Friday, January 29, 2010

What happens to all that stuff in grandma's house?

Grandma is gone. The lawyer is working on how to sell her house and collect the money she had in her retirement account. There are a lot of questions about how to deal with all the stuff in her house but the lawyer doesn't seem to want to answer those questions. Why is that? What is a family supposed to do?

We lawyers call grandma's stuff "personal property." Personal property 
means her dishes, her furniture, her old car, and that collection of ceramic figurines she was so proud of. Lawyers and judges do not want to deal with grandma's stuff. We want the personal property to go away--quietly with no fighting or bickering.

Despite hating it we do hear about it. We hear about it a lot.

The reason lawyers and judges don't want to hear about personal property is because (1) it is always at the center of family battles, and (2) it is seldom worth any money. Often when a parent dies, the children go temporarily crazy. Sibling rivalries that have lain dormant for years spring up as if the parties were all ten years old again. These long-simmering disputes usually make an innocent hunk of personal property the centerpiece. 

"I don't care what the will says," one of the children proclaims, "mother always wanted me to have the toilet plunger and after putting up with my brothers and sisters all these years, I deserve it." To the lawyer, these disputes sound crazy. Elder law and probate lawyers charge over two hundred dollars an hour. Simply talking about personal property with a lawyer costs more than the property is worth. The family tells me it is not about the money; it is about fairness. No it isn't. It is about some deep seated family dysfunction that nobody understands except the family members. Lawyers don't get it; judges don't get it. We don't want to talk about it because we have no idea what the clients are talking about and why they care.
Sometimes the family is not fighting but has gone all money-eyed on the theory that mother's collection of Swedish-Korean wind chimes has to be worth at least a hundred thousand dollars. I have overseen the sale of a lot of personal property. I have learned to hate cars, jewely and collections. Cars are only valuable if you don't have one and need to go somewhere. If you have to sell grandma's car, hope for low low blue book and thank your lucky stars if you can sell it at all. Mother's jewelry may be insured for a bundle, but you can guarantee that nobody wants to buy it. Give it to the daughters and forget it. A collection is a side effect of having a hobby. The only people who make money off collecting are the people who write those collectors guides--the ones with the ridiculously high values that no one  actually pays. Collections are not investments; don't pretend that they are. 

When I file a probate petition, I have to file an inventory of the property that belonged to the deceased. The personal representative appointed in the will often looks at me incredulously and says, "But mother's house is packed from floor to ceiling with stuff. How can I inventory all that?" I tell him or her to walk through the house, wave an arm at all the stuff and say,"personal property, five hundred dollars." I put that in the inventory and no one complains unless it is somebody  in the family going wacko over the car, the jewelry or the figurine collection. Good families get together, split up what they want and donate the rest. Bad families fight and go to court over it.

Don't get me wrong. I love stuff. I buy nice stuff and don't want to lose it. The fact is, however, that once I have put my grubby hands on the stuff, it is not worth much any more. If I keep it a long time, it is worth even less. Keeping it a very very long time and calling it an heirloom doesn't change that.
So what happens to grandma's stuff? In most cases, whatever the family decides. A judge will decide if you insist, but it will be expensive and the judge will not be happy about being made to do it. You do not want decisions about your grandma's stuff being made by an grumpy judge. Follow your lawyers advice; make the personal property disappear. If you family members don't bring up where it went, nobody else will either.

Wednesday, January 27, 2010

Mediation Comes to Multnomah County Probate

Alternative Dispute Resolution--mediation and arbitration--has been used by the courts in Oregon to help resolve civil cases for a long time. If you sued somebody, you didn't get at trial before a judge or jury unless you first went through arbitration or mediation. That was everywhere except in the probate courts. As of February in Multnomah County that changes.

The new local court rules now provide that the judge or any attorney in the case may put a contested matter into mediation. The new rules set out the general procedure for mediation and who may serve as a mediator.

While lawyers outside of the probate world are comfortable in mediation, we who practice in Oregon elder law have not embraced mediation eagerly. I have attempted to talk other lawyers in disputed elder law cases to hire an elder law mediator (such as Pat Medford) but have had minimal success. One of the problems I faced in convincing other lawyers to embrace mediation is that court time in probate is not that hard to get. The probate world has no jury trials. Most issues can be heard and decided in a few hours. Mediation, on the other hand, can be a lengthy process. It often entails more than one meeting, any one of which can last several hours. Mediation, I believe, leads to better results; it does not however, in probate, necessarily lead to cheaper results.

