We will be doing an educational program series in the cities of Southfield, Taylor and Livonia. The subject will, as the title implies, will be planning for and managing long term care. In most folks understanding this subject is a medical/financial one. That is what conditions cause long term care, e.g. Alzheimer’s Disease, and how do you pay for it, e.g. savings, long term care insurance, or government benefits.
Our program series looks at the same subject from a different perspective. While the subject is still long term care our approach is from the perspective on elder control. This may be best explained by the quote: “Every person over age 75 has two missions in life: to remain independent and in control, and to be remembered.” How does one complete these missions while facing the challenge long term care imposes?
In short here are our answers:
Firstly, the only way one can remain independent and in control is by naming the persons who will be carrying out your directions. They will be doing what you want done when you cannot. You must give them legal authority and legally binding instructions.
Secondly, to be remembered means leaving something behind after we pass away. That means leaving a legacy. While long term care can never erase the memories, relationships and accomplishments of a lifetime it can defeat the hope and plan of leaving a gift after one is gone.
Our educational program series will show attendees how to accomplish the life mission for the elder. This series will be invaluable for seniors facing the crisis of long term care, for children of aging parents and for retirees who want to be prepared for the long term care challenge.
The evening programs will be held at the Southfield Civic Center Parks and Rec Building on July 19th; Taylor Senior Center on August 3rd; and the Livonia Civic Center Library on August 17th. Read more about it herehttp://www.jimschuster.com/jim-schusters-summer-2016-education-programs/
Everybody wants to avoid making a mistake, right? And everybody wants to know “What mistakes should I avoid?” The question is universal. Whether you are learning a new recipe, a new sport or planning some do it yourself project, you want to know what not to do.
So, here I will lay out the five most common mistakes I see. But, first let’s set the context and that is aging. It is invariably true that as we age we cannot expect to be in control of our daily affairs. The spirit may be willing to be “forever young” but the flesh is weak. That means we need somebody to take care of things for us. Pay the bills, get money out of the bank, manage all medical matters including from making appointments to following through the treatment program. This period of need may run into months or years.
I have posted a new article on our website, which goes into detail. I’ll give the link below, but for the people who just want a quick read, here you go!
“It’s mind over matter. All you have to do is just try harder.” This mistake leads to lifetime probate AND probate after death too!
“I did what the people at the Senior Center said to do. I made my daughter joint on all my accounts. She can pay the bills and after I die she will share it with all the other children.” What if the daughter decides she “earned” the money and will not share? Probate court battles.
“I’ve got a Will and I’m all set!” It is cute but pretty accurate to say preparing only for death leaves you unprepared for life.
“We hired a lady in the neighborhood to help Mom. She wants to be paid cash. Under the table.” The lady is a legal employee and Mom is the employer. An employer has strict legal duties to pay taxes and comply with all other laws covering this employment.
“Why pay a lawyer? The VFW guy said Dad had to spend it and the lady at the nursing home said the same thing.” These benefit programs are very complicated. They were written by a large committee whose members made sure they put in a little bit for themselves. And, the committee’s name is Congress.
If you want to learn more, here’s the link to the full article.http://www.jimschuster.com/the-five-most-common-mistakes-an-elder-law-attorney-sees/
I would like to share another story from the New York Times series on compulsory consumer arbitration. In this case, Elizabeth Barrow, an active 100 year old resident was killed by her roommate. The roommate had a history of violent confrontation, the most recent involved her. The resident was charged with murder but was found not competent to stand trial. For six years the son has been trying to hold the nursing home accountable for their failure to address the threat of this roommate. He felt their action was like leaving a gun on a table with a toddler. Six years later he may finally have a chance to have the matter reviewed in court.
As is common in these cases the son found out that part of the pile of papers he signed on her admission to the nursing home was a compulsory arbitration agreement. He took the case to arbitration. The arbitrator had hundreds of cases with the nursing home law firm. He found in the favor of the nursing home by checking the line that the nursing home was “not negligent.” There was no explanation.
According to the Times article this kind of secretive proceeding shields the nursing home from public scrutiny. State officials, who oversee nursing homes, “ in 16 states and the District of Columbia urged the federal government to deny Medicaid and Medicare money to nursing homes that use the clauses.”
While almost all courts have “rubber stamped” arbitration requirements, the Barrow case may have a different outcome. It turns out that the son was his mother’s healthcare agent. Under that power he could make medical decisions, but the court will rule on whether that includes authority to agree to arbitrate wrongful death cases.
