Sunday, April 13, 2014

Critical Issues to Consider in Planning Via Powers of Attorney

ElderLawGuy Jeff Marshall succinctly discusses four critical issues that individuals and families should consider when using Powers of Attorney in estate and incapacity planning. Here's the link to Jeff's "Powers of Attorney: Things You Need to Know."  

April 13, 2014 in Advance Directives/End-of-Life, Consumer Information, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Property Management | Permalink | Comments (1) | TrackBack (0)

Friday, April 4, 2014

Florida Supreme Court Ruling Demonstrates More Dangers of DIY Will "Forms"

The Florida Supreme court ruled unanimously in Aldrich v Basile on March 27 that property acquired by a testator after execution of her will was not be controlled by the will, because although she had made bequests, the "E-Z Legal Form" she used did not include a residuary clause to address non-specific bequests.   Thus the after-acquired property passed by intestacy laws to family members not mentioned in the will.

The testator has used the "will form" to make specific bequests of several items of valuable property, including her house, vehicle and bank accounts (identified by numbers) to her sister, and provided that if her sister "dies before I do I leave all listed to" her brother.  The sister died first, leaving "Putnam County" property to the testator. Two nieces (children of a second brother, also deceased) asserted an interest in the probate action, arguing that "without any general devises and in the absence of a residuary clause," the will "contained no mechanism to dispose of the after-acquired property." They could recover under Florida's intestacy laws. 

The court also rejected consideration of a separate hand-written note by the testator as evidence of her "true" intent with regard to the after-acquired property to the named brother, because Florida's law requires "the same formalities" as a will for codicils.

In a separate concurring opinion, Justice Pariente pointed to the pre-printed will form, noting there was no "space to include a residuary clause or pre-printed language that would allow a testator to elect to use such a clause." Justice Pariente described the unfortunate decision by the testator to rely on a form, rather than hire a "knowledgeable lawyer," as an example of the "old adage 'penny-wise and pound-foolish:'"

"I therefore take this opportunity to highlight a cautionary tale of the  potential dangers of utilizing pre-printed forms and drafting a will without legal assistance.  As the case demonstrates, that decision can ultimately result in the frustration of the testator's intent, in addition to the payment of extensive attorney's fees -- the precise results the testator sought to avoid in the first place."

For another example of a "penny-wise and pound foolish" outcome from use of commercial estate planning "forms," see our October 2013 post on a Pennsylvania case, see "Do-It-Yourself Wills:  Penny Wise & Pound Foolish?"

 Thanks to Professor Laurel Terry for pointing to an ABA Journal Blog post on the Florida case.


April 4, 2014 in Current Affairs, Estates and Trusts, State Statutes/Regulations | Permalink | Comments (0) | TrackBack (0)

Friday, March 28, 2014

Failure of Consideration and Promises to "Care for Grandma for the Rest of Her Life"

This semester I'm teaching Contracts, which always provides interesting opportunites to introduce "Elder Law" concerns in a traditional course.

This week I offered a not-so-hypothetical fact pattern, where Grandmother deeds house to Grandchild, in exchange for Grandchild's "promise to care for Grandma for the rest of her life."  Whenever I use this hypo, I pick one of a number of reasons the agreement does not work out as planned, such as the individuals don't get along with each other, grandchild gets pregnant or ill, etc.  This week's reason was "Grandma needs more specialized care" but cannot afford it because she's given away her primary resource. Grandchild doesn't want to sell the house, now that it is "hers," and she doesn't want to take out a mortgage. House

I ask the students to brainstorm Grandmother's options.  Almost always, someone suggests Medicaid, and we talk about whether Medicaid will provide adequate assistance and whether there are potential barriers to eligibility for public benefits, such as the five-year look back period. 

Students sometimes suggest Grandmother is subject to "undue influence," which if proven would be grounds for potential rescission.  Good job!  Except that I am usually careful in my hypo not to make Grandchild overtly manipulative.  And in truth, many of these arrangements begin more because of the desires of the aging individual, than because of any greed on the part of the younger person. We also explore "incapacity" and "duress" as possible grounds for rescission.

This week, students also suggested "failure of consideration" as grounds for rescission.  There is an interesting line of cases, perhaps a hybrid of Property and Contract law, that treats "support deeds" as a specific analysis, potentially justifying relief. Examples include:

  • Gilbert v. Rainey, 71 SW. 3d 66 (Ark. Ct. App. 2002), permitting mother to rescind deed for failure of consideration, and admitting mother's parol evidence to show daughter promised life care in exchange for the conveyance of the home, to show that conveyance was not a completed gift;
  • Frasher v. Frasher, 249 S.E. 2d 513 (W.Va. 1978), granting cancellation of deed from grandparents to grandchildren, on the grounds that where discord arises between the parties to a "support deed" between an aged grantor and a younger family member, the property should be restored "if it can be done without injustice" to the younger family member. 