I have know for some time that this was coming. In preparation, I took a course in mediation put on by the Multnomah County Court system and then a longer mediation course taught by Stan Sitnik at Portland State University Department of Conflict Resolution.

Stan's course completely changed my views on several subjects. Two of them are important.

First, I misunderstood mediation. I thought of mediation as being something like a judicial settlement conference where the mediator would listen to both sides, offer suggestions for settlement, and opine on the value of each side's argument from the vantage point of someone who had been doing probate law since Cain killed Abel. This kind of "evaluative" mediation does exist, but it is not exactly in the forefront of current practice. Mediation being currently practiced is a process whereby the mediator steers the parties toward effectively negotiating a resolution themselves. The parties--not the wise mediator--create the solution.

In my class, one young woman opined that she did not think she could be a mediator, because in the role playing she could clearly see how the parties should resolve their differences. She was unable to keep quiet about her solution while the parties struggled to arrive at an obviously inferior answer. Stan suggested she get over it.

Second, before attending Stan's course I thought I was a reasonably competent negotiator when it came to settling cases. In fact, I sucked. My idea of negotiation was to try to get the other side to take a position; I would take a position somewhere away from that and then we would grimly compromise toward a middle. It is a lousy technique that lacks intelligence, stifles creativity, and makes people mad at each other. I am still fairly embarrassed that for so long I went to work every day to deal with conflict resolution and had so little understanding of how to effectively negotiate. Mediation helps people become effective negotiators for those own interests. Those who deal with conflict a lot owe it to themselves to develop negotiation skills on their own.

I am currently a quiet member of the Oregon Mediation Association. One section in the association deals with elder mediation. I suspect that as mediation begins to play a greater role in probate litigation, those elder law mediators will see a lot more work. How this will work out for litigants remains to be seen.

Wednesday, January 20, 2010

2009 Profile of Older Americans

Although an Oregon elder law lawyer by trade, I am amateur gerontologist as well. My studies in gerontology at Portland State never resulted in a degree, but I do maintain my interest in the subject and my membership in the Oregon Gerontological Association. Recently the Administration on Aging of the U.S. Department of Health and Human Services issued its 2009 Profile of Older Americans.

The report sets out in very clear form the numbers about how older American's live. In 2008, Oregon had half a million citizens over the age of sixty-five. That is 13.3% of the population. It is a 16.5% increase since 1998. At the time 8.6% of elders lived in poverty.

The median income of older persons in 2008 was $25,503 for males and $14,559 for females. Of the 2.9 million households headed by older persons in 2007, 80% were owners and 20% were renters. The median family income of older homeowners was $29,899. In 2008, 6.2 million (16.8 %) Americans age 65 and over were in the labor force (working or actively seeking work), including 3.4 million men (21.5%) and 2.8 million women (13.3%).

The report has a lot of other good stuff. If you like this kind of thing, take a look.

Monday, January 18, 2010

What is a trust?

When discussing legal issues with clients I often get the question, "What about a trust?" Some of these clients want to avoid probate, some want to qualify for Medicaid, some want to protect assets, some want to provide for disabled relatives, and some want to save taxes. Everybody has heard about trusts, but a lot of folks are not quite sure what they are. Let's talk about the basics.

Most people know about contracts. A contract is a legal transaction between two people. If I want to rent a car, I put up some money, the car rental company puts up a car, and we agree to trade the money for the use of the car. The contract could last for a day or for many years.

A trust is a legal transaction among three people. The first person is the person who creates the trust. This person, called the trustor or trustmaker, makes the terms of the trust and provides the money necessary to carry out the purposes of the trust. The second person is the trustee. This person takes the money provided by the trustor and agrees to manage and spend it according to the terms and conditions that the trustor wrote down so that the purpose of the trust is accomplished. The third person is the beneficiary. This is the person who receives benefit from the trust. Normally, the trustee has to administer and spend the trust funds for the benefit of the beneficiary.

The basic trust fund baby is created this way. Uncle Scrooge creates a trust for his young nephews, Huey, Dewey and Louie to help them with their education. Scrooge puts a million dollars in the Duckville Savings and Loan and asks the bank's trust department to be the Trustee. Thereafter, Duckville Savings, invests the money and spends the income and principal, according to the directions and guidelines contained in the trust, to educate Huey, Dewey and Louie.

