More than Oregon Elder Law: An Elders' Pledge

When I was in gerontology school a long time ago, instead of paying attention in class one day, I wrote something I called "The Older Americans' Pledge." Recently a group called the Syracuse Cultural Workers adapted the pledge to apply to all elders, whether American or not, and paired it with the wonderful artwork of Diedre Sherer. The group then produced, posters, note paper, and bookmarks using the pledge. One version of the poster is below:

 

The poster and other products can be purchased here. (I do not receive anything on sales other than the pride of being associated with such a great artist.)

Oregon Elder Law - The role of family gifts in estate administration.

     In my last column I talked about gifts between family members during the time that an elder is depending on family for support and long term care. Today I want to talk about gifts and how they affect the wills, trusts and the administration of estates.

Gifts that undo an estate plan.

     Your estate is the money and property you have on the date of your death. The money goes first to pay your bills and then to the people named in your will or trust. If you are old and sick and rich you may find long-estranged children returning to the fold and new friends willing to share your last days with you. Sometimes they are there out of love. Sometimes they want your money.

     The most common method of defeating the distribution plan contained in a will or a trust is to convince an elder to give away all of her money before she dies. As I wrote in my last post, a gift is complete when the property is handed over, and thereafter the recipient can do whatever she wants with the property given. Most wills give a parent's estate to the children in equal shares. Sometimes there is a child interested in getting more than an equal share. The best way for that child to turn that obnoxious will or trust into scrap paper is to get dad to sign over all his property while he is still alive. If he has nothing left at his death, the will means nothing.

     The traffic in my office, suggests that the last years of a wealthy elder's life is a never-ending parade of relatives jamming papers in front of the elder for signature. Most of these papers transfer money or property from the elder to the person who came up with the paper. They have all sorts of reasons why the elder should sign and why it needs to be done right now. “I need to be on your account so I can pay your medical expenses.” “If you don't put me on the house, you will go to probate and the government will get all your money.” “If you don't give me this money now you will have to pay taxes on it.” The creativity of these folks is quite astounding, but none of the schemes benefit anybody but the person who receives the property. No matter how sick you are, there is no good reason for giving away your money because a relative or your hairdresser thinks it's a good idea. If these people really cared about you they would be offering to pay the cost of a visit to a competent estate planning lawyer.

     Deathbed gifts often lead to litigation in which the people named in the will or trust attempt to recover what was given away. These cases employ a lot of probate lawyers. The cases are nasty and expensive, and no matter who wins, the lawyers get a big chunk of the estate.

Gifts and Sibling Tension.

Gifts that Complicate Estate Administration

     Let's assume you died without giving away everything you own. Gifts are still going to play a role what happens.

     Whether you like it or not, your children are going to treat the administration of your estate—the distribution of your money and belongings—as some sort of final reckoning of everything you did for them and everything they did for you. Death is time to balance the books and settle accounts for everything that happened while you were alive.

     A lot of families who end up in my office have one member who needed more help through life than did the others. Sometimes the help was necessary because of an obvious physical or mental illness. The healthy siblings in these cases are usually understanding. Other times the disability is addiction, irresponsibility or congenital laziness, and the children who did not get the extra help are not inclined to be as forgiving. They see the recipient of lifetime gifts as having a balance on the books that, upon death, needs to be taken into account when it comes to passing out the inheritance. The recipient of the parental largess, who is often still broke and in need, doesn't see it that way.

     Similarly, the child who has selflessly given up time and career opportunities to provide care for a parent, sees the administration of the estate as a time to be financially recognized for the sacrifice he made while the other children pursued their personal aims. Generous and giving people often want their self-sacrifice to be rewarded and there is no better way to do that than when dividing father's estate.

     Wills and trusts, however, seldom take these lifetime gifts into account. The estate is divided equally between the children. The child who has lived off his parents for decades gets no deduction for the gifts he received, and the one who toiled to provide care gets no credit for his sacrifice.

Thwarted in their desire for a final account that acknowledges the gifts given by the elder and the gifts given by the children, the children focus their frustration on what seems to outsiders as something arbitrary. Sometimes it is a bank account. Sometimes it is a lamp. Whatever it is, it is a symbol for their complaints against each other and their resentments against the dead elder. 

 

     As I wrote in my first post on gifts, mutual gifting is the way we take care of the those family members who need help. Sometimes it is the older members helping out the younger. Sometimes it is the younger members helping the elders. But don't be fooled. Gifts have long and lasting effects. No matter what your age, give with care and receive with caution. A gift is without expectation of repayment. It is not, however, without consequences.

      There is an adage that the question is not whether to give, but when and how. Put as much thought into your gifts as you do your estate plan. Your will or trust, your beneficiary designations, and the gifts you give should form a coherent whole. Each piece should compliment the others and advance the goal of leaving everyone in the family better off. You cannot eliminate the possibility of your funeral being the scene of rancor and litigation, but by thinking carefully about the gifts you give and receive you can significantly reduce the chances.

The role of family gifts in providing elder care.

Most elder care is provided by families. Families use the same methods for providing care for elders that they use to provide care for any other family member in need. Whether it is a child with a disability, a brother with an addiction, or an elder with declining cognitive skills, families employ an informal system based upon gifts. Gifts, however, are not as simple as they might seem.