The message from the Times series is somber: “Examining how clauses buried in tens of millions of contracts have deprived Americans of one of their most fundamental constitutional rights: their day in court.” Read the article here compulsory nursing home arbitration
On a more mundane note, this article raises the point that powers of attorney merely mean what they say and nothing more. A healthcare power of attorney is not a roving authority to handle anything and everything that may arise. The authority is limited to the identified medical decisions and nothing more.
Suppose a daughter is her mother’s caregiver, all around business and medical manager and is her “power of attorney” and trustee of her living trust. Suppose Mom says “Honey, you are so helpful. I want to show you how much I appreciate it. Write a check for a thousand dollars to yourself.” What should the daughter do? The answer may surprise you.
I wrote in an earlier blog post, A Tale of Two Daughters, how a daughter ran afoul of the law when acting as her Mom’s power of attorney Agent and her Trust as Trustee. The post was based on a case decided in January by the Michigan Court of Appeals, LaForest vs. Swiss. Her siblings took her to court and got judgment of $134,152 against her. What part of the law did she fail?
I’m sure like most children the daughter thought she was “merely taking care of Mom’s business.” She might have said something like “Call me power of attorney, call me trustee. What difference does it make? I’m just helping my Mom.” Indeed most children of aging parents that I work with only see themselves as children doing what a parent wants or needs to be done. But in this context, titles do make a difference.
First comes a “fiduciary” relationship
Whether one is an agent under a power of attorney or trustee of a trust, the power given creates a legal “fiduciary relationship.” When that arises “the fiduciary has a duty to act for the benefit of the principal regarding matters within the scope of the relationship.” Prentis Family Foundation, Inc. v. Barbara Ann Karmanos Cancer Inst., 698 NW 2d 900, 266 Mich. App. 39 (2005). Part of the meaning is that an agent may not personally profit by handling the principal’s business. One might think that all that means is that the “fiduciary” need only do “what Mom wants.” We saw that was insufficient in the LaForest case.
In the elder law context a fiduciary relationship implies control over the elder that can sway the elder’s mind. Take a look at items one and two of the following definition of “fiduciary relationship”. It comes from a case by the Michigan Supreme Court:
“[a] relationship in which one person is under a duty to act for the benefit of the other on matters within the scope of the relationship. Fiduciary relationships—such as trustee-beneficiary, guardian-ward, agent-principal, and attorney-client-require the highest duty of care. Fiduciary relationships [usually] arise in one of four situations: (1) when one person places trust in the faithful integrity of another, who as a result gains superiority or influence over the first, (2) when one person assumes control and responsibility over another, (3) when one person has a duty to act for or give advice to another on matters falling within the scope of the relationship, or (4) when there is a specific relationship that has traditionally been recognized as involving fiduciary duties, as with a lawyer and a client or a stockbroker and a customer.”
In re Estate of Karmey, 468 Mich 68, 73 (2003).
Then comes “undue influence”
Once the finding of a fiduciary relationship in the elder context is found, the next step of the presumption of undue influence comes easily
“A presumption of undue influence arises upon the introduction of evidence that would establish (1) the existence of a confidential or fiduciary relationship between the grantor and a fiduciary, (2) the fiduciary, or an interest represented by the fiduciary, benefits from a transaction, and (3) the fiduciary had an opportunity to influence the grantor’s decision in that transaction.”
In re Erickson Estate, 202 Mich. App. 329, 331 (1993).
Putting it together, if a child is a fiduciary, an agent or a trustee, of an aging parent and if a parent tells the child to do something with the parent’s property that benefits that child only, then it is presumed that the child caused the parent to make that decision. If other parties object, they can take the fiduciary to court, reverse the transaction and make the fiduciary pay for it.
What is the daughter/agent/trustee to do when a parent says to her “You are the only one who helps me and visits me. I want you to have . . . “
LaForest provides clear guidance in cases where the child is a trustee-beneficiary. Let’s hit a couple points. The creation of a trust creates interests in the “beneficiaries” and in the case of a family trust not only is Mom a beneficiary but the children are as well. That means that their approval may be needed for a transaction that is not detailed in the trust document.
A long quote from LaForest vs. Swiss, emphasizes the importance of following procedures when one is acting as trustee:
“As a co-trustee, appellant owed the beneficiaries [] a duty of loyalty provided for in MCL 700.7802(1) and (2), which state:
(1) A trustee shall administer the trust solely in the interests of the trust
beneficiaries.
(2) Subject to the rights of a person dealing with or assisting the trustee as
provided in section 7912, a sale, encumbrance, or other transaction involving the
investment or management of trust property entered into by the trustee for the
trustee’s own personal account or which is otherwise affected by a substantial
conflict between the trustee’s fiduciary and personal interests is voidable by a
trust beneficiary affected by the transaction unless 1 or more of the following
apply
(a) The transaction was authorized by the terms of the trust.
