The Legal Checkup Blog
Great article in Mass Lawyers Weekly - it shows some of the great advocacy of MassNAELA.
RE: H1366, Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act (UAGPPJA)
The Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA) asks for your immediate advocacy to help get the UAGPPJA passed. On July 10th, it passed the Senate, and it is currently being considered by the House Ways and Means Committee. This bill is poised to pass the House, but we need your support NOW because July 31st marks the end of formal sessions for the 2013-2014 session.
We can get this important legislation passed, but we need YOUR help NOW. Every phone call is critical!
PLEASE 1) call your representative and ask him or her to contact Speaker DeLeo in support of Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act.
2) Then call Speaker DeLeo's office yourself and urge him to support passage of this bill. The main number at the State House is (617) 722-2000.
Following is a summary of why this legislation is so important:
While the UAGPPJA provides much needed clarity and a mechanism to establish the most appropriate forum for each case, it also provides significant discretion to the Massachusetts Courts to accept or reject jurisdiction of any matter based on the specific facts. Judges may exercise temporary orders as appropriate for the protection of respondents pending transfer to or acceptance by another jurisdiction.
The UAGPPJA will enable communication and cooperation between courts, simplify procedures for guardians and conservators to act in multiple jurisdictions when necessary (for example, if the protected person has real estate to be sold in another state), and facilitate acceptance and enforcement of guardianship and conservatorship orders in other states. The UAGPPJA even authorizes the courts to decline jurisdiction or impose other appropriate remedies if jurisdiction is acquired by unjustifiable conduct, an issue of growing concern among elder law attorneys who see elders being improperly subjected to the guardianship process as the result of family disputes.
The UAGPPJA provides real solutions with no budget attached. It will minimize the financial and emotional burden on elders and their families who would otherwise have to initiate a second court proceeding simply to satisfy a Registry of Deeds, a care facility, or a financial institution that refuses to honor an out-of-state guardianship or conservatorship order. The UAGPPJA would be a win for our clients and their families, as well as the Commonwealth.
PLEASE HELP US TO ADVOCATE FOR PASSAGE OF THE UAGPPJA!! THANK YOU!
Fraud Schemes Targeted at Senior Citizens
The FBI offers a webpage with a wealth of information and tips on common fraud schemes. As stated on this wonderful resource page, Senior Citizens should be aware of fraud schemes for the following reasons:
Senior citizens are most likely to have a “nest egg,” to own their home, and/or to have excellent credit—all of which make them attractive to con artists.
People who grew up in the 1930s, 1940s, and 1950s were generally raised to be polite and trusting. Con artists exploit these traits, knowing that it is difficult or impossible for these individuals to say “no” or just hang up the telephone.
Older Americans are less likely to report a fraud because they don’t know who to report it to, are too ashamed at having been scammed, or don’t know they have been scammed. Elderly victims may not report crimes, for example, because they are concerned that relatives may think the victims no longer have the mental capacity to take care of their own financial affairs.
When an elderly victim does report the crime, they often make poor witnesses. Con artists know the effects of age on memory, and they are counting on elderly victims not being able to supply enough detailed information to investigators. In addition, the victims’ realization that they have been swindled may take weeks—or more likely, months—after contact with the fraudster. This extended time frame makes it even more difficult to remember details from the events.
Senior citizens are more interested in and susceptible to products promising increased cognitive function, virility, physical conditioning, anti-cancer properties, and so on. In a country where new cures and vaccinations for old diseases have given every American hope for a long and fruitful life, it is not so unbelievable that the con artists’ products can do what they claim.
More helpful information can be found on the FBI's website at: http://www.fbi.gov/scams-safety/fraud/seniors
Tags: long-term care, asset protection, elder law, Legal Check Up, Legal Documents, Estate Planning, Elder Financial Abuse, loved ones, lack of capacity, undue influence, long-term care planning, fraud
I've been feeling compelled to once again urge folks to update their basic estate planning documents and take steps to protect themselves and their hard-earned assets because I have seen a significant increase in crisis cases over the past few months. One panicked daughter could not find out if her mother had been admitted to a psychiatric hospital as she suspected because mom’s Health Care Proxy did not have HIPAA (the health privacy law) release language in it. The hospital would not speak with the daughter even though she was the named Health Care Agent because the Health Care Proxy is only effective when the principal is deemed incapacitated by a doctor.
Then I received a call from Margaret to schedule an appointment for her mom (Betty), as her dad (Joe) was hospitalized and would need nursing home care when discharged. After my meeting with Margaret and Betty, I knew I had to focus on this topic once again. You see, this family represents the typical readers and, in fact, the typical clients. Margaret has two siblings, and all of the children have been urging Betty to see an attorney. They had actually cut my ad out of the SSSN a year ago for mom, who carried it in a folder with some other important information. Whether Betty was in denial of her husband’s decline, too overwhelmed to deal with the issues, or just resigned that it was too late to do any thing to protect the estate, she didn’t make the call. Margaret and her siblings did not want to overstep their boundaries and respected Mom’s independence.
So, there we were, faced with crisis planning to ensure that Joe receives quality care while preserving as much of the estate as possible for Betty’s security. There are more options available with advance planning, for sure, but we could still protect most of the estate with crisis strategies. Joe and Betty own four pieces of real estate and have other assets valued at approximately $519,000. Joe may not have more than $2,000 in his name and Betty is only allowed to retain about $109,000. The primary residence is non-countable by MassHealth in this case. Therefore, our plan needed to address the three additional properties and other “excess assets” of about $410,000. We could protect two of the properties by utilizing exemptions in the MassHealth regulations to convey them out of Joe and Betty’s names. One property would need to be sold, and we could take all of the excess assets (including the proceeds of the sale of the fourth property) and purchase an annuity that will pay a significant monthly income to Betty. By converting the countable excess assets to an income stream for the community spouse, we could protect the estate. Not bad for a crisis plan, right? Not so fast … while we were able to develop a fantastic plan to protect nearly the entire estate, we can’t implement it!! Not yet at least.
