Wills, Trusts & Estates Prof Blog

Even with proper documents, an agent may have trouble handling principal's affairs

Having all of the proper disability planning for property management documents in proper form (e.g., a durable power of attorney) may not be enough for an agent to handle the principal's business in an efficient manner.

Here are some excerpts from Molly Selvin, Cashing out an elderly parent's IRA -- in just 9 visits to the bank, LA Times, May 4, 2008, which describes some of the problems:

Over three months last winter, [Agent] made nine trips to the bank. Sometimes I accompanied him. He spoke with several "customer solutions representatives." He produced his dad's durable power of attorney and living trust for inspection multiple times. Those documents were repeatedly faxed to the bank's central legal department for further examination. Hard copies were then sent by corporate courier to the bank's IRA department -- and disappeared.

Bank of America's employees were unfailingly polite and eager to help. But depending on the day and the person, [Agent] was told that [Principal's] legal papers were in order. Or that they weren't. He was told that, notwithstanding [Principal's] wishes, bank policy bars adult children from managing their parent's individual retirement accounts. Or that it doesn't. * * *

[Agent] eventually prevailed, in large measure because he was persistent. * * *'

The experience was a cautionary tale for other baby boomers who may soon be in charge of their elderly parents' affairs: Holding a durable power of attorney may be only the first step. You may have to fight to enforce it.

Exculpatory clause in power of attorney deemed invalid

The principal executed a power of attorney which granted the agent broad powers to make gifts to himself, exonerated the agent from any liability to the principal or anyone else, and purported to relieve the agent from any duty to account.

The agent used his authority to transfer the principal’s property to himself and members of his family.

In a proceeding brought by the administrator of the principal’s intestate estate, the court held that the agent had violated his fiduciary duties to the principal, that the exoneration clause was void as contrary to public policy and the duties of an agent, and that the attempt to relieve the agent from the duty to account was void as against public policy.  In re Mueller, 853 N.Y.S.2d 245 (N.Y. Sur. Ct. 2008).

Financial planning documents may become crucial in the event of disappearance or incapacity

In Asset Management in Absentia, published in the March 2008 issue of The Estate Analyst, Robert L. Moshman, Esq. discusses some of the lessons learned from the recent events of disappearance of Steve Fossett and appointment of conservator for Britney Spears:

What happens when there are assets worth tens of millions of dollars and the owner’s whereabouts are unknown?***

Optimally, even someone who does not engage in extreme risks should have basic financial planning documents in place to cover periods of mental or physical incapacity. Such documents can range from a simple power of attorney to more sophisticated trusts.***

The case of Britney Spears having her father named as her conservator illustrates other potential downsides to not having advance directives of some kind in place. For Ms. Spears, the choice of her father as conservator by her family and the courts may be diametrically opposed to her own preferences.***

Increasing Elder Abuse Calls for Legislative Action

Jane A. Black (J.D. Candidate 2008, St. John's University School of Law) has recently published her Note entitled The Not-So-Golden Years: Power of Attorney, Elder Abuse, and Why Our Laws Are Failing a Vulnerable Population, 82 St. John's L. Rev. 289 (2008).

Here is the conclusion to her Note:

While the allegations of financial abuse and neglect involving Astor may never be proven, the Park Avenue socialite's story brings to the forefront one of the gravest legal issues affecting the elderly in the twenty-first century. The selection of who will hold one's power of attorney is, undoubtedly, one of the most significant decisions an older individual will make. Depending on the type of power granted, such an individual has the ability to thwart the elderly's desired disposition of money after death, or worse, infuse fear, helplessness, and deceit into the final years of an elderly person's life.

Without immediate action by lawmakers though, there is no indication that financial exploitation of the elderly will subside. Abuse is certain to swell as longevity increases, technology improves, and the lines of communication become easier to cross. As evidenced from the cases and statistics above, the day has passed where the American legal system can fail to recognize elder abuse as a widespread attack on the most vulnerable members of our population. To combat these abuses, federal and state legislatures need to enact uniform laws and sanctioning mechanisms to create a legal system with a hard stance against abuse of the elderly.

Negative Inheritance and Ways to Avoid It

According to Marshall Eckblad, When Inheritance Is Negative, WSJ.com, Jan. 22, 2008:

People who don't prepare to care for their sick and aging parents could fall victim to what economists call "negative inheritance."

If the term seems foreign, the scenario it describes won't: It is when costs to children caring for their relatives outstrip any gifts or bequests they might receive in return.

