powers of attorney cvls/ida collaboration cle seminar · appointments, makes sure the house is...
TRANSCRIPT
Powers of Attorney CVLS/IDA Collaboration CLE Seminar
April 22, 2015
Presented by: Kerry R. Peck, Esq.
Hypothetical
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Huey, Dewey, and Louie are Donald’s three sons. Huey, a father of three, had always taken the initiative in caring for his 65 year old father. He takes him to doctor appointments, makes sure the house is tidy, there is food in the fridge, and that all the bills are paid. So two years ago, Huey took Donald to a lawyer where he named Huey his agent under his Powers of Attorney for property and healthcare.
One year ago, Donald moved in with his son Dewey because his house was too large for him. Dewey, a bachelor and a realtor, not only took care of selling his father’s house, but he also took Donald to an attorney naming himself as his father’s agent under his Power of Attorney for property and healthcare.
About six months ago, while walking to the senior center, Donald was hit by a car and sustained a traumatic brain injury. Even with the injury, Dewey rarely took his father to his countless doctors appointments or therapy. Dewey didn’t take much notice of his father’s major physical and mental decline because he was spending all of his free time with his new model girlfriend.
Hypothetical
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Louie, a flight attendant, lives two hours from his two brothers and recently came to stay with Dewey and Donald for a long weekend when he learned of his father’s brain injury. Louie wasn’t close with either brother and always held a strong sense of resentment toward them.
Even though Louie had never helped care for his father in the past, he decided to take Donald to a lawyer to become his guardian. Despite the fact that Louie was always traveling, he didn’t want to give either of his brothers the glory of being their father’s caretaker, especially after he saw that Dewey didn’t concern himself at all with their father’s wellbeing, and Huey was busy taking care of his kids.
During the guardianship hearing it was discovered that both Huey and Dewey had been separately named agent under Donald’s Powers of Attorney for property and healthcare.
Two prong inquiry
•Does the alleged
disabled person need a guardian?
•If so, who should it be?
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Dueling Powers of Attorney
Existence of Power of Attorney documents. ◦ Healthcare
◦ Property
Validity of Power of Attorney documents. ◦ Capacity
◦ Undue Influence
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Why Guardianship Is Necessary
POA Abused
Undue Influence
Breach of Fiduciary
Duty
Financial Exploitation
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Capacity
The two general levels of legal capacity required for execution of estate planning documents (i.e. wills, testamentary trusts, inter-vivos trusts and gifts, powers of attorney for property and for health care) are:
Testamentary Capacity.
Contractual Capacity.
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Required for execution of a valid will and/or a testamentary trust (one
that governs what happens to property after death).
Defined as "sound mind and memory.”
The person must:
Know that he/she is making a will.
Know and remember the natural objects of his/her bounty.
Comprehend the character and extent of his/her property.
Make the disposition of his/her property according to a plan formed in his/her
own mind.
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Testamentary Capacity
Required for execution of inter- vivos trusts, deeds, and non- durable powers of attorney.
Defined as the ability "to comprehend and understand the terms and effect of the contract."
Contractual capacity
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Assessment of Disability
The person in need of a guardian is the “Disabled Person” and must be 18 years or older and:
Because of mental deterioration or
physical incapacity, is not fully able to
manage his person or estate,
Because of mental illness or
developmental disability is not fully able to manage his person or estate,
Because of gambling, idleness, debauchery or excessive use of intoxicants or drugs, so spends/wastes his estate as to expose himself or his family to want or suffering;
or
Is diagnosed with fetal alcohol
syndrome or fetal alcohol effects.
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Assuming One of Donald’s POA Documents Were Valid
Petition to remove agent if not acting in
best interest.
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Determining Who Should Serve as Guardian
3rd party testimony.
Medical reports admissible.
Court will have to determine who should act as guardian.
Cross petitions can be filed by individuals other than petitioner who wish to serve as guardian.
Upon finding a guardian is necessary:
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Determining Who Should Serve as Guardian
Courts will consider the following factors when determining who should act as the Disabled Person’s guardian:
Recommendations of persons with kinship and family ties; relationship between the Disabled Person and the party being considered for appointment.
Conduct by the Disabled Person prior to being adjudicated disabled, which manifests a trust or confidence in the proposed guardian;
Prior actions by the proposed guardian which indicate a concern for the well-being of the disabled person;
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The ability of the proposed guardian to manage the Disabled Person’s estate;
The extent to which the proposed guardian is committed to discharging responsibilities, which might conflict with his or her duties as guardian;
• In re Conservatorship of Browne, 54 Ill. App. 3d 556 (1977)
The trial court must also consider any preference of the disabled person;
• In re Estate of Debevec, 195 Ill. App. 3d 891 (1990)
The trend in guardianship contests is to settle matters by appointing banks, geriatric care managers, county public guardians, and the Office of the State Guardian, rather than the initial cross-petitioners;
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Hypothetical
•Bob, a 70 year-old widowed retiree, lives in a large condo on Lake Shore Drive. Bob goes to church every Sunday as well as the senior center twice a week to play chess. He only has one child, Mary, who lives in Florida and visits on major holidays.
•Lately Bob has become increasingly forgetful, confused, disoriented, and is hospitalized after slipping on a patch of ice, injuring his hip.
•While in the hospital he was diagnosed with dementia. He refuses to move out of his condo so he hires a caregiver to help him with daily activities such as laundry, cooking and making sure he was properly dressed (since he occasionally forgot to change his clothes).
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•Bob is incredibly lonely following his injury and diagnosis. He finds consolation and companionship with his young caregiver Stacey.