Family members whose earning ability is robust give to those who have less. The recipients may be young adults who are just getting started in life, middle age siblings who have failed to thrive economically, or elders who need help managing their later years. These exchanges can continue for a lifetime. I am sixty-one and, although I do not lack for much of anything, my parents still send me money.

The gift from children to elderly parents usually comes in the form of care. Our children take over the driving, the money management, and sometimes provide hands-on help with the activities of daily living. Within the family system the gift of care repays the gifts the elders have made to the children. This system of reciprocal gifts becomes an integral part of the way family members interact with and support each other. 

Care of family members by the informal exchange of gifts drives lawyers crazy. Only recently have I finally surrendered and accepted the fact that no matter what the law says this system of reciprocal giving will always be the primary way in which families manage care for each other.

In law school lawyers study gifts only briefly. We know that for a gift to be complete there must be intent to give and delivery of the property being given. The transaction is then complete. The recipient has full ownership of the property given, and the giver has no more claim on it. Gifts cannot have strings. If they do, they are not gifts. They may be contracts, or trusts or God knows what, but they are not gifts.

Gifts are not taxable to the recipient. If you receive money as a gift, it is not income. Thus, you pay no income tax on it. If you are very wealthy there may be a tax on the giver, but for anyone likely to die with less than five million dollars that is not an issue.

(If you are rich enough to pay taxes on the gifts you give, you can easily afford a good tax lawyer for individual advice. You should skip this article and hire one.)

The problem with the informal exchange of gifts for elder care is that the government hates it. Most people understand that you cannot give away all your money and then expect the government to pay for your long term care. People intuitively understand and agree with that concept even if they don't know the details of the rule.

(The rule in a nutshell is that large gifts made within five years of a Medicaid application will result in a penalty period in which the giver is disqualified from receiving long term care coverage.)

The Medicaid rule, designed to ward off the perceived threat of millionaires on Medicaid, fails to acknowledge the real life role of gifts in family dynamics. The hard work of elder care is a gift of services from the child to the parent, services that the elder would otherwise have to pay for. The gift of money to the child is reciprocal, an act of gratitude for the care given. Neither gift has formal strings attached, but one leads naturally to the other.

The other legal presumption that comes into play in elder care is the rule that care provided for a family member is a gift unless you can prove otherwise. You overcome that presumption by having a care contract—a written agreement in which the elder pays a family member for care. To be valid, the contract has to be signed before the care is given. I am forever encouraging elders and their family care givers to turn the informal exchange of gifts into a contract. With a contract money flows from the elder to the family care giver without the Medicaid penalty. Most families, however want nothing to do with my care contracts. No financial or legal advantage is significant enough to put a child through the humiliation of asking a parent to pay for family-provided care.

The system of informal giving is so important that few families will sign on to the lawyer-invented alternatives. This means at the time of a Medicaid application some elders will be punished for giving money to their children, and some children who might have received money for providing care will see that money go to care centers or the government.

I will continue to advise against joint bank accounts (a form of gift), joint ownership of real property (another form of gift) and outright gifts of money from elders to their children. I will offer care contracts to be signed by the elders and their children in the hope that the elder's money will flow in a structured way to family care providers rather than nursing homes or the government. A few families will take my advice, but most will not.

I don't blame the families who decline to accept my advice. They choose their family culture over legalism and who am I to blame them. The legal rules and presumptions were developed to stop the small percentage of people who used informal gifting to scam the system. The rules stop the cheaters and mildly annoy the vast majority. Families, I have learned, will put up with a significant amount of annoyance to keep the long established system of gifts in place, and when all is said and done few families are worse off because of it.

We lawyers see the exchange of gifts as a problem, and we offer solutions. Most families who come to me don't see the problem, and thus decline my solutions. I cannot say they are wrong, but I always want their decisions to be informed. 

I have more to say about gifts. In the system of reciprocal gifts I have described there is usually one or more family member keeping accounts of who did the giving and who did the receiving. Where accounts are kept there must come a day of reckoning. That day comes when the elder dies. In my next post, I talk about gifts and the administration of estates.

How to get rid of a predatory professional guardian or conservator in Oregon.

IMPORTANT DISCLAIMER: There are no predatory professional fiduciaries in Oregon. Every single professional guardian or conservator in the state of Oregon is a wonderful, hard working, ethical, and caring person. Thus, the legal tactics discussed below are entirely hypothetical.

With the above disclaimer in mind, let's talk about how to get rid of an unwanted professional fiduciary. (A fiduciary, for purposes of this article, is a court-appointed guardian or conservator.) Some Oregon elder law lawyers think it is impossible to get rid of a court-appointed fiduciary—that once appointed the fiduciary is there for the life of the elder. There is a lot of evidence for this opinion, but I am not so pessimistic.