In order to implement this fantastic plan, we need Joe to sign the Deeds to convey all of the properties out of his name and to transfer all other assets to Betty. If Joe had executed a comprehensive Durable Power of Attorney that provided Betty with the authority to sign such documents on Joe’s behalf, we could implement the plan using the DPOA. But he didn’t. As I tried to explain the problem to Betty and Margaret, Betty reassuringly said, “But he can still sign his name…” I wish it was that easy, but it is not. Due to Joe’s dementia, he would not understand what he was signing and I could not, therefore, notarize his signature on the Deeds. While this plan could have been implemented within a week or two with a proper DPOA, we were instead required to seek the authority of the Court. We filed a Petition asking the Court to appoint Betty and Margaret as co-guardians of Joe. Since a guardian (even if it is the spouse) may not convey property of the Ward without Court approval, we must also file a Petition for Authority to Establish an Estate Plan, along with a number of emergency motions to try to get the approval as quickly as possible. Betty must pay privately for Joe’s nursing home care until we obtain the Court’s approval to do the transfers under the guardianship and obtain MassHealth eligibility.
I am reminded on a daily basis that the message of the importance of advance planning warrants repeating – over and over and over again. Don’t be caught carrying an ad a year from now – take steps today to protect yourself. Update your documents while you can still (knowingly) sign your name! Schedule a Legal Check Up to get started at http://www.thelegalcheckup.com/contact-us/
Tags: long-term care, asset protection, elder law, Legal Check Up, Legal Documents, Estate Planning, disability planning, family, lack of capacity, Durable Power of Attorney, Health Care Proxy, Last Will & Testament
NO BAD DEED SHOULD GO UNPUNISHED:
Evaluation and Discovery of Cases of Financial Abuse of Elders
By William J. Brisk, Esq., CELA and Judith M. Flynn, Esq.
A distressing number of elders and their families seek to rescind deeds and other transfers they believe resulted from fraud, undue influence, mistake, duress, or coercion.[i] All too typical is the case of an elder who conveyed his home to a relative or neighbor for reasons which, once analyzed, are pretextual at best.
Ninety-three year old John sold his home to a grandnephew, Tim, for half of its value, payable in five annual installments. Tim’s father collected a substantial “broker’s fee” from the first installment. An attorney, chosen by Tim’s father, drafted the deed, note, and mortgage before she met John at the time he signed the deed. The documents did not expressly reserve any rights for John, but he was told that he would be welcome to stay with Tim’s family six months a year. When John returned fromFlorida, Tim told him he was not welcome.
Alf, also in his 90s, signed over his home to his niece, Doris, who moved into the upstairs unit, promising to care for him. In fact,Dorisvirtually ignored Alf for the next four years. When Alf was suddenly hospitalized and then sent to rehabilitation,Dorischanged the locks and barred Alf from entering the house, saying that she could not provide the care he needed.
Jean and Marie, unmarried sisters in their 80s, both legally blind and deaf, lived together for over 40 years in the home they had inherited from their parents when, apparently, they deeded their home to a trust which benefited Leonora, one of their nieces. Soon after Jean died, Marie learned that a trust was paying property taxes on her home. Marie swore that she never signed the deed, never met Attorney Smythe who drafted both the deed and trust as well as notarized their execution, and that Leonora was her least favorite relative. Smythe testified at deposition that he twice met with Marie and Jean who, he said, asked Leonora to schedule the meetings so that they could “protect” their home from potential nursing home expenses. Attorney Smythe admitted that he did not understand that the transfer actually jeopardized Jean’s and Marie’s eventual rights to medical assistance.
Christine was in poor health when she named Maxine, one of her two daughters, her agent under a Durable Power of Attorney. Maxine then signed a deed as agent conveying her mother’s home to herself. The Durable Power of Attorney did not authorize gifts. Maxine claims that the conveyance was partial payment for all she had done for her mother, although the deed states no such consideration.
On the other hand, we represent Beth, a young woman who rented an apartment in Mildred’s two-family home for nine years. Beth performed an increasing number of services for Mildred (who had no children): arranging for 24-hour care (interviewing, scheduling, and supervising care providers and agencies), doing all of her shopping, taking Mildred to medical appointments, arranging for admissions to hospitals and rehabilitation centers, and paying her bills. Mildred, who told a number of friends that she considered Beth “like a granddaughter,” deeded a remainder interest in her home to Beth. Mildred’s distant relatives sought to void the deed shortly after Mildred’s death, although they knew about the transfer years before Mildred died.
The conveyances in such cases leave elders with no control over their homes, deprive them of their most valuable asset, and distort their testamentary intents and are instances of what the NationalCenteron Elder Abuse (“NCEA”) sees as a rising tide of domestic financial abuse of elders. Approximately forty percent of all reported cases of elder abuse involve some form of financial abuse. While reports of suspected domestic elder abuse made to Adult Protective Services programs (APS) quadrupled (from 117,000 in 1986[ii] to 470,709 in 2000),[iii] the NCEA estimates that less than one in five elder abuse cases is actually reported.[iv] The most frequent abusers of elders are their adult children (36.7%), their spouses (12.6%), and other family members (10.8%).[v]
Statutes and case law pertaining to litigation of elder abuse varies among jurisdictions. Relevant case law in any jurisdiction remains spare.[vi] The cases that are tried usually do not reach the appellate level and, thus, are rarely reported.[vii] The most significant reason for the paucity of case law on domestic financial abuse, however, is that most cases are never brought to the courts in the first place.[viii] Victims are often unable to pay for representation, are reluctant to sue people upon whom they continue to depend, and fear that disclosure of their predicament will subject them to ridicule or, even worse, guardianship or institutionalization. Even a willing client who has the means to finance litigation faces serious obstacles not the least of which is the possibility that he or she, likely to be the primary witness, may not be an ideal witness or may not even be available to testify when the case comes to trial.
This article is intended to help attorneys who encounter cases of elder financial abuse, whether they are inclined to litigate or not. Upon learning of possible exploitation, attorneys have a duty to provide sound advice which requires, at the very least, understanding of 1) how to conduct initial evaluation of such cases, 2) what types of retainers are appropriate, 3) particular discovery strategies, and 4) suitable remedies. Screening usually requires more than a single meeting with a client. Proper handling of the earlier phases of the litigation can have a significant impact on ultimate success via negotiation or trial.
