries training on how to do the job that the court has appointed them to do.

This is a good thing.

When it comes to guardianships and conservatorship, I copy the notice from the SAVO website below:

Effective July 15, 2014, all non-professional* guardians and conservators appointed by the Multnomah County Circuit Court must, within 15 days of their appointment date, register for a class that meets the curriculum requirements of the Multnomah County Non-Professional Fiduciary Education & Training Program. SAVO’s “Oregon Fiduciary 101” meets these requirements. Multnomah County registrants should select the date of their session keeping in mind that they must complete Oregon Fiduciary 101 within 60 days of their appointment date.

The cost of the course may be treated as a cost of administration of the proceeding.


The notice for trustees and personal representatives is very similar.

Effective February 2, 2015, non-professional* trustees and personal representatives appointed by the Multnomah County Circuit Court must, within 15 days of their appointment date, register for a class that meets the curriculum requirements of the Multnomah County Non-Professional Fiduciary Education & Training Program. SAVO’s “Oregon Fiduciary 102” meets these requirements for trustees and personal representatives. Multnomah County registrants should select the date of their session keeping in mind that they must complete Oregon Fiduciary 102 within 60 days of their appointment date.

The cost of the course may be treated as a cost of administration of the proceeding.


The result is that if you want the court to appoint you as a guardian, a conservator, a trustee or a personal representative you must be ready to take a class. The class can be taken online but currently the court is strongly encouraging in-person attendance.

So far I have only had one non-professional fiduciary take the class. She was a guardian and conservator for an elder relative, and my impression is that the class gave her a leg up on handling the job in an efficient and competent manner.

Handling money that is not yours can be difficult. When dealing with my own money I can skip a lot of safeguards, decide certain record keeping isn't worth the trouble, and carry access to my funds in my hip pocket. Managing money for someone else should never be like that, and if I am managing money by court appointment, it never is like that. We lawyers often have a hard time convincing people of the importance of the difference. The class presented by SAVO may help.





Friday, October 10, 2014

Strategies that don't work in Oregon will contests



The nice thing about being the lawyer in will contests is that the parties to the contest are arguing about money that fell from the sky. The money belonged to the dead person. Nobody involved in the will contest earned it and nobody involved in the contest is going to leave with any less money than they had when they came to the case. Somebody in the will contest is going to get a bunch of money without having to earn it, and somebody else isn't. In the big scheme of things will contests are not that serious. Lawyers I know have clients who will go prison if the case is lost. If my clients lose, they only lose the opportunity to spend somebody else's money.

On the other hand, an inheritance from family is for most people the largest single lump of unearned, untaxed money most people will ever receive. An inheritance can make a huge change in the life of the one who receives it and I perfectly understand why people are willing to fight tooth and nail to get the security that an inheritance can guarantee. I don't have any inheritances coming, so I get up every morning and go to work. I do it to get money. My wife suggests that I also do it because I love the practice and want to see justice done. She is wrong. I do it for the money. If I had a chance to get some money via an inheritance I would do that too.

In will contests the parties very seldom emphasize how much they want and need the dead person's money. They don't want to seem greedy so they devise other reasons for carrying on the fight. The other reasons tend to put the case on a moral plain, pitting good versus evil. There is an aspect of this to any legal case--that's why they call it "courtroom drama"-- but not everybody does it well. This article is about some of the moralizing in will contests that doesn't work.

The most common of the approaches that does not work is the, "I am pursuing this case solely to make sure that grandma's wishes are honored." If you truly believe that the only way to honor your dead grandma is to fight to the bitter end against your relatives over her money, keep quiet about it. It may be the truth and your motives may be pure--you just want to see grandma's wishes carried out. If, however, your battle to honor grandma also means you get a big pile of grandma's money, nobody is going to believe you. Enjoy your pure motives in silence. Will contests destroy families. No one believes that family-destroying litigation honors grandma  Probate lawyers have heard the "it's what she wanted" chant so often they are immune and simply don't care. The dead person is dead. He or she no longer has any wishes. Everybody involved is going to feel more kindly toward you if you simply say that you are continuing the litigation because you think you have a winnable case.