After class was over, some of my students stopped by to chat, offering variations on the hypothetical, sometimes from examples within their own extended families.  In both of the sample cases above, the court attaches special meaning to the concept of "support deeds" going from older to younger generation, but most of the cases along this line are fairly old.  The fact that my students were offering modern variations on the fact pattern suggests there may be good reason to revisit this area of the law. 

Perhaps any resurgence in this topic is another sign of our "aging" times. So, that leads to my question, does your state recognize failure of consideration, tied to "support deeds," as grounds for rescission of a conveyance?

March 28, 2014 in Cognitive Impairment, Current Affairs, Estates and Trusts, Ethical Issues, Health Care/Long Term Care, Housing, Medicaid | Permalink | Comments (2) | TrackBack (0)

Sunday, March 23, 2014

California Court: Enforceability of Mandatory Arbitration Clauses in Trusts

On March 11, 2014, California's intermediate appellate court ruled that a mandatory arbitration clause in an inter vivos trust would not control, where the beneficiary challenging the trust "was not a signatory to the arbitration agreement."  The daughter who challenged the document alleged her mother lacked capacity to sign the newly revised agreement in question and contended the revisions were the product of "elder abuse" and undue influence.  The decision offers much to consider. 

In McArthur v. McArthur, the court noted enforceability of arbitration provisions in trusts was a question of first impression in California and turned to other states for guidance.  In Schoneberger v. Oelze, 96 P. 3d 1078 (Az. Ct. App. 2004), the Arizona court ruled that arbitration clauses contained in trusts agreements are generally not enforceable against nonsignatory beneficiaries, a decision that was later superseded by revisions to Arizona statutes.  In Rachal v. Reitz, 203 S.W. 3d 840 (Tex. 2013), the Texas Supreme Court relied on wording of the state's arbitration law in concluding a trust beneficiary can be bound to arbitrate, regardless of whether the trust document was analyzed as a contract.

In ruling against mandatory arbitration, the California court characterized one daughter's argument that "public policy" favored arbitration of trust disputes as more appropriate for the Legislature.  The Court concluded that "whatever the national trend might be, [the proponent of the trust and mandatory arbitration] fails to demonstrate that any other jurisdiction would compel arbitration under the facts of this case, where the [contesting] beneficiary has not either expressly or implicitly sought the benefits of a trust agreement containing the disputed arbitration provision."

The California decision also points to several law review articles addressing arbitration provisions in trusts disputes, including a 1995 article by Yale Professor John H. Langbein, and a 2012 article by University of Missouri Law Professor S. I. Strong.  By email, Professor Strong notes it will be interesting to see whether the McArthur case goes to the California Supreme Court. 

While not addressed in the opinion directly, the details of the trust history in the California case also suggest another potentially interesting question, about the use of particular "mandatory" dispute mechanisms or mandated organizations that could favor a certain result. 

The original McArthur trust, created in 2001, apparently granted the three daughters equal shares of their mother's estate.  The challenged 2011 amendment, however, allegedly favored one daughter and as described in footnote 2, added a "Christian Dispute Resolution" provision that described the mother and that same daughter as "Christians [who] believe the Bible commands them to make every effort to live at peace and to resolve disputes with each other in private or within the Christian church." The mother as "Trustor" and the mother and daughter as "Co-Trustees agree that any claim or dispute arising from or related to the Trust as amended shall be settled by biblically based mediation and, if necessary, legally binding arbitration before the Institute for Christian Conciliation (TM), a division of Peacemaker (R) Ministries...."  

So, if one challenges the very essence of the amended trust and the role of the new co-trustee, doesn't that suggest the challenger might have a uniquely steep uphill climb, whether or not a "member" of the faith or organization granted the power of enforcement?

March 23, 2014 in Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Religion, State Cases | Permalink | Comments (0) | TrackBack (0)

Monday, March 17, 2014

Student Comment on Expansion of Medicaid Estate Recovery

From 3L student Katie L. Summers at my own law school, Penn State Dickinson,  a recently published Penn State Law Review comment titled "Medicaid Estate Recovery: To Expand, or Not to Expand, That is the Question."  Here is a taste, from the abstract:

"To recoup some of the costs of Medicaid, the states are required to implement a Medicaid estate recovery program.  There are certain mandated requirements, but the reach of the recovery program is primarily left to the discretion of the states.  Pennsylvania recently contemplated expanding its Medicaid estate recovery program, but the proposed changes were not enacted.  This Comment provides an overview of Medicaid estate recovery in Pennsylvania by exploring the background of Medicaid, Medicaid estate planning, and Medicaid estate recovery generally.  In addition, this Comment examines the arguments for and against Medicaid estate recovery.  Finally, this Comment recommends the creation of a system that expands Medicaid estate recovery in Pennsylvania, while retaining certain protections for the deceased Medicaid recipient’s heirs."