I. THE INITIAL EVALUATION
A. The Initial Meeting
Successful initial meetings with clients serve at least two significant objectives -- screening and fact-finding. Proper screening increases the likelihood that the client and attorney have common expectations regarding goals, costs, time requirements, and personal attention. The client’s health, financial situation, and support from family or friends, along with the merits of the case should be considered to determine (1) whether the case should be litigated and (2) whether the case is appropriate for your firm.
Fact-finding involves gathering the necessary information and documents and creating a follow-up checklist for both the client and the attorney. Preliminaries include obtaining necessary waivers or releases for privileged or confidential information at the initial meeting and beginning to outline the client’s potential claims. Prospective clients should be asked to bring, if possible, all relevant documents, a list of potential witnesses with contact information, and a written narrative of the facts to the initial meeting.
Previously executed documents may determine if the disputed documents are compatible with or contrary to the grantor’s prior expressed donative intent. It is never acceptable to rely on the memory of the client for the details of the documents, such as who drafted and executed them, their stated consideration, who notarized them, and when they were executed. This information is the foundation for successful discovery in a case of financial abuse of an elder.
Finally, elders are often accompanied to an attorney’s office by family members or friends who may also have a stake in litigation. The lawyer should always meet privately with the elder, at least for part of the meeting, to avoid a later claim that the accompanying family members exerted undue influence at that meeting.
B. Preliminary Investigation
During the preliminary investigation, it will be necessary to retrieve and review any necessary documents not previously provided, interview witnesses, and gather any missing information. The client’s potential claims should be clarified and preliminary research of relevant law conducted. Cases for rescission of deeds as well as for incidental monetary damages are usually based on one or more of the following grounds.
Lack of Capacity The grantor’s lack of capacity or competence at the time the deed was signed is a traditional grounds for invalidating a deed.[ix] Even if the grantor was “competent,” she may not have fully understood the nature of the transaction. In bargain sales to friends or relatives, grantors often have lived in the home for several decades and can remember their purchase price, but have no understanding of the property’s present market value. Bargain sales often involve a payment for either past or future care. Such contracts may be voided on the grantor’s ignorance of the precise terms of the agreement or misunderstanding about the value and likelihood of countervailing services. A Massachusetts case defining the requisite abilities an individual should have to sign a valid deed is Farnum v. Silvano,[x] in which the court recognized that a deed or other contract may require more understanding of the market, costs, taxes, and even alternative housing than a Will or other dispositive document. The Silvano opinion states that “competence to enter into a contract … involves not merely comprehension of what is “going on,” but an ability to comprehend the nature and quality of the transaction, together with an understanding of its significance and consequences.”[xi] While an unfortunate will may alter benefits given to friends or relatives, an improvident deed immediately reduces an elder’s net worth and may require painful relocation which, in turn, can lead to other detrimental effects on the elder during his or her lifetime.
Fraud, Undue Influence, and Duress Because deeds are traditionally attacked as the product of fraud, undue influence, or duress, which must be pleaded with particularity, sufficient information must be obtained before filing an action. The leading case in Massachusetts on undue influence, Neil v. Brackett,[xii] laid out the four elements of necessary proof: (1) an unnatural disposition; (2) by a person susceptible to undue influence to the advantage of someone; (3) with an opportunity to exercise undue influence and; (4) who in fact has used that opportunity to procure the contested disposition through improper means. Preliminary investigation should test whether legal requirements can be proved.
Irregularities in Execution Irregularities in the execution of a deed cast doubt on its authenticity but are not usually sufficient to invalidate a deed absent a showing of fraud or undue influence.[xiii] The making of a false certificate of acknowledgement as a notary public, however, may be a statutory violation.[xiv] Damages directly resulting from this wrongful act are recoverable.[xv] Although the attestation clause indicates that the donor appeared before the notary and stated that the transfer was his free act and deed, in many cases the person notarizing a deed may not have been present at the time the donor signed the deed. While the motivation may be to accommodate an elder, by notarizing a signature of an individual who did not appear before the notary or notarizing a signed document delivered to the notary by family members, the notary (often an attorney) facilitates financial exploitation of elders.[xvi]
Promises of Future Care Gifts or bargains are often predicated on a “contract” to provide future services. If conditions spelled out in the deed or in a “bill of sale” or other contemporaneous document are breached, the grantee’s title may be challenged. The Statute of Frauds prevents a challenge to the sale of real estate if the terms are not written.[xvii] Whether the written contract/deed reflects the entire agreement of the parties is a question of fact for the court.[xviii] Evidence of the negotiations is usually admissible to show the extent to which the deed was undertaken as an integration of the parties understanding.[xix] If the Court determines that the writing was not adopted as a completely integrated agreement of the parties, additional consistent terms will be admissible.[xx] Often, however, such conditions are implicit so that suits must be based on an equitable basis such as “unjust enrichment.”
C. Tools for Gathering Information
While attorneys approach cases in different ways, two tools are particularly helpful in conducting preliminary investigation of these cases. They are created at the outset and should be expanded and reinforced throughout the duration of the case. These tools will help uncover the strength of a client’s case and, more importantly, highlight any areas of weakness that must be overcome for successful settlement or trial.
2. Chart of the Elements
Once the bases for your client’s claims are determined, a chart of the elements required to prove each claim will help organize testimony, documents, questions for discovery, and further investigation. An initial investigation should list potential witnesses and documentary evidence that would help prove (or disprove) each required element. This simple technique highlights the areas of weakness of the case and focuses discovery efforts where appropriate to obtain material evidence sufficient to satisfy all of the legal requirements.