To protect against the havoc a negative inheritance can wreak on a financial plan, financial advisers have developed detailed strategies, typically including a combination of family dialogue, long-term-care insurance and proactive management of the parents' remaining assets.***

"If you planned to withdraw 5% from your portfolio every year to support your lifestyle," says Joe Birkofer, a principal at Legacy Asset Management Inc. in Houston, "and then you increase that by 50%" to care for ailing parents, "your financial plan's a mess."***

Abuse of Power of Attorney Alleged

The following is from Laura Italiano & Hasani Gittens, Doc BilksS Ma, 92, OF 832G: DA:

Dr. Robin Motz, who works at Columbia-Presbyterian Hospital, was indicted [on January 23, 2008] on charges that he scammed his 92-year-old mother out of nearly $1 million dollars - leaving her virtually penniless and on the brink of eviction from her Upper West Side co-op.

Motz, 64, who used power-of-attorney over his ailing mother's accounts to bilk her out of $832,453, is also being investigated to see if he used his knowledge of and access to prescription drugs to speed her demise, a high-level law-enforcement source said.

In 2003, Motz took control of his mother's finances because she was ailing physically - but not mentally - prosecutors said inside Manhattan Supreme Court yesterday.

"Do it Yourself" Estate Plan Backfires

In The Medicaid Trap, Est. Analyst (Nov. 2007), Robert L. Moshman tells a story about an unfortunate mother who did not hire her own estate planning attorney and ended up in a financially detrimental situation.

Here are some excerpts from this article:

Mom, a widow, age 72, with a net worth of $500,000 owns a home worth $400,000. She has four children.

Five years ago Daughter and Son-in-Law lost their home and declared bankruptcy and ended up moving in with Mom.***

Then, one day, Daughter and Son-in-Law informed Mom that they want to buy her house[.]*** They tell her that by selling assets now, she'll qualify for Medicaid in the future. And they'll provide her with a life estate...***

Son-in-Law priced the house at $300,000, had Mom provide a "gift of equity" worth $150,000, got a mortgage for the remaining $150,000 which he had Mom sign over in return for the life estate.***

Without offering up one dime of his own money, Son-In-Law ended up with a house worth $400,000 and $150,000 cash. Meanwhile, Mom was left with a life estate. But from that day on, Mom was excluded from the household, subjected to verbal abuse, and ended up staying in her room, which was crammed with possessions that Son-In-Law threatened to throw out. The tension landed Mom in the hospital.

Analysis: What's wrong with this picture? Everything. Without her own attorney, Mom never understood what a "gift of equity" meant or where her $150,000 went. Nor did anyone take the time to explain the impact of this transaction on her estate plan. Instead of providing benefits worth $125,000 to each of her four children, this transaction left her with $100,000 to be divided equally under her existing will even though one of her children had already seized 80% of her net worth.***

Protecting an elderly person from his/herself -- Not an easy task

In Of Principals and POAs: Protecting the Elderly from Themselves, 95 Ill. B.J. 580 (2007), Helen W. Gunnarsson discusses the problems which may arise when a "good" agent wants to protect an "unwilling" principal.

Here are some excerpts from this most interesting article:

Most lawyers know what it is to serve clients afflicted with dementia. If they don't, they surely know or have known a family member or friend who is such a client.

Lawyers can ameliorate some of the anguish that accompanies the onset and progression of dementia. They can help impaired individuals and concerned family members make wise decisions that will improve the remainder of the impaired individuals' lives and preserve more of their estates for their heirs or beneficiaries.

By itself, though, existing law may not be able to provide a perfect solution for the impaired person who's in the hazy no-man's-land between "sharp as a tack" and incompetent - perhaps sharp one day, or one minute, and incompetent the next. How effective an instrument can and should the law be for protecting someone like that from himself?

Through the use of a compelling hypothetical situation, Ms. Gunnarsson demonstrates the problems that arise and how the law is not well-suited to solving them.

Agent’s power to sue for sums due allowed the hiring of an attorney on a contingent fee basis

The alleged tortfeasor contended that the injured party’s agent did not have the authority to bring suit on the principal’s behalf and to hire an attorney to pursue the claim.

In Campbell v. Tenet Health System, DI, Inc., 224 S.W.3d 632 (Mo. Ct. App. 2007), the court held that the language granting the agent authority to sue for sums due and owning the principal and to do everything necessary to carry out the authority granted in the power of attorney authorized bringing of suit for a personal injury claim.

Power of Attorney Abuse

I commend to your reading the extensive posting on Neil Hendershot's PA Elder, Estate & Fiduciary Law Blog entitled "Powers of Attorney" Investigated in Series.  He reviews a four part special investigative report by the Pittsburgh Post-Gazette focusing on powers of attorney -- specifically, the abuse that can occur in this powerful relationship by some agents who exercise their sweeping authority.

