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Capacity Case Illustrates Witness Weight

This unpublished opinion provides an opportunity to discuss the types of witnesses that are often involved in lack of capacity and undue influence cases, and how they are weighed at the trial level.

The case of is called In Re Estate of Aurelia Rokosky (click on the name to read the case).

Aurelia lived alone on Grosse Ile. She apparently had no spouse or children.  But she had a friend who lived nearby until 1994 when this friend moved to Portland, Oregon.  In 1976 Aurelia prepared a will leaving everything to this Portland friend.

In 2008, when Aurelia was 86, she developed a new friendship with a person in Michigan. This Michigan friend helped Aurelia with her shopping and housework.  In 2010, this Michigan friend began helping Aurelia with her bill payment and finances.

Aurelia also had a neighbor (“Neighbor Bill”) with whom she had a good relationship until mid-2010. Before their friendship broke off, Neighbor Bill observed that Aurelia suffered from significant confusion, that she was unable, for instance, to operate her television, and that she repeated herself frequently. Their relationship ended, Neighbor Bill claimed, because Aurelia became paranoid.  At one point in late 2010, Neighbor Bill called the local police department because he was afraid that Aurelia was not safe living alone, but the police found her home and living situation to be in reasonable order.

On January 24, 2011, Aurelia saw a lawyer and had a will prepared leaving everything to the Michigan friend. The lawyer testified that she was clear and coherent at their meeting, and that she had testamentary capacity.

That same day, when Aurelia arrived home, she called Neighbor Bill several times, each time in an agitated state, and each time explaining that she had arranged for her estate to pass to the Michigan neighbor at her death.

A few days later, Neighbor Bill and others who knew Aurelia became concerned that they had not heard from or seen Aurelia. The police were called.  Aurelia was found in her home in her bathtub fully clothed.  It is unclear how long she had been in the tub, and she was taken to a hospital where a doctor evaluated her cognition and deemed her to be “profoundly confused.”

Aurelia was discharged from the hospital to a long term care facility where she lived the remainder of her life and died in August, 2013.

Also, it is important to note that in September 2011, Aurelia met with a second lawyer and executed a ladybird deed leaving her home to Michigan friend at her death. That deed was deemed invalid, and that decision was not appealed.  But the second lawyer also testified that as of September 2011, when Aurelia met with him, she had testamentary capacity.

And finally, the Portland friend, in contesting the validity of the will, employed an expert witness, a geriatric psychiatrist, who reviewed the Aurelia’s medical records and opined that Aurelia lacked testamentary capacity on January 24, 2011 (the date of the will) and for every day thereafter.

After receiving all of this testimony, the trial court admitted the 2011 as valid on summary disposition, and the Portland friend appealed.

So, to sum it up, besides the presumably self-serving testimony of the parties themselves:

  • There are two lawyers who met with Aurelia and who testified that Aurelia had testamentary capacity in January 2011 and in September 2011.
  • There is a police report that indicates that Aurelia’s home was reasonably maintained in mid-2010.
  • There is an uninterested fact witness, Neighbor Bill, who testified as to Aurelia having clear signs of cognitive impairment before the 2011 will was executed, and that Aurelia became severely agitated and confused on the very date she signed the will, leading to hospitalization a few days later.
  • There is the evidence that the Michigan friend, a fact witness who seeks to have the will upheld, cannot dispute, which is that she was helping Aurelia with her daily activities, including her finances, before the will was signed.
  • There is a medical opinion from four days after the will was signed, when Aurelia was in the hospital, that she was demented and severely confused.
  • There is an expert opinion that she lacked testamentary capacity on the date the will was signed.

Indeed it is difficult to understand how a trial judge would think that, with all this evidence, this case could be decided on summary disposition. And you will not be surprised to learn that the Court of Appeals reversed that order and remanded the case for trial.  But this case illustrates some important points about how these cases can be viewed at the trial court level, and what witnesses carry the most weight, including:

(1) Trial judges often place great weight on the testimony of the lawyers they know. Capacity is, after all, a legal question and lawyers who regularly prepare estate plans are considered experts in evaluating whether their clients meet the standards of testamentary capacity.

