We Do Grow Young Again

hand w flowers

In the house of the old couple that passed, the furniture was outdated, the carpeting worn, the window dressings shabby.

I have been in houses like this many times before. A house trapped in a time period long past. It was typical.

The family commented – apologetically: “they had the money” and “we never could convince them to spend it.”  Clichés about the depression era.  This too was typical.

But I wonder if these houses tell us something else about aging, something that perhaps we know but are uncomfortable acknowledging – because of what it says about us.

Maybe the truth is they simply didn’t much care what their house looked like. They were comfortable.  The couch – missing a leg but with that fourth corner adequately supported by a couple bricks – still worked. Why buy a new one?

In that lengthy period of adulthood during which we are obedient to the controlling values of society; during which we worry so much about what people think of us and how they will judge us if our house, our clothes, our cars are not what is expected of someone of our status. Finding joy in shopping.  Stressing about the image we convey in the way we present ourselves – by the possessions we own.  Judging others as we fear we are being judged.

I like to think now that with advanced age comes a freedom from the self-imposed trap of materialism. And in that way, returns us to our youth, to the time before we were socialized into the world of possessions and status.  And I like to think that through that growth process we recover at least a part of the innocence we lost along the way.

 

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A Gold Digger Epidemic: Statistically Speaking

Goldigger

Statistics can be fun. One of the big statistics driving the aging industry is the reality that people are living longer than ever.  Get beneath the impressive growth of the aging population, get into some of the nuances, and see why certain issues seem to come up so frequently.  One of those is what might be called the gold digger epidemic.

According to the Federal Interagency Forum on Aging-Related Statistics for 2012, in that year there were about 1,790,000 men over the age of 85, or about 32.6% percent of the over 85 population.  Whereas there were about 3,704,000 women aged 85+, or 67.4 percent of that population.  That’s more than twice as many women as men.

Dig deeper and you find, of those over 85, 58.3% of the men are married, and only 18% of the women are married. That means older women are almost twice as likely to be single.

By my calculations, that means 2,666,880 single women over 85 and only 746,430 single men. With women being more likely to be financially insecure, it all adds up to a lot of older women having at least the motivation to be scouting for men with money in a very disproportionate pool.

While I deplore the gender bias inherent in the term “gold digger”, it is the term that comes up in many a client meeting.

Mom died and Dad got bucks? Be on notice.

Of course the other side of the coin is comfort and companionship in old age, not to be undervalued. For other blog posts on this topic, see: The Second Love of Her Life: A Sunday Morning Story, posted April 19 2015; and Capacity to Marry, posted December 20 2012

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Curious Concept from a Midwest Neighbor

Joe is taking care of his Mom, Dolly. Joshua, Joe’s brother and Dolly’s other son, isn’t helping out.  So Joe sues Joshua for help with Dolly’s care costs – and wins.  Now Joshua has to pay $400 per month toward Dolly’s care costs.  So says a recent decision of the Superior Court of Pennsylvania.  Click here to read the case.

It’s called “Filial Responsibility.” Surprisingly, 29 states have laws that would allow this result, although only two: Pennsylvania and South Dakota have actively used these laws in recent times. Michigan is not currently one of the states with such laws.

The concept, that kids are responsible for their parent’s care costs seems simultaneously fair and outrageous.

In one respect it seems fair that children support their parents. After all, they supported their children during periods when the children were incapable of financing their own needs.

On the other hand, parents elect to have children and assume those costs. Children have no choice as to who their parents are, and no control over how their parents’ resources were dissipated prior to any demand for support from the kids. Adult children may not even like their parents (as is one of the defenses raised by Joshua in this case).

The concept seems especially disconcerting in this time of high care expenses for the elderly. Should the states, now overwhelmed with paying for care of a booming population of older impaired adults, start looking to the pocketbooks of their children as another source to offset these expenses?

It is an interesting topic for sure. To read more about filial responsibility laws, click here and here.

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Oh, By The Way

So five sisters, four surviving. Dad dies, and one daughter, Sandy, announces to her sisters: “and by the way Dad owed me $1.5 million dollars for taking care of him all these years.”

Nice.

The case is called In Re Schwein Estate. Click on the name to read it.

Short story: Sandy also happened to be personal representative of the estate. The law imposes certain requirements on the way a personal representative must assert a claim.  Sandy failed to follow those rules.  The trial court, for whatever reason, went to great lengths to allow Sandy’s claim notwithstanding these procedural defects.  The Court of Appeals reversed.