March 17, 2014 in Estates and Trusts, Ethical Issues, Federal Cases, Federal Statutes/Regulations, Health Care/Long Term Care, Medicaid, Property Management | Permalink | Comments (0) | TrackBack (0)

Thursday, March 6, 2014

Court's Approval of Estate Account No Bar to Criminal Charges Against Trustee/Agent

In companion appellate cases, a brother and sister argued the Commonwealth of Pennsylvania was "collaterally estopped or otherwise barred by the constitution and/or statute" from bringing criminal charges against them arising from payments from a trust account, because of a civil order "approving" the final accounting in the estate.  Pointing out that the state was not a "party" to the Orphan's Court proceeding, even if it had an interest in proper disbursement of estate funds, the Pennsylvania Superior Court rejected the estoppel arguments as a "matter of law." 

The Court observed, "As [Charles] McCullough has indentified no ruling or filing in the certified record that made the Commonwealth a party to the Orphan's Court proceeding, we conclude that it was not a party. As such, collateral estoppel cannot apply."

The rulings in Commonwealth v. Charles McCullough and Commonwealth v. Kathleen McCullough, decided on February 27,  allow the siblings' cases to go forward on multiple criminal counts, including allegations of theft by unlawful taking and conspiracy.  The allegations go back to 2007, with multiple continuances of the scheduled trial dates.

The court appeared to credit the Commonwealth's theory that the complexity of the case was largely the result of the brother, a licensed attorney, who "intentionally obfuscated his roles as trustee and agent," creating confusion on the part of the bank, a co-trustee.  The brother was charged with "24 crimes arising from his actions as an agent and co-trustee for Shirley Jordan, now deceased. Jordan was approximately 90 years old, a widow without any children, and living in a senior living center when she executed a springing power of attorney in favor of McCollough."  The Court observed that it was estimated that "Jordan had assets of approximately fourteen million dollars at the time."  

Charles is accused of misusing Jordan's assets for his own benefit (including an alleged $10,000 gift to a charity allegedly connected to his family) and of arranging for his sister to be hired at an "exorbitant" rate of $60 per hour for companion services for the elderly woman, as compared to a "Department of Labor estimate of average wages of $8.63 to $9.74 per hour." 

The appellate opinions in the cases are fairly dry.  In fact, the sister was charged with theft of what, at first blush, seems like a fairly small sum, $4,575.01. 

The larger back story, however, includes the allegation that the sister was "hired" as a companion by her brother, using his authority under a Power of Attorney, just weeks after she had been fired and accused of misappropriating more than $1 million from her previous corporate employer. In a separate criminal proceeding, Kathleen McCullough was convicted in 2010 of theft from two companies that employed her, as detailed in the Pittsburgh Post-Gazette.  

March 6, 2014 in Crimes, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, State Cases, State Statutes/Regulations | Permalink | Comments (0) | TrackBack (0)

Friday, February 28, 2014

Kansas Attorney Disbarred After Forgery of Estate Planning Documents

In the February 7 disbarment of Kansas attorney Daniel R. Beck, the disciplinary record describes a cascading series of events (including the fact that Beck continued to practice law while on administrative suspension). The heart of the case is the attorney's role in execution of "updated" estate planning documents. 

During the disciplinary proceedings, Beck was found to have directed a man to forge the signature of the man's mother, a 90-year old woman in a nursing home, on key documents. Further, the attorney forged the name of his own secretary as the notary on the documents that included a family trust, a general durable power of attorney, a living will, a last will and testament, a health care power of attorney, an assignment of personal property, and an authorization to release health care information.  

The attorney had drafted the original estate plan for the woman and her then-husband. In preparing and executing the "updated" documents, he was interacting solely with the son, although the record does not suggest the son was seeking or receiving any "benefit" from the changes.    

In attempting to avoid major sanctions, the attorney argued that some of the updates, such as a "new" power of attorney and healthcare power of attorney, were necessary "because in his experience sometimes hospitals and financial institutions would not honor those documents if the documents are from a long time ago." At the same time he argued the updated documents made no substantive changes to the existing plan. No harm, no foul as a defense? The Kansas Supreme Court rejected the argument that the attorney's actions caused no harm to the woman in the nursing home, who died a few months after her signatures were forged:

"Respondent [Beck] admits L.H. was vulnerable but asserts that we must construe the word 'victim' to require a showing that the attorney's conduct 'actually exposed] [a] vulnerable client to real and significant harm,' and argues such as showing was not made in this case.