(2) Capacity is presumed. The burden is on the contestant to overcome the presumption of capacity.  In any case where there is a lawyer who prepared the document, this presumption and the testimony of an experienced estate planning attorney, carries great weight.

(3) Testamentary capacity is a low standard.

(4) The “lucid moment” concept is far from dead. Even though Aurelia was deemed incompetent only a few days after the execution of the will, and even though she spent those few intervening days in a confused and agitated state, and even though there is ample evidence of age-related cognitive decline even before the will was signed, the trial judge presumably had no problem concluding that she was clear and coherent at the moment she signed the will, as her attorney testified.

These are the types of witnesses that often exist in lack of capacity/undue influence cases. What we can take away from this example, I think, is that challenging documents prepared by an experienced lawyer is tough sledding, but can be accomplished.  As in this case, expert opinions have become standard practice, and are often critical to surviving summary disposition.  Solid testimony from an uninterested fact witness can also be very valuable.  And, as I have suggested before, surviving summary disposition is often the first objective.  When a case is heading to a jury, the parties each face significant risk and the possibility of settlement increases accordingly.

My Million Marbles Memories

This occurred some years ago, when I had more time, the firm was so much smaller, and the types of cases I handled and clients I saw were more diverse. I miss those days, but life goes on and we can’t have everything.  What I have now is good too.

I don’t remember her name, or where she lived, but I do recall visiting her in her home in a trailer park.

She was old and she was dying.

She said she needed a will. So we talked.

I don’t like the word passion. I think it’s overused. To my way of thinking, the popular notion that everyone has a passion and they just need to find it, is unhelpful.  Rather, I’ve come to believe that there are passionate people, and there are people who lack that quality; and then there are people who have a lot of issues or insecurities that prompts behavior which can be mistaken for passion.  Not a judgment, just an observation.

So, this woman had a thing, call it a passion if you must, but her thing was collecting marbles.

She said she had a million marbles. Her home was full of them, stored in any variety of containers, and incredibly, she explained, if we pulled up the floor boards to her trailer, we would find marbles stashed underneath.  She said that they had to reinforce the foundation of her trailer to support the weight of all the marbles.

We talked about her family, her estate planning objectives, and she educated me about marbles, almost all of which knowledge I have since forgotten.

I don’t recall if I went to her home a second time for the signing. But I know that at some subsequent time, an assortment of marbles arranged in a mushroom shaped jar (pictured above) was delivered to me.  I was told that these marbles had been especially selected for me by the woman.  Perhaps she liked my company, or perhaps I didn’t charge her for the will and she considered this my payment.  That fact, I also do not recall.

I’ve kept this jar in my private work area, and have noted it many times over the years. I don’t take the marbles out and I don’t play with them, but at times just seeing the jar causes me to remember the woman in her trailer surrounded by all her marbles,  and also to remember how my practice used to be, what I’ve lost and what I’ve gained.

So, Dear Ms. Marble Lady: Thanks for the marbles – and the memories that I’ve stored with them in your mushroom shaped jar.

The Awesome Power of Constructive Trust

 

Mom made the house joint with son, rights of survivorship. Now Mom, in her demented state, tells the court that, when she did it, she thought her son would share the house with his siblings after she died.  The court uses that testimony to void the deed, citing the equitable remedy of constructive trust.  The Court of Appeals upholds that decision.

This new unpublished case is In Re Guardianship and Conservatorship of Dorothy Redd (click on the name to read the case).  You might recognize the name.  This is a second appeal arising from the same file.  The first resulted in a published decision, and is addressed in my prior post Seeing Redd (click on the name to read that prior post), a case which offers an important rule about fiduciary removal for interference with family relations.

Constructive Trust is a remedy, which also can be pled as a cause of action. I plead it all the time.  To me, constructive trust is the Hail Mary of probate court litigation.  In the grey world of family exploitation cases, if all else fails, ask the court “to do the right thing.”  Who knows, it might just work?  It worked in this case.