I may be crazy enough to believe that that there are ways to dislodge an oppressive professional guardian or conservator, but I am not so crazy as to think it is easy. If you are contemplating the strategy laid out in this article be assured that the road is a difficult and costs are high. It should not be attempted by anyone short on time, money, or patience. People email me all the time with horribly sad stories about the court-appointed fiduciary who is making their family miserable. They ask me to help and, promise to pay me ten dollars a month for a thousand years if I will take the case. I don’t take any of them. This is a tough job requiring a lot of work on my part. It can’t be done on the cheap no matter how heart rending the story.

If you have decided you have what it takes--emotionally and financially to try it--the first thing to do is map out the players.

The professional fiduciary.

Who is it? What is the fiduciary’s reputation in the elder law community. Does the fiduciary avoid or embrace litigation? Does the fiduciary avoid or embrace alternative dispute resolution techniques?

The professional fiduciary’s lawyer.

We ask the same questions about the lawyer as we do about the fiduciary plus a couple more. The big question is who is running the show? Some fiduciaries control their lawyers. Others trust their lawyer to handle all legal matters and do whatever the lawyer says, no matter how crazy it is. We need to know who is making the decisions.

The judge

Who is the judge? Judges and court staff have favorites. You want to know whether the fiduciary or the lawyer is a teacher’s pet. At some point the judge appointed the fiduciary. We must at all costs avoid saying, suggesting or implying that the judge was wrong when she initially made the appointment. This is doubly true if the fiduciary or the lawyer representing the fiduciary is a court favorite.

The family and the plan

In order for this to work the family has to be fully lawyered up and they have to present a united front. If the family is squabbling, any attempt to remove a fiduciary is doomed. One of the common reasons for appointing a professional fiduciary is that the family cannot agree on a care plan for the elder. If that conflict still exists the chances of getting the fiduciary removed or replaced is pretty much nil.

There are two common roadblocks to family unity, either of which will doom an attempt to remove a professional fiduciary.

One roadblock is a passive attorney for the elder. Often the elder has an attorney, maybe a court-appointed attorney, who is more interested in keeping good relations with the fiduciary or the fiduciary’s attorney than being aggressive in protecting the elder. If the lawyer for the elder is not on board, you will have to throw in the towel. No matter how united the rest of the family is, you can't get there without the cooperation of the lawyer who represents the elder.

The other common roadblock is a recalcitrant sibling. One child, usually the child who petitioned to have the fiduciary appointed, may have a loyalty to the situation he or she helped create. You have to get this sibling on board with the plan if you have any chance at all. Once you have the sibling on board you need the sibling’s lawyer on board. This can be a problem.

Elder law lawyers and professional fiduciaries feed off of each other. Normal people don’t know professional fiduciaries. Elder law lawyers do. Oregon elder law lawyers recommend the professional fiduciaries they know. When a fiduciary gets hired because of the lawyer’s recommendation, the fiduciary returns the favor by hiring the elder law lawyer on other cases. If your Oregon elder law lawyer recommends a certain fiduciary, don’t be surprised if the lawyer has previously represented that fiduciary. Once this mutually beneficial relationship has been going on for a while, the lawyer is understandably unhappy to hear that his client now wants to remove the same fiduciary the lawyer recommended earlier. The client will have to be firm in his directions to the lawyer, or, in some cases, get a new lawyer.

If the members of the family and their lawyers cannot unite in the plan to remove or replace the fiduciary, it is not going to work. If the family is a loggerheads about what to do, but not actually shooting at each other, I recommend elder mediation. There are good mediators who work with the families of elders to bring families back together. They aren’t cheap, but they charge less that lawyers and do more to unite families than lawyers have ever done.

Many people who come to me for help getting rid of a court-appointed guardian or conservator have a different plan. They want to make a list of all the bad things the fiduciary did and use the list to get the judge to un-appoint the fiduciary. This plan is always attractive to clients, it being a lot easier to point out other peoples' faults than to heal self-inflicted wounds that have plagued the family for years. The plan involving a list of misdeeds by the fiduciary doesn't work.

So let's assume that the family is united. The unity may be fragile, limited even to a mediated family agreement regarding the future of the elder, but that is enough. At this point the family member with the best relationship with the fiduciary—usually the family member who started the legal proceedings in the first place—simply asks the fiduciary to step aside in favor of a different, competent guardian or conservator.

Lawyers under appreciate the usefulness of asking for what they want. Somewhere somebody taught them that it is better to bluster and threaten. It is not. Often when I want to pursue a legal plan I will simply call up all the other lawyers, tell them what I want, and ask if it is okay. Many times they simply agree. I have had cases in which I got the consent of several different lawyers for every step of a legal plan before ever writing a single legal document.

If the family is united and makes a polite request that the existing guardian or conservator step aside, the court-appointed fiduciary is under incredible pressure to comply with the request. The family does not have to point to wrongdoing. It simply has to say that all members feel a different guardian or conservator would better serve the needs of the family. The fiduciary has no reason to stay other than the economic benefit it receives, and no fiduciary ever wants to maintain the she is holding onto the case for the money.

If the fiduciary refuses to step aside after being asked, you can then petition the court. At this point you still do not have to list the misdeeds of the fiduciary. You simply, united as a family, ask the court to appoint a different, but equally competent guardian or conservator.

No plan is perfect. This one is not guaranteed and there may be others, but I have seen a lot of different families and a lot of different lawyers try to dislodge an unwanted professional fiduciary who had embedded him or herself into a client's family. This is the only plan I have ever seen work.