A chart based on the necessary elements of proof also serves as preliminary preparation for dispositive motions such as dismissal based on the Statute of Limitations, Summary Judgment, or Motions to Strike, as well as for an Offer of Proof which might later be required for either a pre-trial conference or for a structured mediation. For example, a claim filed after the Statute of Limitations had expired may withstand dismissal if the client can prove that the disputed transfer was not discovered until much later due to the fraud of the defendant.[xxiii] Charts also facilitate opposition to the granting of Summary Judgment by defining material facts that are in dispute. A comprehensive chart can become quite complex because it will indicate not only what the attorney’s investigation has uncovered, but also the allegations and evidence of the opponents. Creating such a chart as part of the pre-filing investigation will ensure that the opponent has no basis to file a Motion to Strike for failure to plead with particularity, as is typically required for counts of fraud and undue influence.[xxiv]
II. RETAINERS AND RELATED ISSUES
Litigating on behalf of elders who have been financially abused by family or friends poses significant challenges that should be considered prior to entering into a retainer agreement. There is a number of options that can be tailored to particular circumstances.
Contingency Fee Agreements
Contingency fee cases are considered ethical by the Rules of Professional Conduct and in general practice.[xxv] It is not uncommon for an attorney and client to reach an agreement that the attorney will recoup whatever costs of litigation she advances plus one-third of any successful judgment or settlement, when it is collected, as long as there is some risk that plaintiff will not recover. In cases of financial elder abuse, which are primarily fact-based and unusually challenging, it may not be in the interest of the attorney to enter into a contingency fee agreement unless the financial stakes are very high. In addition, clients are more invested in their own cases and more likely to be reasonable in settlement discussions when they pay fees throughout the course of litigation.
Hourly Fee Agreements
An hourly agreement may be desirable to attorneys in such cases because they will be compensated for their time regardless of the outcome. The irony of elder financial abuse is that frequently the clients have lost so much of their savings that they cannot afford to pay hourly litigation fees to recover what they lost. Although it may not be feasible for the elder to enter into an hourly retainer, it is crucial that they make at least a token contribution.
Some agreements combine elements of hourly and contingent fees, usually by referring to a “success factor” which would trigger additional compensation to the attorney. For example, the attorney might bill the client at one-half her regular hourly rate, but be compensated at triple the hourly compensation if the representation achieved, either by settlement or trial, “success.” The combined hourly and incentive compensation would not exceed 1/3 of the judgment in any event. In theory, such hybrid agreements overcome one of the great problems of contingent fee agreements (the client, by paying for services, is more likely to use them carefully), reduce what the client is obliged to pay out-of-pocket, yet offer the attorney an incentive to maximize recovery. Contingent fee and hybrid agreements become more difficult to implement, however, when the goal is simply to restore an illiquid asset to the elder. If the client is then unwilling to sell or finance the asset, the lawyer may be forced to sue his former client for a well-earned fee. Retainer agreements might require a successful plaintiff to sell or mortgage a recovered property.
Agreement for Preliminary Investigation Only
Recently, we began to enter into agreements for a preliminary investigation only. If the client is interested in pursuing the case at the conclusion of the preliminary investigation, we may enter a new agreement based on what we learn. Neither the client nor the firm is obligated to enter a new agreement, however. This protects the firm in situations in which the client exaggerates, misrepresents, or misperceives material facts.
It may be desirable to include a requirement in retainer agreements that clients in such cases immediately appoint an agent under a durable power of attorney and specifically provide in her Will that her executor will have the authority to commence or continue such legal action. Failure to provide for such transitions in management in the event that the client becomes incapacitated or dies can significantly increase costs and delays of litigation.
III. DISCOVERY STRATEGIES
Litigation of financial abuse of elders raises some unique discovery issues due to the health and financial issues that are common among these clients. Elder clients are often more fragile, and issues of their physical and mental health and economic situation may influence discovery decisions.
Waivers and Releases The most notable discovery issue in this type of litigation is the confidentiality of medical records and privileged discussions between an attorney and the elder client. To avoid later delays, lawyers should obtain from the client at the earliest opportunity a written waiver of the attorney/client privilege and an authorization to release medical records. If the elder is not able to issue these due to incapacity or death, they may be obtained from the elder’s agent, the personal representative of the elder’s estate, or, as a last resort, the court.
Preservation of Testimony The harsh reality of representing elders is the need to preserve testimony in the event of death or incapacity. A videotaped deposition may be considered if the elder’s resources are sufficient, as an Affidavit is likely to be challenged as inadmissible hearsay. If an Affidavit was made for a purpose other than perpetuating testimony, however, it may be admissible. In a case in which we believe the drafting attorney lied under oath as to acts which included failing to meet or communicate with clients, failing to ensure their competence or intent, and falsely notarizing and witnessing documents, we obtained an affidavit from a 93-year-old client (along with corroborating affidavits) to submit to the Board of Bar Overseers. The client died before we could schedule a videotaped deposition. Her Affidavit would, nevertheless, be admissible under M.G.L. 233, § 65, which provides:
“In any action or other civil judicial proceeding, a declaration of a deceased person shall not be inadmissible in evidence as hearsay . . . if the court finds that it was made in good faith and upon the personal knowledge of the declarant.”While statements made for the purpose of perpetuating testimony are not made admissible by this section,[xxvi] this affidavit was not collected for that purpose. These cases are challenging enough without losing the testimony of the principal witness, so preservation of testimony should be a priority early in the case.
Financial Limitations The financial limitations of the client may cause greater reliance on paper discovery such as Requests for Production of Documents, Interrogatories, and Requests for Admissions. While depositions provide an opportunity to view the demeanor of witnesses during testimony and allow spontaneous questioning based on previous answers, the expense may be prohibitive in some cases. The facts of the case will dictate whether a deposition is a necessary expense.
Ethical Issues Many objectionable transfers were made with the assistance of an attorney who may negligently or otherwise have contributed to the exploitation.[xxvii] For example, an attorney claiming to concentrate on estate planning and elder law revised an elderly couple’s bypass trusts to pass assets directly to the only child of one of the spouses. He admitted in discovery that the child had contacted him and that he conducted an initial meeting with her to determine the couple’s desire to change their estate plan so that the wife would inherit nothing from her husband. The documents he completed before meeting with the couple essentially disinherited the wife. The attorney later wrote to a company managing an annuity stating that he “represented the husband, wife and daughter.” Pursuant to the attorney’s request, the company shifted income from the wife to her step-daughter. The attorney also admitted at deposition that he did not counsel the wife on her rights to a statutory share of her husband’s estate or to obtain independent legal counsel, in his latest role representing the step-daughter in probating her father’s estate.