We  need not decide whether the term 'vulnerable victim' requires that an attorney expose a client to actual harm because we conclude the record contains adequate evidence of injury, including $2,800 L.H.'s trust paid to respondent for legal work L.H. never authorized, approved, or used....


Moreover, since respondent never spoke to L.H., he can only speculate as to whether the documents he drafted could comport with L.H.'s current wishes.  Put simply, an attorney injures, or at least potentially injures, a client when he or she takes legal action on the client's behalf without ever speaking with the client or ensuring that the proposed action is in accord with the client's wishes."

Hat tip to ElderLawGuy Jeff Marshall for this interesting opinion.           

February 28, 2014 in Advance Directives/End-of-Life, Crimes, Estates and Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, February 17, 2014

Australian Court Permits Probate of iPhone "Will"

Under sad circumstances in Australia, where the testator took his own life after creating a "series of documents on his iPhone, most of them final farewells," the Supreme Court of Queensland has ruled that the man's Will created on the iPhone was properly subject to probate. 

Key to the decision in In Re Yu, [2013] QSC 322, are the findings that the electronically created and stored document satisfied all three elements required for nontraditional documents to be accepted for probate under Australian law, including: 

1. The existence of a document, which can include "any disc, tape, or other article, or any material form from which writings are capable fo being produced or reproduced, with or without the aid of another article or device."

2. Whether the document purports to state the testamentary intentions of the deceased.

3. Whether the decased inteneded the document to form his Will. 

The Supreme Court of Queensland is the highest court of Queensland and includes both a trial court and a Court of Appeal.  This decision was issued at the trial court level.

I can see U.S. law professors -- and law students -- already thinking about variations on this fact pattern.  Gives additional significance to the question, "Is there an app for that?"   

February 17, 2014 in Estates and Trusts | Permalink | Comments (0) | TrackBack (0)

Monday, February 10, 2014

Incapacity and the Second Amendment

Florida elder law and estate planning attorney Carla-Michelle Adams observes that state laws, such as that of her home state, are often silent on whether a guardianship determines the right of a ward to possess or access guns.  In an editorial column for the Florida Bar Journal in December 2013, "Grandparents, Guns and Guardianship: Incapacity and the Right to Bear Arms," she urges clarification of state laws to avoid confusion under the Constitution, and contends that guardianship orders should specifically address gun posession: 

"It is imperative that the right to bear arms is effectively removed by order of the court upon a finding of incapacity as a preventative measure for the ward and the community at large. Without legislation specifically indicating that the right to bear arms shall be subject to elimination upon a finding of incapacity, there is a question as to whether the Second Amendment right is subject to retention by the mentally incapacitated ward; the [Florida] statute is ambiguous to this end."

February 10, 2014 in Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, Ethical Issues | Permalink | Comments (0) | TrackBack (0)

Thursday, January 30, 2014

Webcast: Dealing with Financial Institutions on POAs (or with other Fiduciary Authority)

Recently I received a communication from a professional agent, the head of a nonproft guardianship organization, and someone I have watched in action for eight years.  He and his team of carefully supervised agents work on behalf of elderly clients, disabled persons, and family members to handle financial matters. They are paid modestly, on a sliding scale, based on the client's income or estate. Sometimes they are operating as the court-appointed guardians, while other times their authority was granted by the principal through a POA, often with the cooperation (and sometimes the gratitude) of the family. 

This professional reported to me that they "are having increasingly difficult times using our authority for legitimate purposes, to the point where we have to subpoena information from banks as the guardian, because they will not accept our appointment."  Further, he reports "some banks are not honoring our POA or are adding unreasonable burdens, not required by law, leaving us unable to assist an older person."

Here is an experienced agent, who is trying do the job as a fiduciary in a highly professional manner. On the other side of the aisle are banks and other financial institutions, who have become understandably "gun shy" because of increasingly high profile cases of "bad" agents -- often family or "friends" -- who have misused their authority.

Well, as you might guess, this very topic has generated a timely CLE program!  "Dealing With Financial Institutions in Estates, Trusts and with POAs" is the title of a half-day program sponsored by the Pennsylvania Bar Institute that will take place at the following dates and times:

  • Tuesday, February 4, 2014, from 9 to 1:15, in Philadelphia, PA
  • Wednesday, February 26, 2014, from 9 to 1:15 in Pittsburgh, PA
  • Monday, March 3, 2014, from 9 to 1:15, in Mechanicsburg PA
  • Live Webcast on Monday, March 3, 2014 via

The program will focus on "bridging the divide" between financial institutions and agents, to help both sides better understand the powers and limitations conferred by law.  In additional to "family" fact patterns, the program will offer insights into fiduciaries acting on behalf of business owners. The faculty include experienced lawyers representing financial institutions and individuals -- plus one of those pesky law professor types. 