I bring this case to your attention because (1) it’s a published opinion, (2) it offers a good discussion of the law that applies when a personal representative makes a claim against the estate, and (3) a somewhat less thorough discussion of post-death claims for caregiving services provided to the deceased while he was alive.

It is also worth noting that while Court of Appeals opinions are almost always delivered with no emotion, the panel in this case gets a little snarky in the way it corrects the trial judge. For instance, if you ever happen to find youself in need of legal authority for the proposition that “statutes should be construed to avoid absurd results,” this is your case.

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Tangled Webs

spider

If someone wanted to capture the essence of elder law litigation in a nutshell, they might be inclined to echo the words of the poet: “Oh what tangled webs we weave, when first we practice to deceive.”

While the cases that come into our office are varied in many respects, they almost all share in the proposition that the situation is not simple, and that the complexity arose out of someone’s (or some group’s) initial efforts to be sneaky and devious. Once that dynamic is in play, all the rest follows, and by the time the situation comes to light (comes into my office), the whole thing is a tangled web of deception and missteps that is so contorted as to be almost unfathomable.

At initial consults, I listen, and listen and listen (or read and read and read, since many times I ask for their summaries in writing) – trying to glean the relevant legal facts, but at the same time trying to understand the personalities, motivations and relationships that in the long run will become the meat of the story – and every case is a story. Law is always about two things – the law and the facts.  The law is the skeleton, but the facts are the meat.  One critical role of the litigator is to take the facts and apply them to the bones of the law so that they become something the decision-maker (judge or jury) can visualize, understand and rule on.

The thing that focused my attention on this particular topic was a recently unpublished Court of Appeals opinion. It’s called:  In Re Beverly LaForest Living Trust (click on the name to read the case).  It’s a short case, and in the long run, of little significance, being unpublished and not announcing anything new about the law.  But I think there are pieces of this case that are illustrative of the point I’m trying to make.

In LaForest, daughter (“Patricia”) is power of attorney for her mother (“Beverly”), the vulnerable adult. Patricia is also Trustee of Beverly’s Trust.  Patricia engages an attorney to assist with “Medicaid planning”.  That is, obtaining advice designed to allow Beverly to qualify for Medicaid assistance, while at the same time “protecting” her assets for the family.  In that context, a house, an annuity and a vehicle were transferred to Patricia.  When Beverly died, Patricia claimed the assets transferred were hers to keep.  Her siblings challenged this assertion, saying that while the intention may have been to place the assets in Patricia’s name, the objective was to do so to obtain Medicaid benefits and not as a gift to her, but rather so that she would hold those assets in trust for the benefit of all the siblings and divide them up when Beverly died, as would have occurred had Medicaid not been an issue.  The trial court agreed with the siblings – which is that Patricia could not keep those assets as her own but rather that they were divided among her and her siblings following Beverly’s death.  The Court of Appeals affirmed the decision of the trial court.

Hats. People think of themselves as children, or parents or whatever with respect to their relation to a vulnerable adult. They come to learn the words “power of attorney” and “trustee” – but they never really understand how their role as power of attorney or trustee is distinct from their role as family member.  This case explores the actions that Patricia took as power of attorney and as trustee, and demonstrates that with respect to each hat Patricia wore, certain legal obligations applied, and that her failure to adhere to those obligations was contrary to the law. This is an important, and often misunderstood, lesson for people acting in fiduciary roles with respect to vulnerable adults.  It is also important to recognize and distinguish that while a power of attorney or trustee may have the legal ability to retitle assets, doing so may, notwithstanding, be a violation of their duty as a fiduciary.

Medicaid Planning. Medicaid planning has become a popular concept, and because it often involves transferring property of an impaired older adult, and doing so by someone acting as power of attorney or trustee, it is not surprising when, as in this case, Medicaid planning is used as justification for this type of conduct.

Feeling Entitled. Likewise, in these types of cases, it is not uncommon for one of the children to believe that the transfer of a disproportionate share of the estate to them was what the vulnerable adult would have wanted.  In this case, the Court acknowledges that Patricia saw her mother nearly every day and regularly assisted her mother with her needs; whereas the now-complaining siblings had almost no contact with Beverly throughout this period.  Patricia argues that these facts support the proposition that Beverly intended for her to keep these things and not share them with her siblings.