No-contest clauses in Oregon wills and trusts

Oregon elders who expect trouble among the heirs when it comes time to distribute the estate often include a no-contest clause in the will or trust. A no-contest clause, also known as an in terrorem clause, normally says that anyone who contests the will or trust gets disinherited. People put these clauses in their estate planning documents to discourage litigation. And that it does. Oregon elder law and probate lawyers like me who sometimes challenge the validity of wills and trusts look for these clauses and tread carefully whenever we find them.

This post will examine how no-contests clauses work and don't work. In practice, the clauses are tricky end can, under certain circumstances, protect the bad guys while the good guys get cheated.

Let's get the obvious out of the way at the beginning. No-contest clauses only dissuade litigation by someone who receives something of value from the estate. Let's say Adam has two sons, Cain and Abel. Adam decides to leave his entire estate to Abel, and puts a no-contest clause in his will saying that if anyone challenges the will, that person receives nothing. Cain thinks that Adam did not have the mental capacity to make a will when he disinherited Cain, or that Abel used undue influence to get Cain disinherited. Therefore, Cain lawyers up and challenges the will. Cain is not dissuaded by the no-contest clause because he receives nothing anyway.

If Cain's challenge is unsuccessful, the judge deciding that Adam had testamentary capacity and was not unduly influenced, then Cain is no worse off than he was under the will. If, however, Cain is successful, the judge ruling that old Adam was nutty as a fruitcake when he signed the will, then the whole will, including the no-contest clause is thrown out. Adam is now intestate—meaning he died without a valid will—and therefore his estate is distributed according the law. The law is that when you die unmarried without a valid will your children take your estate in equal shares. Thus, Cain and Abel each get half. Cain has succeeded in getting half of the estate even though the will had a no-contest clause.

The moral of the story is that if you think that your son, Cain, might challenge the will and you want a no-contest clause to stop him, you have to leave him enough money so that he does not want to risk losing it. Let's say Adam had a million dollar estate and left $900,000 to Abel and $100,000 to Cain. Now, if Cain challenges the will, he risks losing $100,000 to gain $400,000. It is a risk he will think long and hard about. Having $100,000 is significantly better than having nothing.

The complexity of no-contest clauses does not stop here. The clause, under certain circumstances, can protect bad guys and prevent your rightful heirs from getting their inheritance.

Let's say that Adam puts his no-contest clause into a trust that leaves his estate equally to his loving sons, Cain and Abel. When he executes the trust, Adam is healthy, robust and clearly capable of doing an estate plan. The no-contest clause disinherits anyone who challenges the trust.

When Adam is on his deathbed, wracked with pain and suffering from delirium, Cain comes in and puts in front of Adam an amendment to the trust which disinherits Abel and leaves everything to Cain. Adam dies the next day.

Abel is furious. He goes to Cain and claims that Adam did not have the mental capacity to write the amendment and was pressured by Cain to sign the document. Cain admits it. Cain says, "I am sure that no judge would uphold the amendment. However, the no-contest clause was in the original trust. The no-contest clause was signed when Adam was capable and not subject to undue influence." Thus, if Abel challenges the amendment, he has challenged a provision of the trust, and will be disinherited even if your challenge succeeds. Abel, who is really the good guy, receives nothing from the trust and receives nothing if he challenges the wrongfully obtained amendment.

The situation described above would be the same if Adam had written a will and Cain had shown up at Adam's bedside with a codicil. (A codicil adds to or changes a will without revoking the original will).

I don't know of any court that has truly tackled this problem, but it appears that if you put a no-contest clause in your estate plan, and then later someone uses trickery to get you to change that plan (but without actually revoking the original document with the no-contest clause) you may have made it very risky for your rightful heirs to challenge the wrongfully obtained document.

I get cases with these kind of problems because families keep putting estate planning documents in front of elders while they are dying. The family is in stress and no person should ever be doing estate planning from a hospital bed.

So what to do to protect yourself? Make your estate plan when you are healthy and do not put no-contest clauses in your estate planning documents. Because the clauses only effect those people who receive a substantial portion of your estate, only those you really care about are affected. If a document is wrongfully obtained or made invalid because of your dementia, it is probably better that one of your loved ones be able to bring the problem before a judge. You do not want to make your loved ones unable to challenge fraudulently obtained documents.

If your attorney insists on a no-contest clause in your estate planning document, clearly state that the no-contest provision applies only to the original document and does not prevent the challenge of a codicil or amendment.

We all want to avoid litigation over our estates. Litigation is bad, but worse is having your estate go somewhere you never intended. Don't handcuff your family's ability to use the courts as they were intended to be used.

Oregon Elder Law: The Oregon Courts, the Department of Veterans Affairs and the problem of competing fiduciaries.

This is a complicated post. You may want to review my earlier posts on guardians, conservators and professional fiduciaries if you aren't comfortable with those concepts..

In my practice I run into three types of fiduciaries. There are social security rep payees. There are state court appointed conservators and there are fiduciaries appointed by the US Department of Veterans Affairs (USDVA).