The Power of Attorney-Transfer Tax Interface

Bridget J. Crawford (Associate Professor of Law, Pace University - School of Law) has recently posted her article on SSRN entitled The Tax Regulation of Contractual Intimacy: Transfer Tax Aspects of Powers of Attorney.

Here is the abstract of her article:

Powers of attorney are both the most common and the most abused of all estate planning documents. Newspapers and court cases are full of stories of alleged wrongdoing by agents who, whether due to misunderstanding or overt abuse, exceed the authorities given to them by the principal. Part I of this article provides an overview of the creation, scope and limitations powers of attorney. A power of attorney is, at its core, a contract for legal intimacy. It is an instrument that permits one person (called the attorney-in-fact or the agent) to act as the legal alter ego of another (the principal). Part II examines the estate and gift tax consequences of creating a power of attorney. Most lawyers assume (correctly) that the execution of a power of attorney does not give rise to a taxable gift by the principal and should not cause any estate tax inclusion in the estate of the agent. Part III explores how a fiduciary analysis of an agent's authorities is consistent with the Uniform Durable Power of Attorney Act. Part IV considers the implications of the Act's efforts to regularize powers of attorney. By making the principal/agent relationship more standard, some tax and estate planning professionals may shift their business practices in unexpected ways. Part V interprets the projected commodification of the principal/agent relationship in light of the way people live in the United States.

This article seeks to make two principal contributions to critical tax scholarship. The first is methodological. Instead of critiquing the existing law, this article explores a positive aspect of the existing wealth transfer tax rules. Critical tax scholarship to date tends to explore how existing law is biased, discriminatory or has a disparate impact on certain segments of the population. The article's second intended contribution is a normative one. In examining the tax treatment of intimacy that arises by contract, such as that between a principal and agent, this article opens the door for further exploration of ways in which the tax law can and should recognize choice-based human relationships. Scholars with an anti-subordination agenda should focus on ways to use existing tax laws to their advantage, given the political obstacles to left-oriented reform of the tax system.

Disability Planning

William L. E. Dussault (Dussault Law Group, Seattle, Washington) has recently published his articled entitled Planning for Disability, 33 ACTEC J. 42 (2007). 

Here is the author's description of the article:

It is the purpose of this article to emphasize the need for, and method of, estate and personal planning for persons whose family members include persons who may be disabled. Basic special needs trust planning has become somewhat commonplace over the last 20 years. This article will review concerns that relate to testamentary and inter vivos planning for families with handicapped children. It will also expand the topic to include appropriate and necessary planning for the likelihood of late onset disability of a spouse or parent. This article will also review planning for the individual who has a disability and who receives funds during adulthood, when eligibility for publicly supported programs and services can be critically important. Finally, the article will offer some more sophisticated approaches that coordinate transfer tax strategies with disability planning.

Recommendations to Prevent Abuse of Durable Powers of Attorney

Nina A. Kohn (Assistant Professor of Law, Syracuse University College of Law) has recently published her article entitled Elder Empowerment as a Strategy for Curbing the Hidden Abuses of Durable Powers of Attorney, 59 Rutgers L. Rev. 1 (2006).

Here is an excerpt from the article's conclusion:

[M]ost states' DPOA enabling statutes create powerful documents that allow agents to exercise broad discretion while providing little guidance as to how they are to make decisions on behalf of principals. The result is a system in which enforcing an agent's fiduciary obligation is difficult, agents face uncertainty and confusion, and principals are fundamentally disempowered. Such a system not only facilitates financial exploitation of elders, but also unnecessarily burdens agents and has the potential to transform family dynamics at the expense of principals' physical and psychological well-being.

One way to clarify the DPOA relationship and the expectations of principals and agents alike--and at the same time address concerns about financial exploitation--is to have the AIF and the principal communicate openly with one another about expectations and potential transactions undertaken pursuant to the DPOA. However, only six states have statutory requirements that explicitly require the AIF to keep in contact or communicate with the principal, and there is no general common law duty to do so. Moreover, in no state is an agent necessarily required to notify a principal before undertaking a transaction, even if the principal has full capacity and the transaction would fundamentally transform the principal's life.

To continue to allow agents to act without communicating with principals is to ignore agents' basic duty of obedience. Moreover, the benefits of such communication far outweigh any additional burden it may place on the parties. Communication clarifies the agent's role, discourages the agent from acting in a manner inconsistent with the principal's wishes and values, reduces the extent to which the relationship can be expected to disempower the principal, and increases the chance of discerning misuse by putting the principal in a better position to monitor the relationship for exploitation.