Seems simple. Like contracts, the devil is in the details. A full chapter of the Oregon Revised Statutes deals with how to create, administer and terminate trusts. I keep a paper copy of those laws on my desk at all times.

So can trusts do all the things that people think they can? No. Trusts can do some of those things. Trusts can be used to avoid probate, but whether that is a good thing depends on the situation. Trusts can be used to protect assets, but you need to have whole lot of assets that need protection before asset protection trusts become worth the cost and legal risks entailed in creating them. If you have too much income to qualify for Medicaid, an Income Cap Trust will allow you to qualify, but trusts will not permit elders to give away their money and have the government pay for their long term care. Trusts are good ways to provide for disabled relatives and can be used in certain circumstances to give money to a disabled person without disqualifying the person from receiving public benefits. Trusts can save you taxes if you pay a lot in taxes and are willing to give away big chunks of your money to avoid paying taxes on it.

If future posts I hope to address specific kinds of trusts. The important thing to recognize when talking about trusts is that they come in a wide variety of shapes and sizes. You can do a lot of good things with trusts, but like with other things in life, if what you hear about trusts sounds too good to be true, it probably is.

Tuesday, January 12, 2010

Who gets my stuff if I don't have a will?

If you die without a will, the state of Oregon has written one for you. A will tells who gets your stuff when you are dead. If you die without a will you are said to have died "intestate." When you die intestate Oregon law determines where your stuff goes. Lawyers have a chart. We find out who survived you, check the chart, and that's where your stuff goes.

By the way, if you die without a will the State of Oregon does not get it.

If you have a spouse who survives you and the spouse is the parent of all your children, then your spouse gets everything. If you have a spouse who survives you and at least one child who is not the child of your spouse, then your spouse gets half and the rest goes as set out below.

Any property that doesn't go to a surviving spouse goes to your children. However, if one (or more) of your children died before you did, then the portion that would have gone to the deceased child is split among his or her children. If you never had children, your property goes to your surviving parents. If your parents are gone too, then your brothers and sisters inherit. But if your brothers and sisters are dead as well, their children split your property. If you have no brothers, sisters, nieces or nephews, it starts going to your cousins. By this time it is fairly complicated, but there is a chart and your lawyer can look it up.

If someone does not have a relative who can take their property according to the chart, it goes to the State. If there is a relative who is entitled to something according to the chart, but the relative cannot be found, his or her share goes to the Oregon Department of State Lands. Thus, when a relative who would be entitled to property from someone who died intestate cannot be located, the State of Oregon, which is entitled to his or her share, has all the rights that the missing person would have had. That includes the right to be a personal representative of the estate and even to challenge a will.

You can see now that if you write a will leaving everything to your spouse, but should he or she not survive you, then to your children in equal shares, and your spouse is the parent of your children, your will states exactly what the law would require anyway. The Oregon law governing intestate distribution is designed to reflect what most people would put in a will if they had gotten around to writing one. That does not mean you should put off doing a will--there are other good reasons for not dying intestate. But you do not have to worry that without a will you family will be denied the benefit of your property. The people you want to get it may not get it, but somebody in your family will receive it.

Friday, January 8, 2010

How not to hire an Oregon elder law lawyer.

Lawyers want and need clients. Our professional magazines are filled with ideas about how to get them and how to keep them. Clients pay our bills and keep us in business. However, we want good clients with good cases. Very few of us are so desperate that we have to take anybody who comes through the door and needs a lawyer. I have been astounded for years how difficult some people make it for me to want to take their cases. Many people who want a lawyer and need a lawyer are going without because they are doing a horrible job during their first contact with the lawyer.

A remarkable number of people who contact me give me some version of the following tale:

"I don't have any money to pay for a lawyer but this case is easy and you should be able to get the other side to pay your fees. The last lawyer I had was incompetent so recently I have been representing myself, but the judge is crooked and keeps ruling against me. Oh, and did I mention, I need to be in court tomorrow afternoon."
When I hear this sort of thing--and trust me, I really do hear it--I run for the hills. I would rather give up the profession than represent this person.