Social Security doesn’t present much of a problem. Social Security will normally honor an appointment of a fiduciary by a state court by making the fiduciary the rep payee for Social Security. That puts the state and federal money in the same hands. Then, when I do an annual accounting to the state court, with a wink and a nod, I include the social security, as if it were subject to state court administration. It is a courtesy to the state court so that judges have a full picture of the protected person's finances.

The problem arises when state appointed fiduciaries and those appointed by the USDVA clash. The USDVA has its own system, and unlike Social Security, the USDVA and the state courts do not always play well together..

In addition to the tension inherent in having two parallel systems, there is often an atmosphere of distrust between those who work primarily in one system or the other. Partisans on the state court side allege that USDVA appointed fiduciaries are untrained, overworked, and unresponsive. Partisans on the federal side allege that state court fiduciaries are arrogant, overpaid and rapacious. I try to stay out of the crossfire, but the partisans are easy to find and can make these cases more difficult than they already are.

The problem for the elders arises when a state court conservator is appointed for a protected person who already has a USDVA rep payee. The USDVA will not normally make the state appointed conservator the rep payee for USDVA funds, so the protected person ends up with two fiduciaries. Two fiduciaries are not better than one, particularly when the two money managers don’t believe the other one truly deserves to be there. It gets even worse if the state court also appoints a professional guardian who wants to be paid by somebody, but isn’t quite sure who. In these cases, every expense has to be negotiated by the two fiduciaries.

Some lawyers believe they can avoid the two-fiduciary problem by having a state court appoint the Oregon Department of Veterans affairs as the state court fiduciary. The theory may be that the two agencies have similar names so they will cooperate with each other. That isn’t necessarily true. The lawyer hopes that the USDVA will make the ODVA the rep payee for federal VA benefits thereby putting a state agency in charge of the federal money. That might happen, or it might not. The USDVA, it seems to me, is particularly reluctant to appoint the ODVA as rep payee for federal benefits if it looks like the appointment of the ODVA was instigated primarily as a strategy to get state control of USDVA payments. In such cases, the USDVA often leaves its own fiduciary in place to manage the federal money. The protected person ends up paying both the ODVA and the USDVA fiduciary.

The situation is complicated by the fact that when amounts over $10,000 accumulate in a USDVA account, the USDVA may (or may not)  ask the local USDVA fiduciary to apply for conservatorship under state law. If the fiduciary is appointed he will thereafter be paid according to state law rather than federal law. For the fiduciary, this usually means a raise. If, however, the USDVA fiduciary is not appointed--say for example the court finds that the protected person is competent or that a different person is more appropriate to serve--then the USDVA fiduciary will continue to administer the USDVA money. Even when the USDVA initiates the proceeding in state court, the state doesn’t get to choose who will manage VA money.

I had one case where the USDVA fiduciary applied to be a successor state law conservator after a family member resigned. After reviewing a visitors report, the court found that that protected person no longer needed a conservator. The USDVA makes its own capacity determinations and ignored the state court ruling. Thereafter the USDVA left the rep payee in place and cut the monthly budget of the veteran because he could now pay his living expenses out of the funds freed up by the termination of the state court conservatorship.

If you have the USDVA involved in your case you have to remember that the USDVA is not bound by state court determinations and regularly ignores them. You cannot subpoena USDVA medical providers as witnesses in state court. The USDVA makes its own competency determinations. The USDVA fiduciaries do their own accounting's each year to the USDVA, accountings which are often disapproved (for sometimes serious and sometimes trivial reasons). USDVA fiduciaries are contractors who cannot voluntarily turn over federal money to family or state authorities and cannot, if they want to keep their contracts, resign as the fiduciary for a particular veteran. All the important decisions and expenditures are made by the USDVA field examiners and the people at the fiduciary hub.

The moral is--I think--that when I get involved with someone who has a USDVA fiduciary, I have to look ahead. I can’t adopt a legal strategy that will create dueling fiduciaries. If all the money in the case comes from Social Security and USDVA, there is no money for the state courts to manage. In those cases I have to be very circumspect about asking for a state law conservator. If I want to change the USDVA fiduciary in charge, I have to tread lightly and use charm instead of bluster. The only way to force the USDVA to do anything is in federal court where the law is stacked against me. The USDVA folks know this. They know I don’t like federal court and my clients can’t afford to go there. The people at the USDVA will, however, listen to respectful and well presented plans that enhance the life of the veteran. And, supposedly, that is what we all want.

Oregon Elder Law: Becoming a Conservator for Your Spouse

As a general rule, when a person's husband or wife becomes incapacitated the capable spouse can handle the financial affairs of both without the intervention of the courts. The combination of joint accounts and automatic deposit of retirement income allows the capable spouse to manage he money for both husband and wife. Sometimes, however, situations arise in which the capable spouse cannot adequately manage the couple's income and assets without help from the courts. In these situations the well spouse may have to seek court help to protect the long term financial security of both persons. Court proceedings by one spouse to be named the conservator of the other create unique problems for the Oregon elder law attorney and the Oregon courts.