Although it is unrealistic and unreasonable to require such communication to take place in advance of all transactions, some transactions are so fundamental to the principal's life and lifestyle that the agent should be explicitly required to notify the principal before undertaking them. Requiring notification of such “fundamental transactions,” will help curb over-reaching and allow elders greater control over their own lives. Moreover, by giving protection to agents who do engage in advance notification, states can protect well-meaning agents from subsequent legal challenges and the legal system from avoidable litigation.

These simple reforms would help DPOAs live up to their promise of being tools of empowerment. * * * In short, the DPOA, which for so long has been touted as a way to increase elder autonomy, could finally become a tool for advancing society's acceptance of the notion that elders retain autonomy.

Creating wills and powers of attorney deemed to be the unauthorized practice of law

The testarix asked her friend, an insurance agent, to help draft her will.  The friend filled in the blanks in a computer generated generic will which the testatrix executed.  The friend was named executor.

In Franklin v. Chavis, 640 S.E.2d 873 (S.C. 2007) , the court found that the testatrix was not involved in drafting the document and did not review it.  The court held that the friend had acted as more than a scrivener and had engaged in the unauthorized practice of law.  The friend also drafted a power of attorney for the testatrix which did not involve filling in blanks in a form and this too was the unauthorized practice of law.  The court also determined that the friend could not receive compensation for acting as the executor.

Agents did not breach their fiduciary duty by selling specifically devised land

The testatrix’s will devised the house and surrounding real estate which she had received under her second husband’s will to his son and the remainder of her estate to her children by a prior marriage.

Acting under a durable power of attorney, her children sold the undeveloped portion of the real estate to one of their children’s friends at less than the appraised value, deposited the proceeds in a joint account with themselves and the testatrix, and paid for her nursing home care from the account.

After her death, the step-son sued. In Stewart v. Sewell, 215 S.W.3d 815 ( Tenn. 2007) , the court held that the devise adeemed by extinction under the law in effect when the testatrix died and that the agents acted properly.

Credit union negligent in allowing an agent to pledge account funds

A principal and his agent under a power of attorney granting extensive authority over banking transactions opened a joint account at a credit union.  The principal was the sole source of the funds in the account.  Later, the agent pledged the accounts as security for personal loans to agent on which he eventually defaulted and credit union took ownership of the funds.

In Bryant v. Community Choice Credit Union, No. 05CA0910, 2007 WL 177671 (Colo. Ct. App. Jan. 25, 2007), the court held that because the credit union noted the power of attorney in its records, it knew that the agent was a fiduciary for the principal and therefore breached its duty of care in allowing agent to use the accounts for himself and that an action for conversion would also be available.

Lillian Glasser Decision

Earlier on this blog, I reported on the case of Lillian Glasser and the battle to control her and her $25 million fortune.  See here, here, here, here, here, and here.

On March 8, 2007, the Superior Court Of New Jersey, Chancery Division – Probate Part Middlesex County issued its opinion.

Here are some of the highlights of this lengthy (82 page) opinion:

• Lillian's daughter, Suzanne Mathews, must return approximately $20 million to Lillian.
• Lillian's earlier will which leaves her estate equally to her two children (Suzanne Mathews and Mark Glasser) remains effective.
• A purported later will which Lillian executed with Suzanne's assistance will be ineffective.
• Lillian is deemed incapacitated and Joseph Cantanese is appointed as her new guardian of the person and Neuberger Berman (a financial planning firm) as guardian of her estate.
• The judge severely criticized Suzanne's conduct determining that she breached fiduciary duties, exerted undue influence over Lillian, and was untruthful with the court.
• Although the judge determined that Mark acted in good faith to assist Lillian, the judge was critical of Mark's "take no prisoners" tactics and his "less than candid" testimony.

According to Zeke MacCormack, Daughter ordered to repay millions, San Antonio Express-News, March 15, 2007, Mark has "heard talk of an appeal."

Special thanks to James Woo (Davidson & Troilo, San Antonio, Texas) for being the first person to bring the Glasser opinion to my attention.

Transactions between the agent and the principal presumed to be the result of undue influence.

North Dakota law provides that all transactions between a trust and a trust beneficiary are presumed to be without sufficient consideration and to have been entered into while the beneficiary was under undue influence.  Citing precedent holding that an attorney-in-fact is subject to the same fiduciary duties as a trustee, the court in Allard v. Johnson, 724 N.W.2d 331 (N.D. 2006), held that the statutory presumptions apply to transactions by the agent who breached the fiduciary duties owed to the principal.

District of Columbia enacts presumption of competency

District of Columbia law now provides that an individual is presumed competent to make legal, health-care, and all other decisions unless certified otherwise or deemed incapacitated or incompetent by a court.  Incapacity is not inferred from the fact that an individual is voluntarily or involuntarily hospitalized for mental illness or has mental retardation

The legislation took effect on December 21, 2006.