Let’s review:

When Mom was competent, she deeded the house to herself and her son as joint tenants with rights of survivorship. Now she says that at the time, her express intent was that when her son received the property at her death, that he would share the proceeds with his other siblings.  There is apparently no, or insufficient, evidence to attack the deed for lack of capacity, undue influence or duress.  And there is apparently also no, or insufficient, evidence to impose an oral trust on the property (that is, no evidence that son made representations to mom that caused her to believe he was accepting the deed based on the agreement that he would share the proceeds with his siblings).

But the court decided that it simply wouldn’t be fair for son to keep the house, and voided the deed by exercising its equitable powers of constructive trust.

The Outer Bounds of Equity

Even in the wide-open range of equity, constructive trust is an anomaly, seemingly untethered by any evidentiary requirement.

It’s one thing to invoke equity by saying: “I took care of the old geezer for twenty years based on the promise that I would get compensated from his estate, and I wouldn’t have continued to do the work if I had known that he was leaving me nothing.” In those cases, the fact that the contract wasn’t in writing, or the terms were uncertain, can be remedied through equity (quantum meruit or unjust enrichment).  That’s equity, but at least there are some rules.  In those cases, the claimant has to prove that they would not have provided the care ‘but for’ the promise of compensation.

Constructive Trust doesn’t require anything so firm. It simply requires convincing the trial court that the outcome isn’t fair.  The leading case on constructive trust is the 1958 case of Kent v Klein, 352 Mich 652, 656; 91 NW2d 11. Kent is cited extensively in this Redd case, and those quotes demonstrate just how loose the parameters are:

A constructive trust may be imposed whenever “the circumstances under which property was acquired make it inequitable that it should be retained by him who holds the legal title. Constructive trusts have been said to arise through the application of the doctrine of equitable estoppel, or under the broad doctrine that equity regards and treats as done what in good conscience ought to be done.”

As Spiderman’s uncle once said: “With great power comes great responsibility.”  So, for argument’s sake, let’s read between the lines of this decision.

In the first Redd case, this same son was removed as guardian because the trial court found that he was actively undermining the relationships between his demented mother and her other children, his siblings.  So, he was already the bad guy in this court when the questions at issue in this appeal arose.  In this appeal, his accountings are disallowed, he is removed as beneficiary of a life insurance policy his mother established on her life, and the deed leaving him her home is voided.

One explanation is that he really is the bad guy and had a hand in the getting mom to execute the deed. But if those were the facts, as discussed above, the contestants would have had legal grounds to attack the deed: duress and undue influence.  That evidence, presumably, didn’t exist.

Remember also that the testimony about what mom believed or intended at the time she created the deed, comes from a demented woman who is no doubt being influenced by the people around her; and since her son’s removal as guardian, should we assume those people are the other siblings? How much weight should be given to her current memories of what she did some years earlier?  Also, the COA opinion mentions only in an off-handed way that, in explaining her decision to execute the deed, mom states that at least part of her motivation was that her son had made improvements to the house.

So, the other possible perspective is that maybe son is the good kid. Maybe his siblings didn’t have a lot to do with mom, but lawyered up when they realized they were getting cut out.  Maybe he had reasons for his keeping the other kids away from mom, although perhaps he was too strident in how he did it.  Maybe he is the only one who cared.  I don’t know.  But I suspect the story is richer than this opinion reveals.

Conclusion

I’m not saying this case is wrongly decided, I’m just saying it’s grey – it’s always grey; and unleashing unfettered equitable powers in these cases is dicey.

Speaking of which, I have an article coming out on this very topic.  It will be in the February edition of the Michigan Bar Journal.  It’s called: Best Practices for Family Exploitation Cases.  If you are so inclined, give it a read, and I hope you find it worthwhile.

Puzzling New Medicaid Policy on Homestead Exemption to Take Effect

Heads Up: If Medicaid planning isn’t your bag, you may want to pass on this post.