Common Situations

Cases in which one spouse seeks court authority to manage the finances of the other fall into two basic types. The first is when the incapacitated spouse owns property in his or her own name that is needed for long term care costs but is unavailable because the incapacitated spouse is incapable of signing the documents necessary to free up the money. The second situation is the one in which one spouse is, as a result of mild dementia or obsessive behavior, wasting the couple's life savings. This, more often than not, occurs in elderly men who become obsessed with spending money on sweepstakes, internet scams, gambling, or crackpot money-making schemes.

What to do?

In situations like the one described above the spouse who is still capable of managing money retains an Oregon elder law attorney to ask the court to make her conservator for her husband. A conservator is authorized to manage the money for the incapacitated spouse, but must carefully account to the court for all of the income and payments made on behalf of the incapacitated spouse. It is a lot of work for the attorney to set up a conservatorship like this and a lot of work for the newly appointed spouse/conservator to keep the records that the court will require.

The problem for the couple, the lawyer, and the courts in these cases is that the couple's income and outgo have usually been inextricably intertwined for many years. Now the court is being asked to oversee the finances of one of them while leaving the other free, like any other citizen, to freely manage her own income and expenditures.

This is easier said than done.

Preliminary Problems for the Spouse-Conservator.

A wife who wants to be conservator for her husband faces the normal problems that face any conservator plus some. First she must qualify to be conservator by being able to buy a bond equal to the amount of money she will be managing for her husband. She must have no criminal record and must be capable of doing the bookkeeping necessary to be a conservator. 

 

If the wife is appointed conservator, she will have to inventory all of the couple's income and property, determining what is jointly owned and what is owned solely by each of them. This inventory of income and assets will determine what the conservatorship will look like.

An Oregon conservatorship of a spouse to pay for long term care.

If the conservatorship was sought because the spouse needed to access assets belonging to the incapacitated spouse for long term care, then the capable wife will need to establish one or more conservatorship accounts and transfer the assets of the incapacitated spouse to that account. If, for instance, the incapacitated husband had a brokerage account in his own name and the money in that account was needed to pay his bill at a long term care center, the spouse-conservator would move the funds in the brokerage account to an account in the name 0f the conservator. The conservator might also have the retirement income of the incapacitated spouse deposited in that account. The long term care costs for the husband could then be paid from that account, and at the end of the year, when an annual accounting was due for the court, the records of that account would show the income and outgo related to the husband's long term care.

There may be other assets that belong to the incapacitated husband that must be disclosed to the court but are not going to be used for long term care. For instance, the incapacitated husband probably owns a one-half interest in the family home. This will have to be reported to the court, but it is unlikely that the home will have to be sold to pay for care (assuming that the capable wife still lives there). Sale of the house, will normally be restricted so that the cost of the bond is reduced, and the capable wife cannot disappear with all of the couple's equity leaving the incapacitated spouse high and dry. If the house needs to be sold, the court order necessary to allow it to happen will not be difficult for your Oregon elder law attorney to obtain.

If the wife/conservator is dependent upon the income of her incapacitated husband, the wife’s lawyer will provide a budget to the court allowing a withdrawal from the conservatorship account—from the husband's income—a certain monthly amount to provide for the wife's needs.

A conservatorship when a spouse is wasting assets.

If a spouse has a cognitive defect that manifests itself in wasteful spending of the couple's income the non-disabled spouse may seek a conservatorship to limit the losses. This kind of mental illness shows up in several forms. Sometimes the spouse is addicted to sweepstakes. Sometimes it is gambling. Sometimes it is phony get rich schemes. In these cases, the spouse with capacity is not usually worried about long term care or getting access to property held in the disabled spouses name. The spouse here is worried about protecting the accumulated wealth of the couple and stopping the bleeding.

If the disabled spouse used credit to fund his wasteful spending there may also be creditors—often credit card companies—wanting to be paid.

In these cases the conservatorship begins as in the previous case, by properly qualifying, getting the bond, and inventorying the income and property of the couple. Then credit card companies, merchants and other possible creditors need to be notified that the disabled spouse no longer has the legal ability to make contracts.

 

In these cases the spouse-conservator is not worried about paying for long term care, but rather about the normal monthly contributions that the disabled spouse makes to the couple's expenses. Once again the conservator should establish a conservatorship account and direct the disabled spouse's income to that account. The conservator should then establish a budget based upon the way bills have been paid in the past and ask the court to approve both the budget and the disabled spouse's share of the monthly expenses. Thereafter, the spouse/conservator will pay the court approved disabled spouse's share from the conservatorship account to the normal household account to be spent according to the budget. In this manner, the day-to-day expenditures by the non-disabled spouse do not become subject to the reporting requirements of the conservatorship. The money left over in the conservatorship account after the monthly contribution by the disabled spouse could be saved or applied for the benefit of the creditors of the disabled spouse.

In the first example, where the spouse started a conservatorship in order to take control of an asset held in the disabled spouse's name, the major monthly expenses of the conservatorship were the disabled spouse's long term care costs and his contribution to the wife's support. In the case of a conservatorship designed to limit the disabled spouse's spending ability, the major and maybe only monthly distribution from the conservatorship account is the payment into the couple's normal household account.