See 2006 D.C. Sess. Law Serv. Act 16-566.

Attorney, as Agent for Mother, Misappropriates Over $1.2 Million

On September 25, 2006, a Texas lawyer resigned from the practice of law rather than face discipline.

The lawyer's mother designated her as her agent in a power of attorney.  The trust mother had in her daughter was misplaced; her daughter subsequently misappropriated a whopping $1,214,367 of her mother's property for the lawyer's own personal gain.

When the lawyer's actions came to light, a guardianship battle ensued and the probate court ordered her to render an accounting.  She failed to do so.

See Disciplinary Actions, 70 Tex. B. J. 90, at 94 (2007).

Fighting Abuses of Durable Powers of Attorneys

Nina A. Kohn (Assistant Professor of Law – Syracuse University College of Law) has published her article Elder Empowerment as a Strategy for Curbing the Hidden Abuses of Durable Powers of Attorney on SSRN.

Here is the abstract:

The durable power of attorney (DPOA), one of the nation's most ubiquitous and powerful legal documents, is a popular planning tool for seniors anticipating a decline in cognitive or physical well-being. By executing a DPOA, seniors can grant an agent (typically an adult child) broad authority to engage in financial transactions on their behalf.

While DPOAs are touted as a way for seniors to enhance their autonomy, the author argues that they often have the opposite effect. Under most states' statutory regimes, agents are given little guidance as to what standard to use to make decisions on behalf of elders, and have no duty to communicate or consult with elders. As a result, agents are prone to "over-reach" their traditional fiduciary duties and make decisions that are inconsistent with elders' values and wishes. In most states, for example, an agent who felt her mother would be safer living in a nursing home could force an unwanted move by using the DPOA to sell the mother's house without so much as notifying her.

The author argues that permitting agents to act without communicating and consulting with elders is inconsistent with agents' underlying legal duty of obedience. Drawing on literature from the fields of psychology and sociology, the author shows that permitting such actions can also be expected to fundamentally alter family power structures, to the detriment of elders' well-being. The author therefore proposes that states explicitly require agents to communicate with those on whose behalf they act and to provide advance notification of certain "fundamental" transactions. This novel, yet simple, mechanism would empower elders to better monitor their agents and bring DPOAs a step closer to fulfilling their promise as autonomy-enhancing devices.

Living Old

PBS's Frontline program has prepared an excellent program entitled Living Old which provides "[a] powerful and intimate journey into the uncharted territory of Americans living longer than ever -- and what it means for them, their loved ones and our society."

With 35 million elderly people in America, "the old, old" -- those over 85 -- are now considered the fastest growing segment of the U.S. population. While medical advances have enabled an unprecedented number of Americans to live longer and healthier lives, this new longevity has also had unintended consequences. For millions of Americans, living longer also means serious chronic illness and a protracted physical decline that can require an immense amount of care, often for years and sometimes even decades. Yet just as the need for care is rising, the number of available caregivers is dwindling. With families more dispersed than ever and an overburdened healthcare system, many experts fear that we are on the threshold of a major crisis in care.

You may watch the entire program on-line at no charge.

Special thanks to Neil E. Hendershot of the Harrisburg, Pennsylvania law firm of Goldberg Katzman, P.C., who also authors the PA Elder, Estate & Fiduciary Law Blog, for bringing this program to my attention.  Neil also has an excellent discussion of this topic on his blog entitled PBS Frontline Presents "Living Old."

Different Capacity for Different Documents?

Lawrence A. Frolik (Professor of Law, University of Pittsburgh) and Mary F. Radford (Professor of Law, Georgia State University School of Law) have recently published their article entitled "Sufficient" Capacity: The Contrasting Capacity Requirements for Different Documents, 2 NAELA J. 303 (2006).  Their introduction states that

This article discusses the levels of capacity required to undertake a variety of legal acts, including executing valid wills, trusts, gifts, powers of attorney and contracts.  This article also explores a doctrine that is closely related to the determination of testamentary capacity, the doctrine of "undue influence."  Undue influence lies in the shadow land between testamentary capacity and capacity to contract and is used by probate courts to invalidate the will of an individual whose capacity level is high enough for testamentary capacity, but too low to enable the testator to resist the importuning of another.

Astor Case Settles

Earlier on this blog, I reported on allegations that Anthony Marshall has been mistreating his mother, Brooke Astor.

According to the AP report, Astor's Son Stripped of Guardianship, Oct. 13, 2006:

Brooke Astor's son has been permanently removed as guardian of her estate, according to a settlement announced in court Friday [October 13, 2006].