In addition to standard money damages, such litigation is often begun in order to obtain equitable remedies such as rescinding a deed, gaining entry to a property, or obtaining an accounting of funds managed by a wayward fiduciary. A thorough review of the options should be conducted before filing a complaint.
Statutory Protections for Victims of Elder Abuse and Exploitation
Recognizing the difficulties presented by such cases, some states have enacted special statutes to assist victims of elder abuse and exploitation. One of the more prominent of these is the California Elder and Dependent Adult Civil Protection Act, which establishes a civil remedy for physical abuse, neglect, and fiduciary abuse and authorizes the award of attorney’s fees and costs and, in some circumstances, punitive damages.[xxviii] Illinois also protects elders by authorizing treble damages for elderly or disabled victims of financial exploitation when the exploiter is “criminally charged and fails or refuses to return the victim’s property following demand by the victim or the victim’s legal representative.”[xxix] Other states have statutorily added protection for elders by creating a presumption of undue influence for certain transactions. For example, a “transfer of real estate or major transfer of personal property or money for less than full consideration by an elderly person who is dependent on others to a person with whom the elderly dependent person has a confidential or fiduciary relationship is presumed to be the result of undue influence under Maine law, unless the elder was represented by independent counsel.[xxx] Initial research should determine if your state provides any specific added protections to victims of elder abuse and exploitation.[xxxi]
Temporary orders are often needed to secure the property, avoiding the necessity of a second lawsuit to enforce payment of a favorable judgment. In most cases it may be necessary to file a Verified Complaint, signed by both the client and attorney, in order to obtain temporary relief such as Temporary Restraining Orders, memoranda of lis pendens, attachments, or other remedies.[xxxii] A memorandum of lis pendens is typically granted if the plaintiff shows that a claim has been filed and that the property is subject to the dispute, with no analysis of the quality of the claim. There is a much higher burden to obtain injunctive relief, however. In order to obtain injunctive relief in Massachusetts, for example, moving parties must establish that (1) they have a reasonable likelihood of success on the merits, (2) no adequate remedy at law will protect them from irreparable harm if an injunction is not granted, (3) the harm they will suffer if the injunction is not granted outweighs the injury the defendant will suffer if the injunction is granted.[xxxiii]
Other remedies that should be considered when initiating such litigation include the availability of consumer protection statutes and punitive damages. While most states have enacted consumer protection statutes, the detailed provisions vary state to state.[xxxiv] Consumer protection statutes provide a cause of action against individuals and companies that employ unfair or deceptive business practices and may strengthen the client’s bargaining position because these statutes usually provide for multiple damages and an award of attorney’s fees and costs.[xxxv] Consumer protection statutes are properly applied to cases in which the drafting attorney facilitated financial abuse by failing to meet with the elder, failing to confirm the elder’s intent, and failing to ensure that the elder was competent to make the disputed transfer because this conduct violates the code of professional ethics of attorneys and is a breach of the “attorney-client” relationship.[xxxvi] Attorneys are bound by their state’s rules of ethics, although most states have adopted most or all of the American Bar Association’s Model Rules.[xxxvii] The conduct of others who may be the target of such suits (real estate brokers, insurance salespersons, financial advisors, accountants, for example) is also governed by professional standards and subject to professional discipline.
Although not available in every state, punitive damages should be considered when allowed.[xxxviii] After much debate over the constitutionality of punitive damages that were deemed “excessive,” the Supreme Court recently imposed limitations to punitive damages. In State Farm Mutual Automobile Insurance Co. v. Campbell[xxxix] the Supreme Court overturned a $145 million punitive damages award against an insurer because the ratio of punitive damages to compensatory was too high (145:1). The court held that the ratio should almost never exceed single digits, and in many cases punitive damages should not exceed compensatory damages at all.[xl] While the State Farm decision’s only direct impact is on federal courts, it is part of a nationwide trend to scale back punitive damages.
V. CONCLUSIONWhile elder law attorneys are likely to confront an increasing number of cases in which elders have imprudently deeded over their homes, it is far less certain whether elder law attorneys, most of whom avoid litigation, will meet the demand. To do so, they will have to recognize the special characteristics of such litigation.
First, elderly clients are statistically more likely to die during prolonged litigation. In three of the cases referred to in the introduction to this article our original client died before the case was resolved. We preserved the testimony of one of those clients, in a videotaped deposition, which helped achieve a settlement. In the other two cases the client died, one even before signing a retainer and the other in the midst of discovery. The personal representative in one of those cases decided not to pursue the claim, while the personal representative in the other case decided to settle the claim rather than incur further legal expenses.
Second, elderly clients are more likely to be frail, encounter problems with hearing and speaking, and suffer from memory deficits. The prudent lawyer not only preserves her primary witness’s testimony but may also want to accelerate investigation and obtain an early trial date. At the time a retainer is signed it may be wise to couple it with a limited power of attorney, which would transfer decision-making regarding the case to a trusted friend or relative should the plaintiff no longer be capable of making such judgments. This is significantly superior to asking the court to appoint a guardian ad litem to evaluate settlement offers.
Third, while publicly supported agencies and overworked legal aid organizations can do significant work on such cases their capacity is far less than what is needed. The question becomes how can the for-profit bar represent the great number of swindled elders, without incurring financial losses, when clients may be unable to finance litigation due to the very abuse that makes the litigation necessary. In many cases, it may be useful to offer special retainers, which only cover the cost of a preliminary investigation.
Finally, because of the difficulty in litigating such claims, elder law attorneys have a moral obligation to advocate, outside the courts, for measures to protect elders. Special laws (allowing for the recovery of attorney fees, punitive damages, and granting speedy trials) are needed to increase the likelihood that highly qualified attorneys can serve such clients. Protective services agencies need support to investigate claims and attempt mediation. Constraints on the authorities of agents may be needed. Most of all, we have a duty to ensure that the deeds we draft are properly executed by clients who fully understand their consequences.