As of February 1, 2019, Bridges Eligibility Manual Item 400 (aka “BEM 400”) will be changed.  For the uninitiated, BEM 400 is the source of Medicaid policy relating to exempt and countable assets.

In Medicaid planning, there is probably no topic that is more foundational and complicated than “exempt assets.” Accordingly, BEM 400 is an unusually lengthy policy item.  Click here to view the policy item as it will exist beginning February 1, 2019.  The changes are indicated by lines on the right side of the page.

The change I want to discuss relates to the rules that allow an applicant to exempt a homestead when they are no longer living in the home. [Footnote: This discussion is not relevant if the Medicaid applicant’s spouse is living in the home, or if a blind or disabled child of the applicant is living in the home.  In those cases the homestead is exempt per se.]

Historically, the rule has been that any home that the applicant owns where they formerly lived, could be claimed as a homestead. Currently that exemption is worded as follows:

Exclude a homestead that an owner formerly lived in if any of the following are true:

  • The owner intends to return to the homestead.

  • The owner is in an LTC facility, a hospital, an adult foster care (AFC) home or a home for the aged.

  • A co-owner of the homestead uses the property as his home.

Now let’s go to the policy that takes effect February 1. If you want to follow along, go to the middle of page 36 and look at the topic of “Absent from Homestead.”  The introductory paragraph has been reworded to say:

Exclude the homestead (see definition in this item) that an owner lived inprior to the time the indiidual left the property if any of the following are true:

First, it’s hard to ignore that there are two obvious typographical errors in this sentence.

Substantively, we see that the following words are added: “that an owner lived in prior to the time the individual left the property. …”

So, what does that even mean – if it means anything?

If the applicant is now absent from the home (presumably because they are in institutional care), they must have lived in the home prior to the time they left the home. But then, why put those words in there?

My initial concern is that the department intends to use this language to limit the availability of the homestead exclusion to real estate that was occupied immediately prior to entering long term care. But it doesn’t say that, and could easily have said that.  So maybe I’m just reading too much into it.

Is there another explanation? I think so. And you don’t have to look far to see it.

Also on page 36, immediately following the cited provision, is a section that talks about when a homestead can be exempt if a relative is occupying the property. The new language says:

Relative Occupied. Exclude a homestead provided both of the following are true:

  • The owner is in an institution; see BPG Glossary.

  • The owner’s spouse or relative (see below) lives there.

The current policy reads:

Relative Occupied. Exclude a homestead even if the owner never lived there provided both of the following are true:

  • The owner is in an institution; see BPG Glossary.

  • The owner’s spouse or relative (see below) lives there.

Here the difference is clear. To use the relative occupied exclusion, heretofore, it was not required that the owner ever lived in the home. Now the “never lived there” language is gone.  So, perhaps all that the department is trying to say is that the applicant-owner had to live in the home at some point in order to obtain the exemption for a relative-occupied house? Although, again, that is not what it says, and it could have easily said that.

In conclusion, I guess we will have to wait to see what these changes are intended to mean. Maybe it just means that the relative occupied exclusion requires that the applicant own and formerly lived in the house.  But maybe the department will attempt to place greater restrictions on the homestead exemption, by limiting to only those situations in which the person went directly from the house into long term care.

Published Opinion: No Immunity for Retained Expert

This question could have come up in some other type of case, but it came up in a probate case and that case is published, so I’ll write about it – briefly.

The question is: Can I sue my own expert witness for malpractice?

The answer is: Yes.

That answer did not surprise me.

To read Estate of Voutsaras v Bender et al, click on the name.

Wrapping up 2018 on plantobe100.com

Another year and another bevy of interesting developments in Michigan probate law.

An update: In lame duck session, both houses of the Michigan legislature passed the Michigan version of the Uniform Directed Trustee Act, and the law was signed by the Governor.  I discussed this important new law in the recent post: The Next Big Thing in Michigan Trust Law (click on the name to read the post), which also appears as #5 in the list below.