The next approach that doesn't work comes from the person who says, "Grandma was strong-willed and opinionated so her will could not have been the result of undue influence." This is often the first thing out of the mouth of someone accused of undue influence. I have written about undue influence elsewhere, so read up on it if the concept is new to you, The fact is that among elders, and maybe the population at large, strong-willed and opinionated people are easier to influence for selfish purposes than those who are more reserved and accepting. The laconic grandma who figures to just leave everything to her children--just like everybody else does--because she will be dead anyway is much harder to influence than the angry elder who dashes about changing her estate plan at every slight by a family member.

Elders often have money and need care. Little old ladies complain that elder men are looking for a nurse rather than a wife. A younger woman (in my world that means a woman in her fifties) willing to be a nurse can wrap a gruff and opinionated old man around her little finger in a matter of weeks. An elder is allowed to trade his money for care and, if he wants, he can leave everything to the person who brought him comfort in his last days. That is his right. If, however, the motives of the caregiver are selfish and the reward wildly out of proportion to the value of the care given, the recipient of this largess can expect a will contest. In the case where a distant cousin flies in from out of town--and who never made more than $30,000 a year in her life--suddenly gets a million dollars for the care given in the elder's last year, I think the cousin deserves all the agony that a will contest entails.

One of the tried and true methods of defeating an estate plan is to induce the elder to give away his major assets while still alive. That way the will is still good, but all the property is gone. A lot of my litigation involves unwinding gifts so that if the gift was a result of dementia or undue influence the property goes to the heirs rather than the recipient of the gift. In these cases I always hear, "She forced me to accept those gifts."

The "forced me to accept" approach is similar to the "she is strong-willed and opinionated" tactic. The recipient of the gift--often the elder's house--claims that he tried to refuse the gift but the little old lady would not take no for an answer. (But now that she is dead the recipient is, of course, morally obligated to keep the property.) Probate and elder abuse law is structured in a way that creates, in certain circumstances, an obligation to say no to gifts from old people (unless arranged by the old person's lawyer). If you are not strong enough  to stand up to old men and women and say no, then don't expect to keep the property. If you are too weak to say no and do expect to keep the gift, then you should  get your gift in cash rather than real estate. You will need the cash to pay your lawyer when you are named as the defendant in a financial elder abuse civil suit.

The final unsuccessful approach I want to discuss is the one that can be summed up as, "My opponent is a dirty, rotten, scoundrel." This is approach comes in a variety of flavors and tends to be part of every civil case. Parties like to use this approach. Lawyers put up with it because in the courtroom, as in life, good looking, honest, hardworking, and likeable people do better than ugly, dishonest, lazy and dislikeable people. Judge's have prejudices, and they like to see the benefits of life, including inheritances, go to good people. The problem with this approach is twofold. The first is that inheritance, like sunlight, falls on saints and sinners in equal portion. Parents usually leave their estates to their children no matter how despicable the rest of the world considers those children. Judge's know this and are only willing to let evidence of character, whether good or bad, sway them so much.

The second problem with this approach is that you can only say two bad things about another person without bringing condemnation down upon yourself. If you say three bad things, then you start to look like the scoundrel. Denigrating others is a dangerous tactic that backfires easily. People on God's list of good people spend very little time disparaging other people. If you are spending a lot of your energy doing that, you risk being removed from the list. In the courtroom, if you say three bad things about the person on the other side, the judge is more likely to consider the testimony to be evidence of your poor character than evidence of the other persons. You cannot beat people up and still be the good guy.

Witnesses in will contests are more likely to discredit their own testimony than to have it discredited by others. There are no juries to influence and judges have seen a lot. If the judge senses that a witness is covering up  a simmering cauldron and hate for the other side, the judge may well take over the questioning, uncover that cauldron and by doing so let the witness destroy his own credibility.