Pennsylvania, as is true in other states, has a number of potential changes in law pending at the state legislature, influenced in part by the Uniform Power of Attorney Act changes, first recommended for adoption by the states in 2006.  The program will provide the lates updates and trends.

For more, including remote access to the live webcast, go to the Pennsylvania Bar Institute's webpage, here.

January 30, 2014 in Estates and Trusts, Ethical Issues, Programs/CLEs, Property Management, State Cases, State Statutes/Regulations, Webinars | Permalink | Comments (0) | TrackBack (0)

Monday, January 20, 2014

Potpourri: Interesting Case Discussions in Elder Law Practitioners' Posts

I've been catching up on reading of practitioners' blogs.  I quickly came across interesting discussions of potentially cutting edge decisions in recent law and aging cases.  Here's a selection:

  • From Tucson, Arizona, Robert Fleming's Legal Issues Newsletter reports on the background of the Arizona Court of Appeals decision on  January 2, 2014 in Savittieri v. Williams, affirming the post-death annulment of a woman's marriage for lack of capacity. 


  • From Dearborn Michigan and Pittsburgh, Pennsylvania, John Payne's Off the Top O' My Head, comments on recent decisions within the Third Circuit that address the use of spousal annuities or trusts in Medicaid planning.  For example, he discusses the January 14, 2014 ruling in the United States District Court, Western District of Pennsylvania in Zahner v. Mackereth, that makes fact-specific rulings in three consolidated cases involving annuities and which also, surprising, revisits the dormant "Granny's Lawyer Goes to Jail" provision of federal Medicaid law.  Fortunately for attorneys, the court agrees with former Attorney General Janet Reno that application of the law to legal advice is unconstitutional. Nonethless, I think it is safe to say that the Pennsylvania Department of Public Welfare's attempt to push the law is an indication of the battle lines being drawn over use of annuities.


January 20, 2014 in Cognitive Impairment, Dementia/Alzheimer’s, Estates and Trusts, Federal Cases, Medicaid, State Cases | Permalink | Comments (0) | TrackBack (0)

Friday, January 17, 2014

Analyzing the Circuit Split on Supplemental Needs Trusts & Medicaid

"Missing the Forest for the Trees: Why Supplemental Needs Trusts Should be Exempt from Medicaid Determinations," written by Jeffrey R. Grimsyer as a law student for the Chicago Kent Law Review in 2014, is a thoughtful analysis of the relationship between Medicaid eligibiltiy and supplemental needs trusts, also sometimes called special needs trusts or SNTs. 

"[T]he trust provisions have confused federal courts, causing a recent circuit split about whether assets contained within SNTs can be counted by state Medicaid agencies when they determine the trust beneficiaries' Medicaid eligibility and benefits.  On one hand, one can read [Section] 1396p(d)(4) as being mandatory, which would require all states to exempt assets in SNTs when determining Medicaid eligibility.  This would allow the beneficiaries to continue using SNTs and remain eligible for Medicaid, but would force the states, as payors, to cover more citizens under Medicaid.  On the other hand, one can interpret [Section] 1396p(d)(4) as being optional, which would permit each state to enact laws that disqualify beneficiaries of SNTs from receiving Medicaid.  This would enable states to save some of their limited resources, but would cause beneficiaries to lose their Medicaid benefits if they use SNTs."

Grimeyer argues the Medicaid section in question is "best read as being mandatory on the states based on the applicable statutory interpretation tools." 

January 17, 2014 in Estates and Trusts, Federal Cases, Federal Statutes/Regulations, Medicaid | Permalink | Comments (0) | TrackBack (0)

Tuesday, December 17, 2013

WSJ: Talking About Things Other Than Money With Your Heirs

While I'm not sure I buy all of the suggestions in the article by Wall Street Journal article writer Andrea Coombes on "How to Avoid Estate Fights Among Your Heirs," she certainly raises topics worthy of discussion.  The final point is particularly interesting, encouraging us to consider writing an "ethical will," as a way to share our values.  This is explained as a a non-legally binding way to pass on a life story or a family legacy of values to the next generations.

Hat tip to Dave Pearson in Albuquerque, New Mexico for this link.

December 17, 2013 in Consumer Information, Estates and Trusts, Ethical Issues | Permalink | Comments (0) | TrackBack (0)

Friday, December 13, 2013

Wyoming Supreme Court: Expanded Medicaid Estate Recovery Permits Lien to Attach

In Estate of Marusich, 2013 WL 6450238, decided December 10, 2013, the Wyoming Supreme Court ruled the state could recover costs for Medicaid from the community spouse's estate, where the property in question, the marital home, had been owned as tenants by the entirety at the death of the Medicaid receipient (husband). Key points include:

  • Wyoming has adopted "expanded" estate recovery to include any real property in which a care-receiving individual had any legal title or interest at time of death;
  • Home was titled to the individuals as "husband and wife," which created a "tenancy by the entirety" under state law;
  • Husband received Medicaid benefits during his nursing home stay, until his death in 2005;
  • Wife continued to live in the marital home until her death, intestate, in 2012.

