Category: Lawsuits (Page 1 of 3)

Constructive Trusts – When Trust is Broken

September 29, 2023 / drussellcfp

Elder financial abuse is a distressing issue that affects vulnerable seniors, often leading to significant financial losses. In the realm of legal remedies, one powerful tool used to address such cases is the constructive trust. But what exactly is a constructive trust, and how does it work?

At its core, a constructive trust is a legal remedy aimed at correcting unjust enrichment and ensuring that property or assets are returned to their rightful owner. Unlike a traditional trust created by a formal legal agreement, a constructive trust arises by operation of law. It’s a flexible and equitable concept that courts employ when they find that someone has obtained property, assets, or benefits in an unfair or wrongful manner.

Constructive trusts are not exclusive to elder financial abuse cases; they can be applied in various situations where one party has benefited at the expense of another without a proper legal basis. For purposes of our discussion however, we’ll focus on their use in elder financial abuse situations.

When It’s Time for Dad (or Mom) to Give Up Driving

September 21, 2023 / drussellcfp

If our parents live long enough, there will be many conversations we’ll need to have with them that may make us very uncomfortable. One conversation that we all dread is discussing the possibility of our parent giving up driving. This sensitive topic can be challenging to broach, but it’s a crucial one for the safety and well-being of both our parent and others on the road. In this post, we’ll explore the reasons behind this necessary conversation, provide strategies for discussing it with your parent, and touch on the issue of liability exposure in certain situations.

Why Is This Conversation Necessary?

First and foremost, safety is the primary concern when it comes to aging parents and driving. As your parent gets older, their physical and cognitive abilities may decline, which can make them more susceptible to accidents. Slower reaction times, decreased vision, and other age-related changes can put them and others at risk on the road. According to the CDC, drivers aged 75 and older have the highest death toll in car accidents, primarily attributed to age-related factors such as diminished vision, cognitive decline, and physical changes. Furthermore, the death rate per thousand crashes is notably higher among drivers aged 70 and above when compared to middle-aged drivers, who fall in the 35-54 age range.

Indiana Case Highlights Family Tensions in Selecting Financial Caregivers.

March 27, 2023 / drussellcfp

Most people should be able to choose a loving and honoring adult child or family member as a financial caregiver. An Indiana case highlights the importance of integrity when making the choice.

In the case of Biggs vs Renner, Terri Renner and Sherry Biggs are siblings locked in a court battle over their mother’s care, with Terri claiming that Sherry abused her position as agent under her mother’s Power of Attorney, and used their mother’s funds for her own benefit. Court records would confirm Terri’s fears.

Sherry admitted to converting her mother’s accounts first to a joint account, and then to accounts only in her name. She offered a promissory note to court as evidence that she intended to pay the money back, but the the note was largely unenforceable due to her mother’s incapacity, and no payments had been made so far. In addition, Sherry allowed her daughter and husband to live rent-free in her mother’s home and paid several thousand dollars of improvements from her mother’s accounts that did not directly benefit her mother.

Terri sought a court’s intervention to remove her sister as attorney-in-fact, and to insert a disinterested third party as guardian of their mother’s estate. The court granted Terri’s petition, but Sherry objected on appeal.

A Power of Attorney is a legal arrangement whereby one person grants authority (let’s call that person the grantor) to another person to act in their behalf as attorney-in-fact, or agent while they (the grantor) are alive but unable to act for themselves. Acting as agent under a power of attorney is a fiduciary responsibility that obligates the financial caregiver to exercise the powers granted solely for the benefit of the grantor. A financial caregiver has to keep accurate records and is prohibited from using the property of the grantor for their own purposes. Being a financial caregiver is an honorable position when conducted honorably.

Why name an adult child as financial caregiver?

It is understandable that an older person would want to name an adult child as financial caregiver on their behalf. We want to believe our own children would act honorably on our behalf, or perhaps we have regrets about our own parenting and feel guilty if we do not atone ourselves by putting them in charge. Sometimes a parent will name an estranged child in hope that the trust shown by the parent will mend a broken relationship. Parents will often do whatever it takes to keep a child close to them. However, the selection of a financial caregiver should place emphasis on the dependability and the integrity of the individual over familial connections. This may require difficult decisions and may even alienate family members, but if early and intentional discussions on the subject can be held with the appropriate family members, perhaps these kinds of conflicts can be avoided.

Note: The information above is for general information only and should not be relied upon to make legal or financial decisions Advice as to the preparation and use of Powers of Attorney should only be provided by a qualified attorney licensed in your state.

IRA Funds Protected from the Claims of Guardian

August 24, 2022 / drussellcfp

A Florida Appeals court has ruled that a special appointed guardian does not have a claim for guardianship expenses against a deceased’s IRA accounts. ( Araguel v. Bryan, (Fla. Dist. Ct. App., No. 1D20-2789, August 17, 2022).