(b) The transaction was approved by the court after notice to the interested
persons.
(c) The trust beneficiary did not commence a judicial proceeding within
the time allowed by section 7905.
(d) The trust beneficiary consented to the trustee’s conduct,”
In summary, if a transaction may benefit a trustee there are three ways it may be approved: 1) if it is in the trust, 2) if the trust beneficiaries agree or 3) if a court approves.
While there is no such explicit requirement in the law for agents acting a power of attorney, the three options may be simply prudent in these cases as well.
I know that many elders would be outraged to learn that they have to ask permission of their children to make a gift. This problem is easily avoided by drafting a trust stating that the children are not vested beneficiaries and having the parent retain a “power of appointment.” The problem can be avoided in a power of attorney by granting the child-agent authority to “self deal.” However these fixes do open up the possibility of unreviewable actions by the agent/trustee who may be committing financial elder abuse, only to be caught when all the money is gone.
It is possible for a parent to reward the contributions of helpful child and not cause legal problems for the entire family.
What might an elder do who wants to give a significant benefit to a child “fiduciary”? First I must say that the elder should hire an attorney. What will the attorney do? He or she will make sure the elder is not being unduly influenced or coerced. A suitable legal document will be drafted recording elder’s reasons and consent to the action. Notice will be given to other children, if the elder consents, so that they may “speak now or forever hold their peace.”
Depending on the trust is written, consent may be needed from the other sibling-beneficiaries or approval sought from the probate court.
In the last analysis while an elder may retain the absolute right do what she wants with her property. How that is legally and safely done will depend on the individual circumstances and drafting the legal documents accordingly.
Once again we see that a “trust” or a “power of attorney” is not just a piece of paper but a legal document that creates legal relationships. If they are not drafted according to a client’s individual circumstances they can cause more harm than an elder would ever have contemplated.
A Big Thanks Doug Chalgian, one of Michigan’s best elder law litigation attorneys, who commented a court case, LaForest vs. Swiss, that otherwise may have passed unnoticed. More on this thanks later.
Let me relay two stories of a daughter who has a mother in a nursing home..
First Daughter.
The court case tells us of a lady in a nursing home. She had six children. One daughter handled all of her affairs. She was Mom’s agent under a power of attorney and the trustee of her trust. Mom went into a nursing home and the daughter hired an elder law attorney to engage in Medicaid planning. She saved virtually everything Mom owned from the nursing home. There were three major asset transfers. In chronological order:
The result of this daughter’s transactions was that she ended up with ALL of Mom’s assets. She claimed that her mother wanted her to have everything. The siblings took her to court and won.
Conclusion: This is clearly the case of a greedy daughter who used her power to get the property of her vulnerable mother.
Second Daughter.
This court case involves a daughter’s mom who was in a nursing home for 11 years. In all of those years some of her children visited once. Or, perhaps twice. The dutiful daughter, who was also responsible as her agent and trustee, visited her every day of those 11 years. The daughter, hired an attorney to engage in “Medicaid planning.” The attorney concluded that Mom, his client, wanted the dutiful daughter to have her property. One could understand if Mom felt she had been abandoned by her other children. Perhaps she was angry? We don’t know. The court does not say. She had a condo, a car and cash in the bank. These were transferred to the daughter. All of the transactions were allowable under the Medicaid rules. Of course, when Mom died the other children were there looking for their inheritance that the dutiful daughter preserved.
Conclusion: This is clearly the case of greedy children who cannot be bothered to help their mother while she was in a nursing home but have no bother at all helping themselves to “their inheritance.”
There is a relationship between the two daughters. They are the same person.
The Case
The court case is the Michigan Court of Appeals decision in LaForest vs. Swiss. It is an unpublished decision that might have otherwise gone unnoticed but for Doug Chalgian’s January 9th blog post Tangled Webs. Doug’s commentary is certainly worth a read and contemplation.
I would like to offer another take on the case. I work in the realm of government benefits, e.g. Medicaid, and not litigation. I am much more likely to see a child helping a parent through the nursing home Medicaid morass than I am to see children who never visit their parent. How does a child follow a parent’s intention? How does an attorney know and effect a clint’s intentions? LaForest gives some guidance in such situations. Here are a couple of pointers:
The take away from LaForest is that the “story” is not enough. The legal procedures to effect the parent/applicant/client’s wishes must be followed lest the law will impose its own solution. I’ll be writing more about those procedures in later posts.
Moral: Do The Right Thing, The Right Way.
Jim