The agreement allows Astor's court-appointed guardians, Annette de la Renta and JPMorgan Chase, to remain in place, instead of Anthony Marshall, the 82-year-old son of the 104-year-old philanthropist.

Special thanks to Neil E. Hendershot of the Harrisburg, Pennsylvania law firm of Goldberg Katzman, P.C., who also authors the PA Elder, Estate & Fiduciary Law Blog, for bringing this development to my attention.

Undue Influence

In 1998, Kenneth Duebendorfer executed a power of attorney naming Marcella Hinds as his agent. She was taking care of Duebendorfer on a daily basis, providing hygiene, meals and transportation. She also assisted Duebendorfer in his financial affairs by paying his bills. Duebendorfer executed that will on March 21, 2001 that made provisions for the Hinds and others. Hinds was present at this meeting, but did not participate in the discussion.
   

Duebendorfer had a great niece by his sister Rohrabaugh. After Rohrabaugh's death, Kathy and her husband Randy began to have more contact with Duebendorfer. Beginning in March 2002, Randy saw him about once a week.
   

The Mollers raised some questions as to how the Hinds were handling Duebendorfer’s affairs.  The led Duebendorfer to believe that the Hinds were stealing from him and not managing his money properly. Duebendorfer became angry and executed a new will and power of attorney, naming the Mollers as his agents and making them the chief beneficiaries under his new will. The Hinds and others were included in the new will, but their bequest would fail if the individual predeceased Duebendorfer.
   

Thereafter, Randy terminated a lease Duebendorfer had with Roger Stevens on Duebendorfer's farm, which had existed for over thirty years, since Randy was interested in farming the land himself. Also, Randy changed the POD beneficiary on all of the accounts at the Duebendorfer's bank, listing himself and Kathy as the POD beneficiaries.   

After Duebendorfer's death in 2003, the Hinds and several others filed a petition contesting the probate of Duebendorfer's new will, claiming it had been procured by undue influence on the part of the Mollers.
   

The jury in In re Estate of Duebendorfer, 721 N.W.2d 438 (S.D. 2006), held that the new will was a product of undue influence. The Mollers appealed, contesting the jury instruction.

Their first point of error was that “the trial court erred in instructing the jury that, because of the power of attorney, a confidential relationship did exist at the time of the execution of the [new] will.” The appellate court alluded to the idea that a power of attorney creates a confidential relationship, because a “confidential relationship exists whenever a decedent has placed trust and confidence in the integrity and fidelity of another.” (citing to another case). However, the Mollers had actually admitted at trial that a confidential relationship existed between themselves and Duebendorfer, and were not allowed to alter these facts on appeal.
   

The Moller’s second point was that the trial court erred in shifting the burden of proof to them in the jury instruction. The appellate court disagreed, and upheld the instructing, saying:
   

This instruction allowed the jury to determine, 1) whether the contestants had established that Mollers had actively participated in the preparation and execution of the will, and 2) whether they unduly profited from their actions. It was only after making these two findings that the jury was instructed a presumption of undue influence was established. As per the holdings [other cases, citations omitted] the burden then shifted to Mollers to rebut this presumption.
   
The jury was then further instructed that if they found Mollers did not rebut this presumption, they were to check yes on the special verdict form. However, if the jury determined that either 1) Mollers did not actively participate in the preparation and execution of the will, or 2) did not unduly profit from it, i.e. they rebutted the presumption, the jury were then instructed that the contestants "have the burden of proving the four elements set forth in Instruction No. 16 in order to establish that the will was the result of the undue influence of the Mollers." Thus, "the ultimate burden remain[ed] on the person contesting the will to prove the elements of undue influence by a preponderance of the evidence." [citation omitted].

Illinois Power of Attorney Law Provides Tool to Fight Elder Abuse

In POA amendments help protect incapacitated principals, 94 Ill. B.J. 462 (2006), Helen Gunnarson explains that a recent amendment to the Illinois Power of Attorney Act "empowers the Department of Aging and its provider agencies to go to court to require agents to produce their records, which will help authorities identify and stop abuse."

Contracts for the Care of Elderly Parents

In Who Will Mind Mom? Check Her Contract, Wall St. J., Sept. 7, 2006, Rachel Emma Silverman discusses contracts between parents and children or other family members for care of an elderly or disabled parent or relative.

A small but growing number of families are setting up caregiver contracts, in which adult children or other relatives are hired, for modest salaries, to take care of elderly or disabled family members. These arrangements, which are also called personal-service or personal-care agreements, can help reduce the size of a parent's estate and thereby improve their chances of becoming eligible for long-term-care coverage under Medicaid. They can also minimize battles between siblings and other family members. For many other families, the contracts simply help reward the significant amounts of time, effort and money that family members often spend watching over and taking care of an elderly relative.