[i] Financial exploitation of elders takes two distinct forms. On the one hand, commercial marketing of insurance products, investments, lotteries, and consumer items (whether sold in stores or advertised in various media) is increasingly regulated by state attorneys general as a special branch of consumer protection. The focus of this article is exploitation by friends and families.
[ii]NationalCenter on Elder Abuse, NATIONAL ELDER ABUSE INCIDENCE STUDY (“NEAIS”) (1998).
[iii]NationalCenter on Elder Abuse, “A Response to the Abuse of Vulnerable Adults: The 2000 Survey of State Adult Protective Services.” (2002).
[iv]NationalCenter on Elder Abuse, NATIONAL ELDER ABUSE INCIDENCE STUDY (“NEAIS”) (1998).
[v] Id at 1-9.
[vi] See Lori Stiegel 2000. “The Changing Role of the Courts in Elder-Abuse Cases.” Generations. (Summer 2000.)
[vii] Lori Stiegel 2000 at 60.
[ix] For a discussion of reported cases of elder financial abuse, see Marianne M. Jennings 2000. “From the Courts.” Real Estate Law Journal. Winter 2000. (discussing cases in which deeds were challenged on the basis of the grantor’s lack of capacity, including: In re Estate of Arthur Green, 755 So. 2d 1054 (Miss. 2000); Robertson v. Robertson, 15 S.W.3d 407 (Mo. App. 2000); and, Guin v. Guin, 753 So.2d 1164 (Ala. 1999).
[x] Farnum v. Silvano, III,27 Mass. App. Ct. 536 (1989).
[xi] Citing Sutcliffe v. Heatley, 232Mass. 231, 232-233, (1919).
[xii] Neil v. Brackett, 234Mass. 367 (1920).
[xiii] Most states require deeds to be “acknowledged” by the grantors before a notary public. See, Maine Title 33: Property, Ch. 7, Conveyance of Real Estate, subch. 2, recording, § 203. “Absent an allegation of fraud or forgery, a recorded acknowledgement that is complete and proper on its face is prima facie evidence of the due execution of the [mortgage].” Emphasis added. Messinger, 281 B.R. 573, at 575 citing Abraham v. Mihalich, 479 A.2d 601 (1984): “Where the grantors concede that they have signed the deed and the deed has been delivered, even a defective acknowledgement would not be a basis for invalidating the recordation.” Cf Rice, 133 B.R. 722 (1991) that recording does not cure “an entirely bogus acknowledgement” (which was not signed before the notary). See also, Massachusetts Practice, Real Estate Law, Volume 28, Chapter 4, Types and Elements of Deeds.
[xiv] See Massachusetts G.L. c. 267, § 1, for example.
[xv] McCarthy v. Boston Elevated Railway Co., 223 Mass. 568, 573 (1916); Strother v. Shain, 332Mass. 435 (1948).
[xvi] “Much Ado About Notarizing,” Constance V.Vecchione,Massachusetts Board of Bar Overseers, Office of Bar Counsel, 2001.
[xvii] State Statute of Frauds laws are based on the Uniform Commercial Code, which requires certain types of contracts to be in writing to be enforceable. See, for example, M.G.L. c. 259, § 1 (Massachusetts); Cal.Civ.Code § 1624 (California).
[xviii] Wang Labs, Inc. V. Dockter Pet Centers, Inc. ante, 213, 219 (1981).
[xix] Antonellis v. Northgate Constr. Corp.,326Mass. 847, 849 (1973).
[xx] Kelly v. Arnold, 326Mass. 611, 614-615 (1950).
[xxi] The notarizing attorney, who had also drafted the deed, testified at deposition that the signing took place at 4:00 p.m. in the donor’s hospital room. A review of the medical records revealed that at that precise time, the patient received a significant dosage of Demerol.
[xxii] In addition to general patterns of heightened and impaired cognition (the “sundowning” phenomenon, for example), an individual’s capacity can be directly, and predictably, affected by medication, food intake, weather conditions, and other factors which can be made part of the timeline. “Although the lawyer has the responsibility to determine whether the client is competent, the actual decision may be difficult to make. There are varying degrees of capacity, and the client may, for example, be able to make decisions about routine financial matters but not about major transactions. Capacity may be intermittent, as in the case of the client who has lucid days and bad days, or an Alzheimer’s victim who sundowns, that is, who is alert and has capacity in the morning, but who is confused later in the day. Competence or capacity can also be relative to the circumstances, an insight acknowledged in the various legal standards for capacity to contract, testamentary capacity, and competency to stand trial.” J. Regan, M. Gilfix, and R. Morgan, TAX, ESTATE and FINANCIAL PLANNING for the ELDERLY, (Matthew Bender 2002), § 1.06(4).
[xxiii] Under Massachusetts law, an action to recover property obtained by fraud or undue influence is governed by the three-year statute of limitations for tort actions. See Town of Nantucket v. Beinecke, 379 Mass. 345, 349 (1979); “M.G.L.c. 260 § 2A. The plaintiff has the burden of proving facts that will take the case out of the statute of limitations. Friedman v. Jablonski, 371 Mass. 482, 487 (1976). A defendant in such a case should also consider moving to dismiss based on the Doctrine of Laches if he has been prejudiced (by the death of the elder, the principal witness, for example) due to the plaintiff’s delay in filing once the plaintiff had actual knowledge of the transfer. Creswill v. Grand Lodge Knights of Pythias of Georgia, 225U.S. 246, 247 (1912).
[xxiv] InMassachusetts, this can be found at Mass.R.Civ.P. 9(b).
[xxv] THIRD RESTATEMENT OF THE LAW GOVERNING LAWYERS, § 35 states that, except for criminal and divorce litigation, “A lawyer may contract with a client for a fee the size or payment of which is contingent on the outcome of the matter … [and] unless the contract construed in the circumstances indicates otherwise, when a lawyer has contracted for a contingent fee, the lawyer is entitled to receive the specified fee only when and to the extent the client receives payment.” The ”Rules of Professional Conduct” also permit contingent fees. See Rule 1.5 Cf. In re Matter of Gerard, 634 N.E.2d 51 (Ind. 1994) which declared that “the enormity of Respondent’s fee in relation to the amount of service is fraudulent.”