I have developed five rules to follow when you first approach a lawyer about taking your case. Following them won't guarantee the lawyer will take the case, but ignoring them will guarantee that he or she won't.

Rule One: Don't lead with the fact that you can't pay.

Lawyers are suckers for a good story and can often figure out a way to get paid if you can't pay them. But you have to sell them on the case first. When you start out with how broke you are, the lawyer's interest starts to drop immediately. You do have to be honest about your ability to pay; you don't have to make it the first thing out of your mouth.

Rule Two: Don't evaluate your own case.

People are always telling me how easy it will be for me to win their cases. They scare me when they do that. I practice law for a living and I know how easy it is to lose a case. I don't want to hear from an amateur what a slam dunk it is. Studies show that people in a dispute uniformly overvalue their own position and undervalue the position taken by the other side. Clients do this and lawyers do this. When you first talk to a lawyer about your dispute show him or her that you know there are two sides to the dispute, that your view is not the only view possible, and that you are willing to work with the lawyer to set realistic and achievable legal goals.

Rule Three: Don't bad-mouth other lawyers.

I had someone explain to me the other day that he had to fire his previous lawyer because she was grossly incompetent. I asked who that was and the potential client named one of the best lawyers in the elder law field. His harsh criticism of his previous lawyer made me wonder what he would be saying about me three months from now. I wasn't willing to risk it and sent the potential client down the road. Being critical of others seldom makes you happy and almost never helps you accomplish goals you would like to accomplish. I say this after having tried it over and over, waiting for good results to happen. They never did. If you walk into my office bad-mouthing other lawyers, the judges, and the other parties in the case all you do is convince me that you like to bad-mouth people and that once you leave my office you will probably be doing it to me.

Rule Four: Go see the lawyer before you have lost the case.

People have a constitutional right to represent themselves. I support that right and wish the best to anyone who wants to do it. But if you do it, follow through to the end. I am plagued with people bringing me a stack of unorganized paper and a story about how they wrote a whole bunch of letters to the judge and now there is a ruling against them. I look at the case register and see that they did a horrible job--failed to pay fees, misunderstood the rules, and missed important deadlines.  They represented themselves, they lost, and now they want me to go in and un-lose the case. It can't be done.

Rule Five: Don't wait until the last minute.

I refuse to work for clients who tell me over the phone or in the initial meeting that "there is a court hearing tomorrow afternoon." Legal proceedings provide ample notice of hearings. I have a calendar and I schedule my time. It takes me a long time to create a file and prepare for a hearing. I won't tell all my other clients that their work should wait because this new guy couldn't get around to coming in until the day before a hearing. I turn down good cases from paying clients because they waited until the last minute. Other lawyers do it to.

Some clients make me feel like they respect my time, they are interested in my opinion of the case, and they want me to be properly paid for my work. I love working for those clients. If you want to hire a lawyer, try being one of those clients. Lawyers will be falling all over themselves wanting to work for you.

Sunday, January 3, 2010

How does an Oregon elder law or probate lawyer get paid?

Lawyer's fees depend upon what you want done and who you want to do it. Some lawyers charge more than others. They justify the higher charges on the theory that they are better lawyers. Like all theories, some people buy it and some don't. In this post I explain the four basic methods of paying lawyers, the role of court costs in the price of litigation, and the way lawyers pass on their business overhead to you.

Lawyers fees come in four basic types: flat fee, hourly, phase fees and contingency. A flat fee is a set fee for a certain service. An hourly fee is exactly what it sounds like--you pay for the time the lawyer works on the case, usually by six minute intervals. Phase fees are variations on the flat fee with a set amount payable for each "phase" of a proceeding. Contingency fees are fees based upon a percentage of the money the lawyer recovers in the case.

Flat Fee

A flat fee is straightforward. I might offer to do a middle class estate plan including wills, powers of attorney, and advanced directives for $700. That is a flat fee. I collect half at the beginning of the job and the other half when the client is satisfied enough with my work to come in and sign the documents. In the old days flat fees were the norm for almost all legal work. Then certain high powered clients got the feeling that lawyers were getting a lot of money and not working very hard. They said, "wait a minute," we want to pay by the hour and thereby make sure that our lawyer is actually working on our cases. A few decades later most lawyers were working by the hour. Now the tide is changing again, as more and more Bar associations advise lawyers to abandon the hourly rate. The attractive thing about a flat fee is the certainty. You know what your legal services will cost and you aren't scared to call your lawyer for fear of the next monthly bill. The drawback is that a highly automated lawyer with good support staff may be able to do your $3,000 flat fee legal job and get to the golf course faster than you can get home from the appointment.