Note, however, that these types of contracts may be easily abused by the caregiver and thus must be used with caution.

Trustees say law firm is liable for not spotting theft

Here are some excerpts from Rebecca Beyer [no relation to his blog editor], Trustees, Firm at Odds Over Responsibility for Spotting Theft, Los Angeles Daily Journal:

Family betrayal was at the heart of a financial elder abuse case in which a daughter stole $1.2 million from her mother and $3.6 million from her family’s trust while acting as co-trustee.
 

But her brother and sister believe the law firm retained to handle the family trust should also be held liable for not discovering the elder abuse and theft. [***]
 

[Los Angeles attorney Phillip Heller] represents co-special trustees Joseph Sternlight and Eve Sternlight Cohen, whose sister Helen Sternlight Fabe, was convicted of stealing millions from the trust and their mother Sara Sternlight. The Sternlight siblings seek $5.6 million to cover the theft, plus punitive damages. [***]
 

According to Heller, when the firm [Hoffman, Sabban & Watenmaker] discovered on old tax returns that $1 million in bonds were missing, it accepted Fabe’s explanation that the money had been used to pay a $3,000 decades-old debt and did not notify [then beneficiary] Cohen.
 

Instead, Heller said, the firm had the trustees sign a tax return that did not mention the bonds. [***]
 

Heller said Hoffman, Sabban lawyers…failed to take an accurate inventory of the Sternlight assets by looking at previous years tax returns or having its clients pay for a surety bond that would have required a detailed inventory.  The clients waived the surety bond. [***]
 

[Defense attorney David DiBiase of Anderson, McPharlin & Conners said] “The plaintiffs claim that it is a lawyer’s duty to audit the client’s financial records, hold the client’s checkbook, and only allow the client to write check that the lawyer approves.” [***]
 

He added, “the plaintiffs appear to claim that the lawyer for a trustee has to act as a sort of ‘super-trustee’ and oversee every action that a trustee takes.”[***]
 

“It’s a lawyers job to advise…not to take over the client’s job” said DiBiase.

 

Special thanks to Julia M. Wei of The Law Offices of Peter N. Brewer in Palo Alto, California, for bringing this article to my attention.

Kansas and Medicaid Planning

Molly M. Wood has published Medicaid Long-Term Care Update: Basic Review Estate Recovery and the Deficit Reduction Act of 2005 in the September 2006 issue of The Journal of the Kansas Bar Association.
   

Here is an excerpt from the introduction:
   

Even though you won’t go to jail, Medicaid planning is fraught with peril. Medicaid is a welfare program. It is, of course, appropriate for practitioners to advise clients of the rules, regulations, and statutes so that the client can position herself financially to her best advantage. But in so doing with respect to eligibility for Medicaid, the practitioner finds himself at odds with the thrust of prudent public policy, which seeks to conserve scarce public resources and provide assistance only to the truly needy. The 2004 Kansas Legislature’s amendments to K.S.A. 39-709(e) leave no doubt about the direction of public policy, prudent or otherwise. Two anomalous decisions from the Kansas Supreme Court — Miller v. SRS and Brewer v. Schalansky — highlight this tension and perhaps illustrate the maxim, “bad facts make bad law.”
   

Special thanks to Neil E. Hendershot of the Harrisburg, Pennsylvania law firm of Goldberg Katzman, P.C., who also authors the PA Elder, Estate & Fiduciary Law Blog.

Brooke Astor Update

Earlier on this blog, I reported on allegations that Anthony Marshall has been mistreating his mother, Brooke Astor, his response to those allegations, and an editorial regarding the "Brooke Astor Effect."
   

The details of the alleged breach of duty by Mr. Marshall continue to be uncovered as reported in Serge F. Kovaleski, Mrs. Astor's Son Is Accused of Mishandling Millions, NY Times, Sept. 7, 2006.  Here are a few excerpts from this report:

J. P. Morgan Chase, the court-appointed temporary guardian of Brooke Astor’s assets, says in court papers that it is investigating whether her son improperly obtained about $14 million in cash, property and stocks from his ailing mother while managing her finances. The filing suggested that the bank might pursue litigation against the son, Anthony D. Marshall, to get some of the money and property back.
   

The papers also raise questions about Mrs. Astor’s mental competency in 2003, when she signed documents transferring $3.4 million of her securities and her seaside estate in Maine, valued at $5.5 million, to Mr. Marshall. * * *
   

The papers * * * lay out in great detail a blueprint that could form the basis of a court battle over the fortunes of New York’s grande dame of society and philanthropy. The bank’s documents also represent the first substantial examination in the case of how Mr. Marshall has tended to the finances of his 104-year-old mother.
   