For the record, the five posts (click on the name to go to the post) with the most traffic in 2018 were:

  1. Medicaid Planners Get Rare Win from COA.
  2. Practice Alert: Homeowners’ Coverage Doesn’t Extend to Trust
  3. Storm Clouds in Elder Law Land
  4. Phone App “document” is Valid Will in Michigan
  5. The Next Big Thing in Michigan Trust Law

I realize the trend has been for me to write more frequently about appellate cases as they come out, maybe less ramblings about the law and practice generally. I hope that’s ok.  In any event, that seems to be where my interest lies. It could change.

Thanks for reading. Happy New Year.

The Year I Lost My Innocence – Again

I will remember 2018 as the year we celebrated my mentor’s 80th birthday, and I was able to share publicly the love and appreciation I have for him.

I will remember 2018 as the year I sponsored two incredible young people to be admitted to the legal profession.

I will remember 2018 as the year I met an elderly client who sounded like Gomer Pyle and who was proud of the fact that he had only kissed one woman in his life, the woman he married and had recently nursed through a long final illness. And when I told the young lawyers in my office that the client sounded like Gomer Pyle, they told me they didn’t know who Gomer Pyle was, and upon further inquiry, they didn’t know who Don Knox was either.

I will remember 2018 as the year a client tried to explain to me that in losing her life partner, she had the inexplicable sense that she had lost 80% of what was her life, and yet was left with 80%.

Capacity to Nominate

The question is this: When a person who is the subject of a petition for guardianship or conservatorship nominates an individual they want to serve in those capacities, to what extent is the court required to grant the nominated individual a priority of appointment?  A new unpublished opinion discusses that question, and while I think the opinion falls short in some respects, the issue comes up routinely in contested guardianship and conservatorship matters and this case offers the opportunity to delve into the law.  So here we go:

Let’s start with the law.

MCL 700.5313(2) provides the order of appointment for a guardianship. Its relevant provisions say:

(2) In appointing a guardian under this section, the court shall appoint a person, if suitable and willing to serve, in the following order of priority:

(a) A person previously appointed, qualified, and serving in good standing as guardian for the legally incapacitated individual in another state.

(b) A person the individual subject to the petition chooses to serve as guardian.

(c) A person nominated as guardian in a durable power of attorney or other writing by the individual subject to the petition.

(d) A person named by the individual as a patient advocate or attorney in fact in a durable power of attorney.

For a conservatorship the relevant language is in MCL 700.5409(1), which says:

(1) The court may appoint an individual, a corporation authorized to exercise fiduciary powers, or a professional conservator described in section 5106 to serve as conservator of a protected individual’s estate. The following are entitled to consideration for appointment in the following order of priority:

(a) A conservator, guardian of property, or similar fiduciary appointed or recognized by the appropriate court of another jurisdiction in which the protected individual resides.

(b) An individual or corporation nominated by the protected individual if he or she is 14 years of age or older and of sufficient mental capacity to make an intelligent choice, including a nomination made in a durable power of attorney.

These provisions are similar, but importantly different:

While both statutes provide that, unless someone has already been appointed to serve as guardian or conservator by another state, the highest priority goes the person nominated by the proposed ward. But in the guardianship context, the law provides that the court “shall appoint” the person with priority if they are suitable and willing to serve. In a conservatorship proceeding, the court “may appoint” and having a priority merely provides that such persons “are entitled to consideration.”

Interestingly, the conservatorship statute says that before considering a person nominated by the proposed ward, the court must find that the proposed ward “is of sufficient mental capacity to make an intelligent choice.” In the guardianship context there is no requirement that the proposed ward be capable of making a good choice.

The guardianship law also elevates the person nominated by the proposed ward at the hearing above a person previously nominated in a power of attorney or patient advocate designation. In the conservatorship context, those two forms of priority are equal.

For the record, both statutes are further buttressed by MCL 700.5106 which more specifically addresses the limitations placed on a court with respect to the appointment of a public fiduciary.