Cost and Value

No one gets a conservatorship over his or her spouse except as a last resort. It is expensive, it is time consuming, and it involves the court in your private family life for years. The annual accounting is difficult to prepare and you will be paying your lawyer for years to come. It is a legal strategy to be taken only when everything else ha failed.

On the other hand, situations arise in which you have no choice. If your husbands rental house, or his brokerage account is in his name alone and you need that money to pay for long term care, you have to do it. If your husband is sending your life's earning to Nigeria, it is far better to pay the lawyer and the court the money it takes to have a conservatorship than to lose everything to internet scams.

How to go about it

Something like this is not a do-it-yourself job. You need an elder law lawyer. The guy who got your cousin out of that speeding ticket is probably not the person to go to. Read my article on how to select and hire an elder law lawyer, bite the bullet and make an appointment. Don't kid yourself either. It is going to be expensive, but if you need a conservatorship it is because there is something very valuable you need to protect. Doing what needs to be done will be worth the cost.

Advance Directives Again

I wrote this as a columnist for the blog, Time Goes By,  a blog about topics of interest to all of us with issues surrounding aging. Although I have written here about Oregon Advance Directives, I thought I would share the article with readers of Oregon Elder Law.

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As I make my way toward the grim reaper, there may come a time when I become so sick that I cannot communicate with those around me. My inability to communicate might be due to a temporary illness, but it is most likely to happen during the last days of life. When I can no longer communicate, I have an advance directive that will talk to family and care givers for me.

 

An advance directive is a legally enforceable document that manages my medical care when I cannot. As long as I can still lift my head from the pillow and make my wishes known, my advance directive is scrap paper but when I can no longer do that, my advance directive controls who makes decisions for me and what treatments I receive.

The name “advance directive” probably comes from the fact that the document is signed in advance of final illness and gives directions, but that isn’t the only name the document goes by.

When documents with a similar purpose first appeared they were called “living wills.” Lawyers don’t like to stray far from what they know. They called it a will because it looked like one.

The next name to come around was a “health care power of attorney.” Once again, lawyers took something they knew, the power of attorney, and adapted it for another purpose. The document has also been called a personal directive, advance decision, health care proxy and probably a few other things.

Maybe the name “advance directive” will stick, but don’t count on it. No matter what they are called, all these documents all do the same thing: they provide family and care givers with instructions for how we want to be treated at the end of life.

The most important part of an advance directive is the appointment of a health care representative. A health care representative makes health care decisions, including decisions about when to pull the plug, when you can’t make them yourself.

This person is the advocate for your wishes when you can’t advocate on your own. In my advance directive I named my spouse as my health care representative. I have told her what I want at the end of life and I trust her to make decisions about my care that respect my wishes.

The second most important part of an advance directive is instructions to your medical providers about the kind of treatment you want or don’t want. These “directives” are addressed to your doctor. My sister is a doctor and I have never known her to take directions, but I filled out this part of my advance directive anyway.

I didn’t have to. I could have stopped after appointing my spouse my health care representative, thereby leaving everything up to her. I can fill out all or part of an advanced directive and, if it is properly signed and witnessed, the part filled out will be legally enforceable.

If you want or don’t want certain kinds of medical intervention at the end of life and you don’t have my sister as your doctor, you make those wishes happen by putting them in your advance directive.

Once you’ve named a health care representative to advocate for you and you’ve told the medical profession what sort of care you want, the heavy lifting is done. One of my favorite advanced directives comes from a nonprofit called Aging With Dignity. It is called Five Wishes [pdf] and may be filled out online. This advanced directive is named for five common wishes about dying.

Like all advance directives, it asks you to name a health care representative and give directions about end-of-life care. It goes on to ask how much pain relief you want (we are talking heavy drugs here), what sort of surroundings you want to die in and what you want your loved ones to know.

The Five Wishes document meets legal requirements for an advanced directive in 42 states, but not here in Oregon where I live. I encourage you to find and use the form that is most common in the state where you live.

You need to take your advance directive with you to the hospital when you go in for treatment and have the nurse or social worker scan a copy of the document into your file. The hospitals don’t like to deal with unfamiliar documents. Don’t stress them out. Bring them what they are used to seeing in your community.

Advance directives can be enforced by the courts if they are filled out and witnessed (or notarized) properly, but court is not where you want to go. If you pay attention to the instructions, particularly those concerning witnesses, you have set the stage for end of life care without resort to lawyers.

Some families are so litigious that no document will keep them out of the courthouse but for most of us, an advance directive provides the framework for end of life care that is lawyer-free.

The advance directive is the only legal document that I recommend for everyone. Most legal documents have risks and rewards that must be balanced. The advance directive, however, presents very little risk and big rewards. The end of life is a time for your family to take care of emotional and spiritual matters, not make appointments with lawyers.

A properly signed and witnessed advance directive does as much as a person can do to ensure that the details of your dying do not end up at the courthouse.

Scandal in the world of Oregon Elder Law Lawyers, Professional Fiduciaries, and the Courts

Steve Duin, a columnist for the Oregonian has published an article about the case of Benjamin Alfano. The case involves a prominent professional fiduciary, Chris Farley of Farley, Piazza & Associates, a prominent elder law lawyer, Richard Pagnano, of the Elder Law Firm, the Oregon Department of Veterans Affairs, and Judge Rita Cobb, the Probate Judge in Washington County.