Mr. Marshall’s son Philip has accused his father in a court petition of neglecting Mrs. Astor by cutting back on her medications and living expenses and subjecting her to deplorable conditions in her Park Avenue duplex while enriching himself with her wealth.

Special thanks to Prof. Joel C. Dobris of the University of California-- Davis for bringing this report to my attention.

Power of Attorney Case

For an interesting case dealing with legal and ethical issues surrounding the drafting of a power of attorney, see In re Winthrop, 848 N.E.2d 961 (Ill. 2006).

Although the court was more lenient with respect to his behavior than the Attorney Registration and Disciplinary Commission, the attorney was still suspended for two years because he had provided false information during the investigation of his conduct.

For a discussion of this case, see Helen Gunnarson, POA Perils, 94 Ill. B.J. 403 (2006).  The author concludes:

The complexity of the proceeding does, however, suggest that reinventing the wheel when it comes to drafting powers of attorney may be unwise. Even more important, an attorney would be well advised to exercise extra caution when a third party initiates a request for the attorney to draft an instrument for an elderly person.

The Story of Mary Ellen Bendtsen

The Dallas Morning News is running a comprehensive four-part special report about Mary Ellen Bendtsen described as follows:

The story of Mary Ellen Bendtsen is not just a private tragedy. Experts estimate that one in five elderly Americans will be victims of some form of financial exploitation, losing at least a third of their assets. For each case reported to authorities, 12 to 15 cases are believed to go unreported.

Part I, published August 13, 2006, is described as:

The world Mary Ellen Bendtsen created for herself revolves around 4949 Swiss Ave. As she grows older and the demands of maintaining the aging mansion rise, her grasp on that world weakens. Are Mark McCay and Justin Burgess an answer to her problems, or something more sinister?

Part II, published August 14, 2006, is described as:

An intricate dance begins between Mrs. Bendtsen, Mr. McCay and Mr. Burgess. For a while, she keeps them at arm's length, even while enjoying their help and attention. But when an unexpected calamity occurs, Mrs. Bendtsen's carefully constructed world is threatened.

Part III, to be published August 15, 2006, is described as:

Mrs. Bendtsen's future depends on 32 critical hours. What happens during that brief window in time will decide her fate, for better or worse.

Part IV, to be published August 16, 2006, is described as:

Who will claim 4949 Swiss? More importantly, who will protect Mrs. Bendtsen as she faces her most devastating crisis?

Special thanks to Laura Gibson for bringing this story to my attention.

Anthony Marshall denies neglecting his mother

Earlier on this blog, I reported on allegations that Anthony Marshall has been mistreating his mother, Brooke Aster.

In response these allegations, Anthony Marshall says that he loves his mother and gives her the best treatment possible, spending over $2.5 million a year on her.  Read the full article, Socialite's son denies abuse claims (July 28, 2006), CNN.com.
   

Here are some excerpts:
   

"I love my mother, and no one cares more about her than I do," Anthony Marshall, 82, said in a statement Thursday.
   

Marshall, a former diplomat and Broadway producer who is now his mother's legal guardian, claimed the family spends more than $2.5 million a year to care for Astor at her Park Avenue duplex. She "has a staff of eight with instructions to provide her with whatever she needs and whatever they think she should have," he said.
   

Anthony Marshall and his wife visited [Brooke] Astor [at Lenox Hill Hospital] Thursday evening. Speaking to reporters afterward, Marshall said he was "very touched and encouraged by the fact that my mother's present state of age has brought attention to the need for care of elderly people."

Million dollar matriarch living in squalor

There was an incredibly sad report on CNN.com, Grandson: Society matron is being neglected (July 26, 2006).  Brooke Astor, wife of John Jacob Astor IV, is a multimillionaire who gave away millions to “promoting culture and alleviating human misery.” (CNN.com).  Her 82 year old son, Anthony Marshall, is her current guardian.  He is being accused by his son of neglecting Brooke, who says Brooke is living in absolute squalor. “She wears torn nightgowns and sleeps on a couch that smells of urine. Her bland diet includes pureed peas and oatmeal. Her dogs, once a source of comfort, are kept locked in a pantry.” (CNN.com).

   

He alleges in a sworn statement that his 82-year-old father "has turned a blind eye to her, intentionally and repeatedly ignoring her health, safety, personal and household needs, while enriching himself with millions of dollars."
   

The court papers -- which were sealed on Wednesday -- seek to remove Anthony Marshall as legal guardian and replace him with Annette de la Renta, the wife of Oscar de la Renta, and J.P. Morgan Chase bank.  * * *

      

Astor has faded from sight in recent years amid declining health, including two broken hips. Once she was confined to her apartment, court papers allege, sh