The Court distinguished rulings in Minnesota and Tennessee, where the agencies were barred from applying expanded estate recovery in cases where the care-receiving spouse's interest in marital property was transferred by the Medicaid recipient into the sole name of his or her community spouse before death: 

"While Barg [752 N.W.2d 52 (Minn. 2008)] and Smith [2006 WL 2114250 (Tenn. Ct. App. 2006)] ultimately reached a result consistent with that sought by the Marusich Estate, they do not support the argument that the house should not be available for recovery. In fact, those cases compel the opposite conclusion.  Given Mr. Marusich owned an interest in the house when he died (unlike the reciepient spouses in Barg and Smith), it was within the Department's authority to file a lien even though his interest passed by operaton of law to Mrs. Marusich upon his death."

The outcome in Wyoming points to the significance of expanded Medicaid estate recovery, and the potential importance of estate "re-planning" once the first spouse enters into Medicaid-paid care

December 13, 2013 in Estates and Trusts, Federal Statutes/Regulations, Medicaid, State Cases | Permalink | Comments (0) | TrackBack (0)

Thursday, December 5, 2013

Pennsylvania: Renunciation of Interest in Trust Triggers Ineligibility for Medicaid

Calling it a "matter of first impression," an intermediate appellate court in Pennsylvania has ruled that a woman's renunciation of her interest in a dissolved marital support trust was a transfer "for less than fair consideration,"  thus triggering ineligibility when she entered a nursing home and applied for Medicaid. 

As reported in Schell v. Pa. Department of Public Welfare, decided December 4, 2013 by the Pennsylvania Commonwealth Court, a testamentary trust was dissolved in 2009, leaving approximately $300,000 to be distributed to the settlor's widow.  The widow formally renounced her interest in the distribution, permitting the sum to be divided equally between the couple's two children, one of whom was disabled.  Two years later, in 2011, the widow entered a nursing home and applied for Medical Assistance. 

While DPW accepted the widow's "hardship" argument regarding the half distributed to the disabled daughter, the Court upheld DPW's challenge to the distribution of the other half to the son. The Court rejected the widow's argument that the penalty period could not apply to a trust created more than five years before her nursing home admission, on the ground that the key event was termination of the trust within the Medicaid lookback window:

"Once the trust was dissolved, Petitioner became entitled to any remaining income and principal therein. This income and principal was available for Petitioner to use for her support, but she made an affirmative decision not to receive the same, without any good cause explanation for so doing. . . . Upon Petitioner’s renunciation, the trustee distributed half of the remaining income and principal from the trust, $151,231.76, to her son. Petitioner received nothing in return, and, thus, the [Bureau of Hearings and Appeals] properly concluded that this transfer was for less than fair market value, thereby resulting in the imposition of a penalty period of 582 days." 


December 5, 2013 in Estates and Trusts, Federal Statutes/Regulations, Health Care/Long Term Care, Medicaid, State Cases | Permalink | TrackBack (0)

Sunday, November 10, 2013

Should "Elder Abuse" Trigger Disinheritance?

So-called "Slayer Rules" bar a murderer from inheriting from his victim, and often apply not only to intestate succession but also to gifts made under wills or nonprobate transfers.  The bar may arise by common law, often rooted in equity, or statute.   

As Harvard Law Professor Robert Sitkoff  summarizes well in his 9th edition (Dukeminier) of  Wills, Trusts & Estates, "Nearly every state has enacted a statute dealing with the rights of a killer in the estate of a victim, but the details of these statutes vary considerably and often leave gaps to be resolved by the courts."

However, states have also been expanding the notion of "no profit" from wrongdoing to include abusers -- and theories regarding elder abuse appear to be part of the reason. 

For example, in a 2013 case, the Washington Supreme Court analyzed application of a 2009 amendment of that state's slayer statute to include "abusers," defined as "any person who participates, either as a principal or an accessory before the fact, in the willful and unlawful financial exploitation of a vulnerable adult." The court concluded in a 5-4 decision that the date of filing of a petition to declare a beneficiary an abuser serves as the trigger for timing questions. 

The Washington case involved allegations made by three surviving children against their father's second wife.  The father was in his late eighties when he married the younger woman, who was younger by fifty years.  The history of the case includes a discussion of the father's dementia, and allegations the wife made large transfers to herself and others before his death.  See In re Estate of Haviland, 301 P.3d 31 (Wash. 2013).