[xxvi] Anselmo v. Reback, 400 Mass 865 (1987).
[xxvii] What if you obtain evidence of attorney wrongdoing, such as falsifying notarization, apparently representing two or more individuals whose interests obviously conflict, giving testimony that appears to be false, etc? Some states have adopted the sterner Rule 8.3 of Professional Conduct, which makes reporting mandatory if an attorney has obtained credible evidence (such as sworn affidavits) that another attorney violated the Code.
[xxviii] See Lori Stiegel 2000. “The Changing Role of the Courts in Elder-Abuse Cases.” Generations. Summer 2000. This article discusses the special challenges posed by elder abuse and exploitation cases and some of the positive changes that have been made by the courts and the legislature in response.
[xxix] Id at 62.
[xxxi] See also Terrie Lewis 2001. “Fifty Ways to Exploit Your Grandmother: The Status of Financial Abuse of the Elderly in Minnesota.” William Mitchell Law Review. (Fall 2001.) (Discussion of specialized responses to elder abuse and exploitation inMinnesota and other states.) Also discussed isMassachusetts’ Bank Reporting Project that provides financial institutions and their employees with protocol to follow when they suspect financial abuse, so that they can intervene in a respectful manner without intruding on the senior citizen’s autonomy. Oregon’s legislation allowing an elderly person who suffers an injury due to financial abuse to bring an action against someone who has caused the abuse, permitted the abuse, or should have known of the abuse is also discussed. This legislation allows the elder to recover economic and non-economic damages, attorney’s fees, and reasonable fees for the services of a conservator and guardian ad litem. Or. Rev. Stat. § 124.100.
[xxxii] These temporary remedies are not the same. A lis pendens, for example, does not prevent sale of the property to a willing buyer. Once recorded it serves as notice to potential buyers that the property is in dispute and that the plaintiff, if successful, will have a superior claim to the property. Also, although a lis pendens does not prevent the sale of the property, it makes it much more difficult because most title insurer’s are not willing to take such a risk.
[xxxiii] Packaging Industry Group, Inc. v. Cheney, 380Mass. 609, 616-617 (1980).
[xxxiv] For an overview of the consumer protection statutes in all 50 states, see National Consumer Law Center, Unfair and Deceptive Acts and Practices (2001).
[xxxv]Massachusetts provides for up to treble damages if successful so long as statutory requirements have been met. M.G.L. c. 93A requires a consumer to send a “demand letter” to the defendant, clearly setting forth the specific claim of unfair and deceptive practices and the requested remedy. The defendant must make a reasonable offer of settlement within 30 days or may be subject to up to treble damages upon judgment.
[xxxvi] The Massachusetts Supreme Judicial Court held that the practice of law constitutes trade or commerce and that Chapter 93A, therefore, applies to attorneys. See Guenard v. Burke, 387 Mass. 802 (1982). See also, Brown v. Gerstein, 17Mass. App. 558, 5700571 (1984). Consumer protection statutes may also be applied against other professionals that facilitate exploitation, such as financial advisors and real estate brokers.
[xxxvii]Massachusetts attorneys are governed by Massachusetts Rules of Professional Conduct. See S.J.C. Rule 3:07, Rules of Prof. Conduct and Comments, Rule 1.4 (Communication); See S.J.C. Rule 3:07, Rules of Prof. Conduct and Comments, Rule 1.6 (Confidentiality of Information); See S.J.C. Rule 3:07, Rules of Prof. Conduct and Comments, Rule 1.7 (Conflict of Interest; General Rule); See S.J.C. Rule 3:07, Rules of Prof. Conduct and Comments, Rule 1.14 (Client Under a Disability).
[xxxviii] Punitive damages are not available for common law fraud claims in Massachusetts. SeeComputer Sys. Eng’g, Inc. v. Qantel Corp., 740 F.2d 59, 62 (1st Cir. 1984). Some states make punitive damages available as part of their statutory response to elder abuse. See note 4 supra for discussion of some specific state responses.
[xxxix] State Farm Mutual Automobile Co. v. Campbel et al, U.S. Supreme Court No. 01-1289,decided April 7, 2003.
[xl] See Tony Mauro, “How big is too big? High court sets a limit on punitive damages.”New Jersey Law Journal, (April 14, 2003.)
The call from the facility to inform me that Howard had passed away triggered a variety of emotions in me, but not for the reasons you might expect. Howard had no family and had not executed a Durable Power of Attorney (DPOA) or Health Care Proxy (HC) to appoint someone to make decisions on his behalf. So, when Howard was suffering from dementia and no longer able to live alone in his apartment, Elder Protective Services asked me to serve as his court-appointed guardian. As Howard’s guardian, I became responsible to make all medical decisions on his behalf, secure appropriate housing and services, and to manage his finances.
I called my colleague Kate to incorporate her geriatric care management services into Howard’s plan. Kate and I moved Howard to an assisted living facility and put services in place to allow him to retain as much independence as possible. Even after the transition to a nursing home became necessary, we maintained companion services to provide Howard with a few hours out of the facility each week.
Kate and I have worked as a team to advocate for all of Howard’s needs, and although his dementia advanced he always knew who we were. In fact, Howard once informed the nursing home staff that he was not happy about something and assured them that “his people” were going to look into it. We were proud to serve as “Howard’s people” and so honored that he realized our role until the day he died. Although we were not “family,” we treated Howard with the respect and dignity we would demand for our own parents.
As my week went on, I was consulted by five siblings regarding their father, Bob, who they believe is being financially exploited by their sibling, Jack. Jack, as agent in the HCP and DPOA, is trying to place Bob in a nursing home contrary to Bob’s wishes and despite the fact that Bob is doing well at home with significant assistance. The reality is that Bob’s care is expensive and funds spent on his care now will reduce his children’s future inheritance. As I listen to this family’s story, it appears that Jack is not acting in his father’s best interest, not upholding his father’s wishes to remain at home and is motivated solely by his own financial gain.