All three cited statutes are linked to the law, which can be read in their entirety by clicking on the statute.

Now let’s look at the case of  In Re Guardianship and Conservatorship of David P. VanPoppelen.  Click on the name to read the opinion.  Click here to read the concurrence/dissent which goes into an interesting issue about suitability, which, for the sake of brevity, I won’t discuss in this post.

In this case, the proposed ward (“David”) nominated June to be his guardian and conservator.  He did so both in his power of attorney and patient advocate designation, and he did so when he was questioned by the court-appointed guardian ad litem.  But the trial court bypassed June by finding that the David was not competent to execute the patient advocate designation and power of attorney when they were executed, and further, the court says “He was similarly incompetent to informally select his fiduciary.”

So my complaint with this holding is that while I think the court was certainly within its power to invalidate a power of attorney and patient advocate designation based on a finding of lack of capacity at the time of execution; and to bypass June as conservator by finding, in accordance with MCL 700.5409, that David lacked the ability to “make an intelligent choice” at the time of his verbal nomination; because MCL 700.5313 (the guardianship law) does not include a provision that allows the court to make a verbal nomination contingent on the existing mental capacity of the proposed ward, to my thinking, June should have been given the priority in the guardianship matter.

In conclusion, although I think this court provided an imperfect analysis, I appreciate the opportunity to review the law as it relates to this important question.

Test of Capacity is a Function of Complexity

Party A argued that because a person executed a financial power of attorney and patient advocate designation in June of 2013, the trial court should have found that said person must have been competent to execute a shareholder’s proxy signed in December of that same year. But the trial court found otherwise.

In affirming the trial court, the Court of Appeals says: Not only is it reasonable for the trial court to have concluded that the person’s capacity diminished in the intervening months, but – wait for it –  – –  it is also true that a proxy is a different thing than a power of attorney and therefore the test for capacity is not the same.

That, my friends, is a proposition that is commonly argued, but heretofore not so clearly stated in Michigan law. The proposition that the test of capacity is a function of the complexity of the decision being challenged comes up in litigation all the time. And this is a published decision.  (emphasis added)

Menhennick Family Trust v Timothy Menhennick (click on the name to read the case) purports to be about the meaning of a statute in the Business Corporation Act, but the holding primarily turns on the issue of capacity. Several large chunks of this relatively short opinion clearly state the rules relating to a finding of capacity and how that test can vary with the decision at issue.  Well worth the read.

This is an important decision for probate litigators. I know I will be citing this decision in cases to come, and I am sure others will as well.

Summary Affirmed in Undue Influence Case

In Re Margaret Krum Trust is an unpublished decision of the Court of Appeals dealing with undue influence. [Click on the name to read the case.]  This is a case that was handled by our firm.  We represented the appellee.

Two sisters were cut out of their mother’s trust, and contested the validity of the document when their mother died. They originally pled undue influence and lack of capacity, but withdrew the incapacity claim after discovery was complete.  Our client, the Trustee, brought a motion for summary disposition on the remaining claim of undue influence, and prevailed.  The appeal was from that order.

In affirming the trial court, the COA addresses two points worth noting:

First, the COA says that the existence of a financial power of attorney nominating the alleged undue influencer as agent is sufficient to establish the element of a fiduciary relationship for the purpose of giving rise to the presumption of undue influence, even when there is no evidence that the nominated agent ever exercised any authority under the document.

Second, the COA holds that summary disposition can be granted in an undue influence case even when the presumption of undue influence has been established. This appears to be an accurate statement of the law, even though other panels of the COA have, at times, held otherwise.

If you read the case you will note that the COA deals with the issue of after discovered evidence in the context of a motion for reconsideration. Kind of an interesting twist in this case, if you’re looking for more.

And if you read the case you also learn that the scrivener of the contested document was our friend and colleague Danielle Streed. Thanks for your help in this matter Danielle.

Finally, our own Drummond Black did all the heavy lifting on the MSD and COA briefs. Thanks D. You’re the best!