In 2012, Michigan amended its slayer statute to include abusers, as part of a series of changes to state laws reportedly intended to provide better protection for elderly and vulnerable adults.  Cooley Law Professor Linda Kisabeth analyzes the Michigan changes in her recent article "Slayer Statutes and Elder Abuse: Good Intentions, Right Results? Does Michigan's Amended Slayer Statute Do Enough to Protect the Elderly?" in 26 Quinnipiac Prob. L. J. 273 (2013).

And for an interesting alternative take on slayer laws in their more traditional application, to "murderers," see the 2013 article by Professor Carla Spivack (Okla.City Law), "Killers Shouldn't Inherit From the Victims -- Or Should They?" 

Hat tip to Professor Harvey Feldman for pointing the way to the Washington case.

November 10, 2013 in Cognitive Impairment, Crimes, Dementia/Alzheimer’s, Elder Abuse/Guardianship/Conservatorship, Estates and Trusts, State Cases, State Statutes/Regulations | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 5, 2013

AARP Foundation Ranks Among Chronicle of Philanthropy's "400"

20131103_113649This is the season for many nonprofits to encourage end-of-the-year giving. 

And along that line, I was interested to read in the October 24 issue of the Chronicle of Philanthropy, that AARP Foundation is No. 348 of 400 nonprofits ranked by the Chronicle for "raising the most money from private sources in 2012." 

What surprised me was an asterisk denoting 2012 as the first year that AARP Foundation was on the list.  AARP Foundation reported $61,600,212 in  "private support" for 2012,  a number that represents a 36.4% increase over the previous year.  At the head of the list was United Way Worldwide with just under $4 billion in private support, with Fidelity Charitable coming in at #2 with $3.2 billion.

The issue includes background on Fidelity Charitable's growth, pointing out that it was founded 22 years ago and recent growth is likely due to the "number of affluent Americans who are putting stock-market gains to work in their charitable giving."

According to the Chronicle, the rankings "reflect cash and product donations as well as stock, land and other gifts from individuals, corporations, and foundations."  Further, the Chronicle explains the ranking is "designed to show which groups do best in appealing to donors," and therefore income from non-gift sources is not counted.  Future pledges are also not counted.

Despite gains for individual organizations such as AARP Foundation and others, according to the Chronicle, overall the 400 rated charities "grew just 4 percent, slightly more than half the gain in 2011."

AARP Foundation has identified four priority areas where it hopes to have the greatest impact in helping older persons: hunger, income, housing and isolation, with the work in these areas supported by a "longstanding commitment to legal advocacy on behalf of older Americans everywhere."  For more on AARP Foundation's legal advocacy roles, see here

November 5, 2013 in Estates and Trusts | Permalink | Comments (0) | TrackBack (0)

Thursday, October 31, 2013

Sixth Circuit Upholds Community Spouse Annuity in Medicaid Eligibility Appeal

In Hughes v. McCarthy, decided October 25, 2013, the Sixth Circuit reversed a distict court judgment and approved the right of an Ohio Medicaid applicant to receive coverage for her nursing home care, without penalties tied to her husband's purchase of a single premium annuity.  The husband's actuarily sound annuity named himself as the primary beneficiary, using $175,000 from his IRA account. 

For more on the case including details about the couple's history of spenddown and the type of annuity, see ElderLawGuy Jeff Marshall's recent blog post.

By the way, in reaching its decision, the Sixth Circuit appellate court cites analysis from National Senior Citizens Law Center's Eric Carlson, pointing to his chapter in Matthew Bender's Long-Term Care Advocacy treatise. 

Correct me if I'm wrong, but I think there are now appellate decisions from five circuits approving Medicaid eligibility based on specific facts involving spousal annuities: the 2d Circuit (Lopes case), 3rd Circuit (James case), 6th Circuit (Hughes case), 8th Circuit (Geston case), and 10th Circuit  (Morris case). Am I missing any key appellate cases in this fast moving arena?

For links to several of these cases, see my September post on the Geston case.

October 31, 2013 in Estates and Trusts, Health Care/Long Term Care, Medicaid | Permalink | Comments (0) | TrackBack (0)

Friday, October 25, 2013

Do-It-Yourself Wills: Penny Wise & Pound Foolish?

This semester in my course on Wills, Trusts & Estates we have talked about the trend in modern cases to resolve conflicts over wills and trusts by attempting to respect the "intent" of the testator or settlor, even when imperfectly expressed in a written document.  But, there are often lines beyond which courts will not go to supply missing words or resolve ambiguity.  

In Estate of George Zeevering, decided by an intermediate appellate court in Pennsylvania on September 26, 2013, the court was facing an incomplete do-it-yourself will.  The testator had not consulted with a lawyer.  He attempted to make specific bequests.  One bequest was deemed a "nullity" because the property was already titled in the names of the decedent and a son as joint tenants with right of survivorship.  The father also stated that the "failure of this will to provide any distribution" to three of his daughters was "intentional." 