Despite being represented by a top notch lawyer, poor Mr. Alfano came to a very unfortunate end. Sometimes court proceedings designed to protect elders turn out well for all involved. More commonly the results are mixed. Sometimes they turn out to be a disaster for everybody. Mr. Alfano's case is an example of one of the disasters.

Using a Conservatorship to protect your inheritance.

A conservatorship is designed to prevent a financially incapable elder from wasting his or her money due to deteriorating thinking skills. The socially acceptable motive for rescuing the senior citizen from himself is that the elder may need that money for his own needs, particularly long term care. A child who sees his elderly parent sending her life savings to television evangelists or Caribbean scammers may be legitimately concerned that mom is spending the money she may need for long term care. He also might be legitimately concerned that his mother is wasting his inheritance. This article explores the risks and rewards of using a conservatorship to prevent mom and dad from spending the money their children hope to inherit.

A conservator can be appointed for a person who is “unable to manage financial resources.” This is a wide open door. Conservators get appointed because old women are sending all their money to crooked preachers or old men are spending all their money on hookers. Many times a child seeks a conservatorship because another child is bleeding the parent dry with pleas for money that the kid could earn himself if he had the gumption to go out and get a job. Whenever siblings are involved, there will be the suspicion that the one seeking the conservatorship is less concerned with the well-being of the elder than the well-being of his potential inheritance.

      Can you use a conservatorship to protect your inheritance? Yes. But there are dangerous pitfalls along the way.

      Let's say elderly mom has three kids: Moe, Larry and Curly. Moe and Larry are out in the workplace earning a living. Curly is living with mom and taking care of her and having conversations like this.

“Mother, I baked you a birthday cake.”

“Oh, thank you Curly. You are the only one of my sons who ever bakes me a cake.”

“That's right mother. Moe and Larry don't care about you like I do.”

“What can I do to repay your kindness, Curly?”

“Oh, nothing. I do it out of love. But if you insist on doing something, you could sign over to me all those shares of Microsoft stock you bought in 1985.”

“This is such a nice cake, Curly. Bring me those papers.”

Moe is not happy about this. He reads my blog and knows that one of the best ways to get around a will is to have the elder give away all his or her money before death. In our case, mother's will may split her estate equally between her three children, but if Curly gets his name on on the assets prior to death, there is nothing to transfer by will. Moe and Larry are out of luck.

Moe figures that he will ask that a conservator be appointed for mom on the grounds that she is trading Microsoft stock for birthday cakes, thereby depleting her financial condition for frivolous reasons. He doesn't make the mistake of asking that he be appointed. This would set the stage for a courtroom sibling dispute, which judges never like. He instead will ask that a professional—an neutral independent—be appointed. That way he cannot be accused of trying to get his hands on mom's money himself. Once a conservator is appointed, the professional will make sure that mom's remaining property stays put so that all three brothers inherit it when mom dies. The professional conservator might even be able to get that Microsoft stock back in mom's name using Oregon financial elder abuse statute.

But there is a danger.

The big danger is the mom will be so angry when she receives the papers saying that Moe wants to take her money and give it to a professional—in her mind, a stranger—that she will call her lawyer and tell him to write a new will that disinherits Moe. This happens all the time. Even if a conservator is appointed, mom has the right to have a lawyer and to change her will. The capacity necessaryto write or change a will is far lower than that necessary to manage financial affairs. All mom has to know is the names of her children, what she owns, the fact that she is signing a will, and the effect the will will have. If she knows what she owns, can name her children, and knows that by signing the will she is disinheriting Moe, she has the capacity to change her will. She also has a reason for changing her will; to punish Moe for taking her to court.

A lot of families have a Curly—that son (or daughter) who fails to thrive and spends his life hanging around his parents home and living off handouts from mom or dad. The kids who did thrive don't think much of these family members. Professional fiduciaries dislike them as well and tend to want to separate them from the parent. Parents, however, may love their children equally or even favor the neer-do-well child. By the time one gets to considering a conservatorship there may be in place a stable decades-old family dynamic in which the the parents give extra support to one while the other, more successful children, complain. A child who disturbs this dynamic does so at some peril.

A will signed by a person subject to a conservatorship will always get close scrutiny by the courts. Even if she had the capacity to disinherit Moe, Moe might challenge the will on the basis that Curly used “undue influence” to get her to do it. In undue influence case, the lawyers make lots of money. Judges are successful people and tend to be unsympathetic to folks like Curly who live off their parents. That does not mean, however, that Moe is guaranteed a win. Elders can distribute their estate as they see fit. Giving all the money to the person who was with them the most is neither unusual or unjust.

The moral of this story is that if you want to do the right thing and protect mom from herself, your motives should be pure. If it is truly her that you are thinking about, it should be of no consequence that she disinherits you. If your motives were not pure—you were doing it to prevent your inheritance from disappearing—then you are taking risk. The risk is that your efforts will not be appreciated and you will be disinherited anyway. If you are not disinherited you win. If you are disinherited, you took the risk and lost.