According to the court transcript, In October of 2019, Jane Kaigler Araguel became unable to care for herself. As a result, both of her children, Patrick J. Araguel, III, and Leslie Ladon Bryan, petitioned the trial court to become her emergency temporary guardian and the guardian of her person and property. Instead of appointing either of the children, the trial court appointed a professional emergency temporary guardian. In June of 2020, Ms. Araguel died.

After Mrs. A died, the trial court approved the Guardian’s motion to use her assets — including her IRAs — to pay for the guardian’s expenses, his attorney’s fees, and other costs associated with the guardianship.

IRA Creditor Protection

IRA’s are considered contract property, meaning that the owner of the IRA contracts with an IRA Custodian, to hold and invest the IRA funds, and to pay the funds directly to the contract’s named beneficiary(ies) upon the death of the IRA owner. As such, IRA assets do not pass through the owner’s Last Will and Testament, unless the owner’s estate is listed as the IRA beneficiary.

Protection of IRAs from the claims of creditors depends on the state of residence of the IRA owner. Most states have adopted some kind of creditor protection for IRA assets similar to the protection available for qualified retirement plans (ie. 401k, Profit Sharing, Pension Plans, etc.) that are governed by a Federal Law under the acronym ERISA. Simply stated, these assets are excluded from creditor claims such as bankruptcy and litigant claims, except for fraudulent transfers or a divorcing spouse. For a more detailed discussion about IRA creditor protection, click here.

Back to the Case

Mrs. A’s son appealed the trial court’s ruling, arguing that the IRA contracts were not subject to possession and management by the guardian upon Mrs. A’s death and that the death proceeds should have been immediately delivered over to the IRA beneficiaries. Furthermore, he argued that the IRA’s were protected from creditor claims under Florida law, and should therefore not be available to the Guardian for expenses incurred by the Guardian.

After a discussion of the specific meaning of words contained in the various Florida statutes, the court applied a “plain meaning of the terms ‘claim’ and ‘creditor,’ to rule in favor of the Plaintiff, Mrs. A’s son, and reversed the lower court’s decision. To read the full court transcript, click here.

Key Takeaways

A properly executed Durable Power of Attorney granted to one or both of Mrs. A’s sons could have avoided a court-appointed guardianship and allowed either or both of them to manage her assets upon her incapacity.
A revocable living trust that owned Mrs. A’s assets could have been used along with a Durable Power of Attorney to ensure continuity of the management of her financial affairs upon her incapacity.
IRA’s often represent a significant percentage of an individual’s estate, yet what happens to them upon the owner’s death is controlled by a single piece of paper on file with the IRA Custodian, not the owner’s Last Will and Testament. Beneficiary forms should be regularly reviewed.
Seek the advice of a qualified estate attorney when drafting any of these legal arrangements.

Nursing Home’s Arbitration Agreement Found ‘Unconscionable’

August 19, 2022 / drussellcfp

In 2021, The 8th U.S. Circuit Court of Appeals gave the green light to a federal regulation that allows nursing homes to use arbitration agreements with residents, but prevents them from making the agreements a prerequisite for admission. Several nursing homes had filed a lawsuit against the Centers for Medicare & Medicaid Services (CMS) challenging the new regulation. However, the court upheld the regulation, stating in its opinion that,

“In our view, it is reasonable for CMS to conclude that regulating the use of arbitration agreements in LTC facilities furthers the health, safety, and well-being of residents, particularly during the critical stage when a resident is first admitted to a facility,”

A recent case in Pennsylvania ruled that a nursing home’s arbitration agreement requiring a resident, “Fay V.” to pay half the costs of arbitration was “unconscionable.” Kohlman v. Grane Healthcare Company (Pa. Super 118, J-A25034-21, July 5, 2022). The ruling arose after the estate for Ms. V., who died three months after admission, filed a wrongful death lawsuit against the nursing home and other defendants.

According to the court transcripts, at the time of her admission, Fay V. was 67 years old and was suffering from a number of conditions, including congestive heart failure, diabetes, and pressure ulcers. The nursing home’s assessment of her condition at the time of her admission reported that “she was alert and oriented and had no memory problems or dementia, but that she was also suffering from anxiety and sometimes had trouble concentrating.”

It’s assessment also reported that ‘Fay’s vision was impaired to the point that even with glasses, she was ‘not able to see newspaper headlines but can identify objects.’ Yet upon her admission to Highland Park, she signed a number of documents, including a seven-page Nursing Services Agreement, a two-page Agreement to Arbitrate Disputes (the Arbitration Agreement), and a Resident Representative Agreement concerning the handling of her finances, in which Decedent designated herself as her representative.

In trial court, the court ruled the Arbitration Agreement as unconscionable (excessively unreasonable) because Decedent was in pain and was medicated at the time that she signed the Arbitration Agreement, Decedent was alone when she was asked to sign the Arbitration Agreement, had no opportunity to read the Arbitration Agreement and was not given a copy to review, and the provisions of the Arbitration Agreement were not fully read or explained to Decedent.