Hourly Fee

The hourly fee pays the lawyer for the time he or she puts into the case. Time is kept in tenths of an hour and billed monthly. Hourly rates in Multnomah County run between $200 and $250 per hours, although I have heard rates as high as $350 per hour. The advantage of the hourly rate is that you only pay for the time the lawyer works on your case. The disadvantage is that you pay for every minute the lawyer works on your case. Whether this works out for you will depend upon to what extent the lawyer has billed earlier clients for the job of learning the issues that arise in your case. If your case is simple and all the issues  are familiar to your lawyer, the hourly billing system works to your advantage. If unusual issues arise and your lawyer has to do legal research or make unexpected trips to court, the hourly rate works against you. In the latter case, you end up paying for the lawyer's education so that he can do his or her work more efficiently for the next client. This is great for the next client but not so great for you. The disturbing thing for most clients faced with hourly fees is the uncertainty. It looks like a carte blanc for the lawyer to pick up your file and do a little work on if for $230 an hour any time the office bank account is a little low.

Phase Billing

Phase billing is a type of flat fee billing designed to fit cases in which the amount of work involved is unpredictable. Most cases that will be filed in court fit this description. When  someone files a probate for a deceased family member or a guardianship for an elder with dementia, the lawyer and client do not know whether other interested people will object to the proceeding or whether court appearances will be necessary. Thus, the lawyer and client agree that the client will pay a flat fee for each "phase" of a proceeding. The lawyer might charge $1,200 for filing of a probate, serving all the people required to be served with the petition, obtaining the tax identification number for the estate, publishing notice in the newspaper, and supervising the initial inventory. If there is a missing heir, the client will be charged an additional fee for an heir search. If there is a creditor who claims to be owed money and the claim is disputed the attorney would receive a flat fee for that process. Phase billing fee agreements tend to be complicated because the agreement must carefully set out the lawyer's and the client's responsibility during each phase of the case. On the other hand they allow the client to know both the best case scenario and worst case scenario. The advantage for the lawyer is that it allows the lawyer to use office efficiencies and relieves him or her of the drudgery of time keeping. I hate time keeping and am working on some phase billing for my practice. Phase billing is not widespread in Oregon elder law at this time, but it is coming.

Contingency Fee

When a lawyer signs up to do work on a contingency, he or she takes as a fee a percentage of any recovery from the other side. For contingency to work there has to be an other side and the other side must be capable of paying. Contingency fees are common in the world of personal injury where insurance makes defendants able to pay awards. Contingency is less common in the Oregon elder law world. Some lawyers will do a financial elder abuse case on a contingency if it is a strong case and the alleged abuser has a lot of money. Some lawyers will take a will contest--a case in which a will is challenged as being obtained by fraud or undue influence--on a contingency. This is about it for contingency in the elder law and probate world.

Costs and Expenses.

In addition to lawyers fees you must be aware of costs and expenses. The client is responsible for court filing fees, publications fees, fees for personal service on certain parties, other court costs, and the costs of experts, if necessary. Costs can be significant, and you should discuss them with the lawyer at the outset.

Lawyers Overhead

In addition to lawyers fees, some lawyers charge the time for legal assistants, copying and postage. These kind of charges vary a lot from lawyer to lawyer and you should discuss them ahead of time. I have a large corporate client that strictly prohibits these kind of charges on the theory that they are attempts to transfer normal overhead to the client. I think the theory is a good one, although it severely limits my ability to pay my assistant twenty dollars and hour and bill her services at a hundred, thereby pulling down a nice eighty bucks an hour for doing nothing. If your lawyer is at the top range of hourly rates for your vicinity and is also charging you for a lot of overhead, you might want to wander down the road and talk to someone else. There are a million lawyers out there; you can find one that will treat you fairly.


The key to a good relationship with your lawyer is to talk openly about the fees and any concerns you have. You don't want to be in the dark about what your lawyer is going to cost you and no lawyer wants to do work while worrying that he or she will not get paid. When both sides are at ease about the fee issues, both the case and the relationship go a lot better.