•Stacey is a very attractive divorcee with a child. Stacey doted on Bob from the start. In addition to her duties as his caregiver, she started to pay his bills, accompany him to church, and go shopping with him.
•It wasn’t long until their relationship took a romantic turn. Stacey and her son immediately moved into Bob’s opulent condo. Shortly thereafter, the two made travel plans and Stacey suggested that Bob buy a new car (preferably a luxury SUV so that they would have enough room for all of their things).
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•Stacey took Bob to the Lexus dealership where he bought a 2015 Lexus SUV; he wrote a check for half of it and financed the rest. She suggested that he put her name on the title as well since she would be driving the SUV during their trip and Bob agreed.
•Now that Stacey and her son were living with him, she suggested that Bob should get rid of any other “nosey caregivers and housekeepers” because she would be the only caregiver he would need.
•Stacey then also suggested that Bob add her name to his bank accounts so that she could do the grocery shopping and take care of household things. She also suggested that they meet with his stockbroker to make sure she could use those funds to take care of him. In addition, she mentioned that he should call his attorney to discuss revising his will so that she would “be taken care of.” Bob said, “anything for you,” and gave her the numbers to call and make the appointments.
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Meanwhile Bob’s daughter, Mary, began to get concerned. It was increasingly difficult to reach her father. He had always been very cautious decision-maker, and when Mary learned that he moved a woman into his home after only six weeks she became very worried. Mary, however, was afraid to say anything because she knew how lonely her father was and she felt that maybe this was what he really wanted.
While in town for Thanksgiving, Mary went to an attorney to see what she can do. She was named her father’s POA a few years back. Her lawyer discovers that Bob had not only recently redrafted his Will replacing her with Stacey as beneficiary and named Stacey his new POA.
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Temporary Guardianship:
An Elder Law Attorney’s Tool For Protecting his or her Client or his or her Client’s Loved One From
Financial Exploitation.
• A Sense of Urgency: An elderly person who is being financially exploited can easily have his or her entire estate exhausted in a matter of days.
• Once you learn about the financial exploitation and decide to take action, your goal is to be in front of the Judge asking for the entry of a Temporary Guardianship in 2-3 days.
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In re Estate of Hasse, 327
Ill.App.3d 1057, 764 N.E.2d
1279, 1281, 262 Ill.Dec. 162 (2d
Dist. 2002)
• Because temporary guardianship petitions are granted in emergency situations, it is important both to clearly identify the cause of the emergency and to detail how the current situation jeopardizes the alleged disabled person’s financial or personal well-being.
• The courts do not require the same notice required under Probate Act §11a-10 since that “would undermine the clear purpose of the provisions regarding temporary guardians, which is to attend to the immediate needs of the alleged disabled person.” [Emphasis in original.]
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Steps to Petition for Temporary Guardianship
(1) Obtaining a Physician’s Report (i.e., CCP-211)
◦ Get the CCP-211, or Physician’s Report, completed in time.
◦ Does the report include a diagnosis that the respondent
suffers from one of the following that renders him or her partially or totally incapable of making personal or financial decisions?
◦ Mental deterioration;
◦ Physical Incapacity;
◦ Mental Illness;
◦ Developmental Disability.
◦ The Judge cannot approve a temporary guardian without an
accompanying doctor’s evaluation.
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Steps to Petition for Temporary Guardianship
(2)Filing the Petition for Plenary and Temporary Guardianship Simultaneously.
◦ The Temporary Guardianship petition requires that you state why a temporary guardian is necessary.
◦ The explanation should focus on “the immediate welfare and protection of the alleged disabled person and/or his estate.”
(3)After filing the Temporary Guardianship Petition, a Guardian Ad Litem must be appointed
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Before a hearing is held on the temporary guardianship petition, the Court will appoint a Guardian Ad Litem to visit the Alleged Disabled Person and make a determination and subsequent report to the court as to whether emergency relief is necessary and reasonable under the circumstances.
The “eyes and ears” of the Court. Typically an attorney,
but not required.
The Order Appointing a Temporary Guardian. A temporary guardian only has the powers and duties enumerated in the Court Order.
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The Role of The Guardian Ad Litem
Guardian Ad Litem Report
• His or her observations of the respondent;
• The respondent’s responses to any questions the Guardian Ad Litem (GAL) posed regarding the guardianship proceeding;
• The GAL’s opinion as to the appropriateness of guardianship for the respondent;
• The opinions of any other professionals with whom the GAL consulted regarding the appropriateness of guardianship for the respondent;
• Any other material issues discovered by the GAL.
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When advance directives are not in place, or fail…
The primary purpose of guardianship is to establish a legally-authorized substitute decision-maker for someone
who lacks capacity to make or communicate responsible
decisions.
Guardianship is only to be utilized when necessary to
promote the well-being of the disabled person, to protect him
from neglect, exploitation or abuse and to encourage
development of his maximum self-reliance and independence.
“To simply establish certain disabilities is alone insufficient to support the determination of incompetency. The evidence must also show the person’s incapacity of managing one’s
person and estate.”
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In re Estate of McPeak, 53 Ill. App. 3d 133
(1977)
Guardianship is the Default Estate Plan for Disability Purposes in Illinois.
Disability Affecting Cognition
Can the person make decisions for themselves?
No or Ineffective Planning for Disability.
Does this person have a proper plan in place?
Is the plan appropriate/valid? Agents willing to act?
* Guardianship can also be a very effective tool to combat exploitation.
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Removal of Agent: Improper Financial Transactions
Changing the beneficiaries of a trust, life insurance policy, retirement plan;
Placing funds in joint tenancy accounts/comingling funds;
Transferring funds from a checking account to improperly benefit the fiduciary;
A trustee loaning money to himself.
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