Magic Words. In the end the trial court decided that even though Patricia may have been the only child that emotionally supported her mother in a material way, the evidence that Beverly wanted her to keep these assets was not adequate to overcome the legal rules that arise when a fiduciary engages in “self-dealing.”  The magic words used by the court were: “Constructive Trust.”  It said that although Patricia may have had legal authority as power of attorney and trustee to retitle the assets into her own name, the law still looks at those assets as being held by her, in trust, for her siblings. The Court of Appeals, deferring as it does to the trial court’s ability to assess the credibility of the witnesses that appear before it, found insufficient evidence to reverse the conclusions the trial court made with respect to the parties in this case.

In the end, the story of the LaForest family, although unique in details, is not unique in the sense of how it came about or how it ended. Patricia stepped on the slippery slope of self-dealing in the assets of a vulnerable adult and fell into the ditch of deception.  When the web of facts was untangled, the law was applied, and she was ordered to reimburse her siblings. [Shout out to my friend and colleague, John Fershee, who represented the siblings.] [Also, just FYI, the spider pictured above is a friendly garden spider I got to know last summer while helping my daughter pick tomatoes.]

To read more on elder law litigation click here and here.

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The Self-Inflicted Drafting Defect that Keeps on Giving

Discretionary trusts are important for all sorts of reasons. Essentially, the law holds that when a beneficiary’s interest in a trust is subject to the pure and unfettered discretion of a trustee, because that beneficiary has no ability to control what, if anything, comes out of the trust for their benefit, creditors have nothing to glob onto.

The protection afforded beneficiaries of discretionary trusts importantly applies to situations where the creditor (or would be creditor) is a government entity that offers assistance through a needs-based government programs; such as Supplemental Security Income (SSI) and Medicaid. Accordingly, one of the important applications of pure discretion is with respect to so-called “special needs trusts” – trusts that allow people to become or remain eligible for these benefits even though they have a beneficial interest in a trust.

A discretionary trust interest is commonly defined by what it is not. Specifically, a discretionary trust interest is not a fixed right such as: “Beneficiary A shall receive $10,000 per month” or “Beneficiary A shall receive all income distributed quarterly.”  In addition, a discretionary trust interest is not an “ascertainable standard.”  An interest in a trust creating an ascertainable standard would say something like “the trustee shall make distributions for the health, education and welfare of Beneficiary A.”  In both cases [a fixed right interest and an ascertainable standard interest (also known as a “support trust”)] the trust gives the beneficiary something tangible, something they can go to court and enforce.  If the trustee fails to make a distribution mandated by a fixed right interest, or fails to make a distribution that falls within the scope of the ascertainable standard interest, the court will order the trustee to make that distribution.  And it is this right to compel a distribution that makes the beneficiary’s interest reachable by his/her creditors.

The problem is that in the context of discretionary trusts there is a history and continuing inclination of attorneys to draft language that confuses or mixes the standards, particularly the standards of discretion and an ascertainable standard. It is not uncommon to see trusts intended to be purely discretionary contain language such as:  “Trustee may distribute trust property for the health and maintenance of Beneficiary A, as the Trustee in its sole discretion may deem appropriate.”

A recent example is the case of Cook v Ohio Department of Job and Family Services. (click on the name to read the case).  In this case, Ms. Cook applied for Medicaid and was denied because she was a beneficiary of a trust that contained mixed language – discretion and ascertainable standard.  The agency denied benefits and the Court of Appeals of Ohio upheld that decision.

The appeal was well-argued by highly qualified counsel, but the Court held that the language was sufficiently subject to interpretation as an ascertainable standard and accordingly sided with the agency. In a nod to the proposition that the meaning of a trust is a matter of state law, the appellate court simply said that Ms. Cook could have gone to state court and obtained a declaratory ruling regarding the meaning of the trust, but because she did not do so, the agency’s interpretation would be adopted.

It is frustrating to learn of these cases, and yet they come up frequently. Discretionary and special needs trusts have been around a long time. The law is well developed.  Perhaps it is because, decades ago, the law was less defined and lawyers are reaching for old forms in creating these trusts; or perhaps it is because lawyers tend to be verbose and simply can’t leave the simple statement of “Trustee may make distributions to Beneficiary A in its sole and unfettered discretion” alone.  In any event, this common but completely unnecessarily problem never seems to go away.

To read more on discretionary trusts and the Michigan Trust Code, click here.

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