However, there was no provision made in the will for any residuary and the residuary estate, after payments of debts, totaled over $200,000. 

The appellate court upheld the distribution of the residuary to all of the children:

"[I]t was proper for the orphans' court to conclude that where the intent of the testator is not clear from the will, where the will fails to dispose of a decdent's entire estate, and where the will fails to provide a residuary clause, the residuary estate is to be distributed under intestacy laws."

Hat tip to ElderLawGuy Jeffrey Marshall who has been folllowing the Zeevering case on his blog.

October 25, 2013 in Estates and Trusts, State Cases | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 23, 2013

State POA Laws: The Potential for Problems with Powers of Attorney

Powers of Attorney (POAs) are a key tool in estate planning and Medicaid planning. A thoughtfully drafted POA can avoid the need for a guardianship, for example, and thus avoid delays, embarrassment and greater expense for a principal who later becomes incapacitated.  

Unfortunately, POAs can also be a tool for misuse by agents who can't resist the temptation to help themselves, rather than their principals.  For a number of years, states have been struggling to balance utility against risk.  

In Pennsylvania, for example, prior to 1999, statutory law governing POAs permitted principals to grant agents the authority to make gifts.  Civil case law interpreted such gift-giving authority, unless expressly limited, as permitting agents to make "self-gifts." Even if the agent's self-gifting put the principal in serious financial jeopardy, some prosecutors declined to prosecute.  Following a series of troubling reports and cases, in 1999 the Pennsylvania legislature amended state law to declare that all agents appointed under POAs were subject to specific fiduciary duties.  The change also imposed a statutory presumption of limited gift authority (tied to annual federal gift tax exclusions) unless the principal expressly granted the agent "unlimited" gift authority.

Concern about misuse of powers of attorney has grown on a nationwide basis,especially after high profile cases such as that of New York heiress Brooke Astor, where her son used a POA to sell off artwork and other valuable property, while reportedly keeping his mother isolated from friends. 

Even before the Brooke Astor case came to light, academics, legislators, judges and practitioners worked together in the Uniform Law Commission to propose amendments to statutory authority governing POAs, resulting in the Uniform Power of Attorney Act of 2006 (UPOAA),  which superseded prior uniform law proposals.  The UPOAA attempts to rebalance risk and power, or as the Commission summarizes:

"The UPOAA seeks to preserve the durable power of attorney as a low-cost, flexible, and private form of surrogate decision making while deterring use of the power of attorney as a tool for financial abuse of incapacitated individuals.  It contains provisions that encourage acceptance of powers of attorney by third persons, safeguard incapacitated principals, and provide clearer guidelines for agents."

Adoption of the UPOAA has been fairly slow.  As of today, only 13 states plus the U.S. Virgin Islands, have enacted the UPOAA. 

In 2013, legislatures in Mississippi (H.B. 468) and Pennsylvania (S.B. 620) are considering adoption.  In Pennsylvania, the need for clarification has been heightened by reaction to the Pennsylvania Supreme Court's opinion in Vine v. Commonwealth, 9 A.3d 1150 (Pa. 2010), where a POA was signed by a hospitalized principal, and  used by the husband/agent to make self-benefiting changes to his wife's retirement accounts, while his wife was incapacitated.   

Court practice and enforcement policies on POAs, guardianships and elder abuse are also under consideration by the Pennsylvania Elder Law Task Force (2013), chaired by Justice  Debra Todd of the Pennsylvania Supreme Court.

In Pennsylvania, views on what changes to POA laws are necessary differ in small or large ways among bankers, estate attorneys, elder law attorneys and district attorneys, just to name a few of the interested parties. 

The scholarship of law professors has been important to the debate over proper use of POAs, including two articles by Valparaiso Law Professor Linda Whitton, "Durable Powers of Attorney as Alternatives to Guardianship: Lessons We Have Learned" and "The New Power of Attorney Act: Balancing Protection of the Principal, the Agent and Third-Persons." 

By the way, when I first drafted this post, I titled it "The Problem(s) with Powers of Attorney."  Overnight, I rethought that title, because many POAs are never abused and agents frequently go above and beyond in performing uncompensated services, including financial management, for aging principals.  I therefore retitled the post. What law reform movements are attempting to do is reduce the potential for abuse.  Human nature being what it is, there is probably no law that can prevent abuse by a wrongly motivated agent.  Who to trust with powers granted under a POA will always be an important matter for families to consider and discuss with their legal and financial advisors.

October 23, 2013 in Advance Directives/End-of-Life, Current Affairs, Estates and Trusts, Ethical Issues, Medicaid, Property Management, State Cases, State Statutes/Regulations | Permalink | Comments (0) | TrackBack (0)