Apparently, Bob appointed Jack over the objections of all the other children simply because he is the oldest. Jack does not get along with any of his siblings. He has had trouble managing his own finances and filed for bankruptcy in the past. Jack was simply not an appropriate choice to serve as Bob’s agent, and although Bob realized that when he executed his documents, he did not want to hurt Jack’s feelings.
To make matters worse, Bob took steps to protect his assets from the cost of nursing home care by conveying his home and assets to a trust. Yes, you guessed it – Jack is the trustee. Bob is now at risk of being moved to a nursing home against his will, despite the availability of sufficient funds to provide the necessary care in the home.
The cases of Howard and Bob illustrate that poor planning is worse than no planning at all. Make no mistake – the message here is not that planning is not important. It is critical to understand, however, that the primary purpose of planning and protecting assets is to ensure your own future care and security. If your intent is to remain in your home as long as possible, then your planning should reflect that.
You must appoint agents and trustees in a manner that respects your wishes, protects your security and does not leave you vulnerable in the event that relationships go bad in the future.
Howard did no planning at all, but as his Court-appointed guardian I had a duty to use his funds for his benefit and to keep him in the least-restrictive environment as long as possible. In contrast, Bob’s poor planning left him unprotected because in his effort to “protect” assets, he gave up all control over his future security.
If you do not want to find yourself in Bob’s situation, work with an elder law attorney to ensure that your documents include the necessary protective provisions and be willing to make the difficult decisions that are necessary to appoint agents who will hold your wishes and best interests paramount to their own.
Tags: asset protection, elder law, Legal Check Up, Legal Documents, Estate Planning, disability planning, Elder Financial Abuse, lack of capacity, undue influence, Durable Power of Attorney, Health Care Proxy, Last Will & Testament, duress
Most people have conducted some level of estate planning at some point in their lives. Estate planning typically involves a plan for distribution of one’s assets during life and at death. Estate planning for elders is a bit more complicated due to the natural changes that aging brings, and requires consideration of potential changes in mental or physical condition. In addition to a Will, effective planning requires that you appoint someone to act on your behalf if you become incapacitated. This is achieved with a Durable Power of Attorney (for finances) and a Health Care Proxy (for health care). These documents grant your agent the authority to make decisions on your behalf if you are ever unable to speak for yourself. It is important that you execute these important documents while you are competent to ensure that your wishes are upheld. These documents may also help to avoid the necessity for costly guardianship proceedings in the probate court in the future if you become incapacitated. Following is a brief summary of these essential documents.
DURABLE POWER OF ATTORNEY
A Durable Power of Attorney grants your Agent the authority to act on your behalf in financial and related matters. A Power of Attorney is not sufficient for elder law purposes unless it is Durable, which means it remains effective after the principal becomes incapacitated. The Durable Power of Attorney must be comprehensive, enumerating many specific powers. (If you have a Durable Power of Attorney that is only a page or two long, it is probably not sufficient for many common issues elders face.) There are specific clauses that must be included in order to be effective for many common situations that elders face. A qualified Elder Law Attorney will be able to discuss these with you and ensure that your Durable Power of Attorney will be honored by third parties (banks, brokerage companies, the Internal Revenue Service, etc.).
The most common Durable Powers of Attorney grant the Agent the right to act immediately, but they can also be drafted to grant “springing” powers to your Agent. A Durable Power of Attorney with springing powers will grant your Agent authority to act only after one or two physicians certify your inability to act on your own behalf. Unfortunately, third parties are often more cautious in dealing with documents with springing powers, so your Agent may have difficulty acting on your behalf with a springing Durable Power of Attorney.
It is important that you trust your Agent completely, and you should understand that your Agent has a legal duty to act in your best interests. If you are uncomfortable with granting immediate authority, however, there is another option. You may execute a Durable Power of Attorney that grants your Agent immediate powers to act on your behalf, but have your attorney hold the documents in “escrow” until your Agent presents proof of your incapacity. This avoids the heightened scrutiny from banks and other institutions, but affords you the added comfort and security you desire.
HEALTH CARE PROXY
A Health Care Proxy grants your Agent authority to make health care decisions on your behalf, but only after you have been deemed incapable of making or communicating decisions for yourself. It is a springing power by definition. It is important that you discuss your wishes with your Agent so that they may communicate your wishes if you are not able to. Unlike a Durable Power of Attorney, your health care Agent should make decisions that you would make if you were able, rather than decisions that he or she thinks are best. Your Agent can only fulfill this duty, however, if you take the time to inform them of your wishes.
In addition, because your Health Care Proxy is a “springing” document, your document should include a clause granting your Agent immediate authority to act on your behalf under HIPAA (Health Insurance Portability and Accountability Act). HIPAA was enacted to give individuals greater protection over their medical records, but there may be circumstances in which you need your Agent to assist you regarding your medical records before your Health Care Proxy springs into effect.
Although Living Wills are not enforceable in Massachusetts, it is still recommended that you execute one as a written expression of your wishes regarding artificial feeding or respiration, invasive surgery, etc. If there is ever a dispute about your care in the future, the Court can rely on your Living Will as evidence of what you would want. (Remember the recent case of Terry Schiavo … her husband and her parents disagreed as to whether she would want to be artificially sustained. If she had executed a Living Will, the court could have relied on it to determine what she would have wanted.)
LAST WILL & TESTAMENT
Your Will designates who the beneficiaries of your estate will be. If you and your spouse have “Sweetheart” Wills (each of you leaves everything to your beloved spouse …), consider drafting new Wills which could protect your assets if one of you requires nursing home care. There are strategies you can employ that will ensure that your spouse benefits from your estate if you predecease him or her, without leaving your estate vulnerable to the cost of nursing home care. In addition, if you have a disabled child you will want to make specific provisions in your Will to provide for that child without causing a disqualification from any public benefits he or she is entitled to.
So, dust off that old estate plan and give it a fresh look since your situation has probably changed significantly since you last reviewed it. If you have never done any estate planning documents, now is the time. Take greater control of your future -- call us at 781-681-6638 to schedule a Legal Check Up.
Tags: asset protection, elder law, Legal Check Up, Legal Documents, Estate Planning, disability planning, lack of capacity, Durable Power of Attorney, Living Wills, Health Care Proxy, Last Will & Testament