The Dark Side Of Health Care Powers Of Attorney – Part 4

By Cary A. Lind

Scenerio 2.

Richard and Mary set up a comprehensive estate plan. They executed wills, a family trust, and powers of attorney for health care and property. The POAs named their son, Allen, as primary agent for both property and health care, and Allen was also the successor trustee of the trust.

The following year, the health of both Mary and Richard was declining seriously. Richard had terminal cancer and was growing less and less capable of taking care of his own needs, let alone the family’s financial matters. Mary had Alzheimer’s disease, and her mental condition was worsening. Mary and Richard’s three children, Allen, Lucy, and Linda, made arrangements for at least one of them or their spouses to be present at all times with Richard and Mary to take care of their needs and to protect them from making mistakes connected with their ailments. Contrary to that arrangement, however, Lucy moved in with Richard and Mary on an almost full-time basis and took over handling their finances. Lucy took Richard and Mary to their attorney, who refused to change any of their estate planning documents. Lucy then took them to a different attorney and arranged for them to execute new powers of attorney naming Lucy as primary agent and an amendment to the living trust naming Lucy as the first successor trustee. Prior to that date, Allen had been seeing to payment of all of the family bills and had actively been attempting to employ independent caretakers for Mary and Richard.

Richard died two weeks later. After Richard’s funeral, Allen asked Lucy for information on several checks and other financial matters. Lucy then informed Allen that she was the first agent for health care and property for Mary. When Lucy failed to properly furnish the requested information to Allen, he retained counsel and filed for guardianship. Allen also moved to invalidate Lucy’s POAs and the amendment to the trust based upon the lack of capacity of both Richard and Mary at the time. In response, Lucy moved to dismiss the guardianship based upon the new POAs.

Over the next several months, the parties carried on protracted settlement discussions while trying to take proper care of Mary at the same time. There was almost constant turmoil. Lucy stayed with Mary most of the time but often brought her dog along with her. The dog terrorized and traumatized Mary’s cat. Sometimes Lucy took Mary to her own home, leaving Allen and Linda not knowing where Mary was or whether she would be home or not. A number of full-time caretakers were interviewed and some were hired, but none of them stayed for any significant period of time, often because of Lucy’s interfering with their duties. Items of personal property including items of Mary’s clothing and Richard’s gun disappeared from Mary’s house. Back and forth negotiations focused on these and other minutiae.

The parties ultimately negotiated and executed an extremely detailed settlement agreement. When it was presented to the court, however, the judge refused to accept it, because it required the court to supervise minute details that were well beyond the scope of usual court oversight. The parties resumed negotiations and finally reached a modified agreement that was acceptable to the court. An independent care manager was appointed guardian of Mary’s person, and Allen was appointed plenary guardian of her estate.

Upon later motion and agreement of all three children, all prior POAs were invalidated, and Allen was restored as the successor trustee of the trust. It then took almost three years after the date of the appointments for Lucy to fully account and for the court to rule on her accounting as agent under the POAs, with an inordinate expenditure of fees and costs incurred in that process.

This case differs from the first scenario in that it did not involve a denial of visitation, but it did involve limiting of information and participation in Mary’s care. Allen did not want control just so that he could be in charge. He knew Lucy well and did not want her to be in control, because he knew that the situation then would end up in chaos. In fact, the settlement did not prevent Lucy from giving her input, and she could voice her opinions to Allen on financial matters and to the guardian of the person on personal matters.

Also in contrast to Lucy, Allen was very concerned about Mary’s expenses, and he could and would keep her costs and expenses limited. Lucy had already shown early on that she could not properly take care of Mary’s personal or financial matters.

Not all clients are willing to spend their own money to see that their parents are taken care of properly. Allen did so, and by his actions made sure that his own rational decisions would determine Mary’s care rather than Lucy’s erratic ones. The cost, however, was substantial – to Allen, Lucy, and Mary. Had the trust and prior POAs remained intact, no guardianship would have been necessary. Beyond Allen’s and Lucy’s individual expenditures, however, the remaining fees were paid from Mary’s funds. Thus, despite there being no change in the ultimate disposition of Mary’s assets or estate, changing only the agent and successor trustee cost the family as a whole tens of thousands of dollars.