Source: Nursing Home’s Arbitration Agreement Found ‘Unconscionable’ — and Unenforceable — in Wrongful Death Suit

Daughter and partner try to force the sale of parent’s home.

August 18, 2022 / drussellcfp

A Massachusetts case illustrates the care that must be exercised when giving property interests to others and how those interests are titled. Donald and Suzanne Bragdon owned their home as Tenants by Entirety, a form of holding title available only to married individuals. They subsequently conveyed one-half of their home to their daughter, Laurie Durken, and her partner, Terrence McCarthy as co-joint tenants between all four of them, but also retained a life estate in the property. A retained life estate divides property ownership into two parts – one part for the living owner, and one part for the residual owner that only vests after the living owner’s death.

So, we have three forms of holding title going on here – a tenancy by entirety for half the house between Donald and Suzanne, a joint tenancy between all four individuals for the other half of the house, and a retained life estate in the entire property by Donald and Suzanne. Whether or not this was intentional planning I do not know, but it’s a recipe for disaster and it nearly occurred for Donald and Suzanne but for the protection against forced division that their various titling gave them.

Sadly, Laurie and Terrence sought to partition the property – essentially force the sale of it presumably because they needed the money. As you would expect, Donald and Suzanne objected to this idea of forcibly selling their home, and ultimately the conflict wound up in court. Laurie and Terrence argued that they owned a “possessory” right in the property regardless of the existence of the retained life estate that gave them the right to partition. Donald and Suzanne said the life estate superseded any right of possession Laurie and Terrence may have until after their deaths.

After examination of the deeds executed between the four, the courts agreed with Donald and Suzanne.

McCarthy and Durkan relinquished their prior possessory undivided one-half interest in the property by voluntarily signing onto the 2013 deed as grantors. Thus, the Bragdons are entitled to the benefit of the presumption that one who signs an instrument has read and understood its contents and has assented to its terms and legal effect. By the 2013 deed, the Bragdons hold a life estate in 100% of the property, and McCarthy and Durkan hold the remainder interest in 100% of the property. As McCarthy and Durkan do not hold any present possessory interest in the property, they are not entitled to partition. Their petition for partition must be dismissed.

Source: MCCARTHY vs. BRAGDON, MISC 20-000118

The lesson here is to seek competent legal advice when it comes to gifting property interests to 3rd parties and forms of holding title. A knowledgeable attorney will not only understand the operation of title law but can also give guidance and warnings about these kinds of what-if scenarios. In this case, an ounce of prevention would have been worth more than the pound of cure.

Click to read or download our Guide to Holding Title

NPR report shows nursing homes are suing family and relatives to collect debts.

August 8, 2022 / drussellcfp

Debt lawsuits — a byproduct of America’s medical debt crisis — can ensnare not only patients but also those who help sick and older people be admitted to nursing homes, a KHN-NPR investigation finds.

Source: Nursing homes use lawsuits to demand friends and family pay off medical debts : Shots – Health News : NPR

At 93, She Waged War on JPMorgan and Two Financial Advisors—Her Grandsons – Bloomberg

February 22, 2021 / drussellcfp

Beverley Schottenstein said two grandsons who managed her money at JPMorgan forged documents, ran up commissions with inappropriate trading and made her miss tens of millions of dollars in gains. So she decided to teach them all a lesson.

Source: At 93, She Waged War on JPMorgan and Two Financial Advisors—Her Grandsons – Bloomberg

Suspension imposed after appeals judge is accused of making himself a beneficiary of ex-client’s will

January 15, 2021 / drussellcfp

The Georgia Supreme Court has suspended a state appeals judge with pay during an ethics investigation.

The court suspended the judge, Christian Coomer, on Wednesday, Law360 reports.Coomer is accused of making himself a beneficiary and his wife the executor when drafting wills for a then-client, according to Law.com, Law360 and the Daily Tribune News.

Coomer is also accused of drafting an irrevocable living trust for the client that designated Coomer as the trustee and beneficiary, with the power to transfer funds to himself while the client was still alive, according to the Dec. 28 charges by the Georgia Judicial Qualifications Commission.

Source: Suspension imposed after appeals judge is accused of making himself a beneficiary of ex-client’s will

Can a Trustee be removed for being a Pain in the backside?

August 19, 2020 / drussellcfp

In this episode of the case files, I discuss the Texas case of Ramirez vs. Rodriguez, et. al., a case that involves four sibling co-trustees and the attempt by three of them to remove their trouble-making brother because of his hostile actions. Is being a royal pain in the derriere enough to remove a trustee from office.

This case reminds me of a scene from an episode of The Marvelous Mrs. Maisel, an Amazon original series that I have featured in the video.

Both this case and the scene from the series drive home the point that sometimes mixing family and money can be an explosive combination.

Choose your trustees carefully!