Digital Assets in the Estate and Elder Law Context – Evolving Law in a State of Uncertainty: Part II

In this post, I look particularly at a couple topics that touch on issues that relate to both the agent/conservator (while a person is still living) context (what we elder law types refer to as disabled or incapacitated) as well as the post-mortem (decedent’s estate) context.

Fall Colors at DBG

After reading last week’s post, one of my readers expressed to  me that he thought it was perhaps a bit too much of the big picture and didn’t see how the post hung together.  So, with that helpful observation in mind, I write today’s post with the intent for a slightly more concrete approach. . . .

Today I will focus on two major aspects of digital assets and our thinking about them.  First, I will look at the historical distinction between tangible versus intangible property and how digital assets extend this historical distinction in a new context.  Second, I will briefly examine the intersection of laws that apply to and are involved in our online activities, specifically I’ll take a look at which law applies and in what context-  the federal law and state law sources for internet regulation.

I recently spoke with a colleague who has been practicing for over forty years.  He has a tax law background and I am lucky to consider him part of my “brain trust.”  I liked his comments to me about digital assets, that they are basically just intangible property of different stripes and that this management issue for the decedent estate context can be managed in a way similar to the historical use of a “literary executor” that many writers have employed over the course of history.  I plan to revisit this prospect of “digital executor” in future posts.  Okay, I promised I was going to get more literal in this post, so here goes.

Black’s Law Dictionary (my embossed office copy was published in 1979) gives three useful definitions:

It defines “intangible asset” as: Such values as accrue to a going business as goodwill, trademarks, copyrights, franchises or the like.  A nonphysical, noncurrent asset which exists only in connection with something else, as the goodwill of a business.  For “intangible property” is the following: As used chiefly in the law of taxation, this term means such property as has no intrinsic and marketable value, but is merely the representative or evidence of value, such as certificates of stock, bonds, promissory notes, and franchises.  And so if you’re still scratching your head over this legal term for je ne sais quoi, Black’s offers this final shot under “intangibles:”  property that is a “right” rather than a physical object.  . . This sounds pretty well on point so far, doesn’t it?  So, let’s take a look at the second topic – the fuss about how to regulate the internet.

The Supremacy clause, conflict of laws, etc.  One astute commentator (Jim Lamm, who edits the very astute blog digital passing) has discussed the issue of federal preemption in the digital asset context. Federal preemption derives from the Supremacy Clause of the U.S. Constitution, which makes the U.S. Constitution the supreme law of the land.  Remember that under our federal system each state has its own constitution which is free to provide and protect rights more vigorously than the US Constitution, but below which no state constitution can fall, at the  …. There are two basic types of federal preemption, express and implied.  Express is explicit, when the federal law says “this is the law or federal regulatory regime that applies to a particular are of law.  I am thinking back to a case I was familiar with from federal court.  A good example of this is the Federal Insecticide and Fungicide and Rodenticide Act (FIFRA) which confers exclusive regulatory control of labeling of pesticides on the Environmental Protection Agency.  The states have no authority to regulate labeling under this type of federal preemption.

As you might imagine, even  express preemption gets an occasional workout in the U.S. Supreme Court.  So what about this issue in the context of digital assets?  There is arguably no  federal law that states it (the federal government) is the supreme regulatory scheme for the internet, even if there are in place a number of laws, including criminal statutes, regulating use of the internet.  Here is where we look at implied preemption, and the flavor of this type applicable to the digital assets and internet context is “occupation of the field” preemption, basically where the federal law takes up so much of the “regulatory room” if you will, that there is really nothing substantive left for the states to regulate.  It is a far stretch to consider the federal statutes concerning the use of the internet use as concerning a federal interest (as opposed to state interest) that is entrenched in a federal regulatory and enforcement scheme that is all-embracing in such a way as to leave no room for the individual  states to regulate in any meaningful way.

I will forge ahead with this discussion as it develops and as the Uniform Law Commissioners hone their model act.  This will potentially apply to our probate code in Colorado in several contexts  – for agents and other fiduciaries, for guardians and conservators, trustees, as well as personal representatives.  So, once again, we are left with more questions than answers.  This is one of the primary reasons I love practicing estate and elder law – it is constantly evolving.  So, if I might cast my net out on that far shore as I close this post, let me quote a favorite poet – Rainer Maria Rilke – who had a very insightful comment about the importance of questions in a human life:

..I would like to beg you dear Sir, as well as I can, to have patience with everything unresolved in your heart and to try to love the questions themselves as if they were locked rooms or books written in a very foreign language. Don’t search for the answers, which could not be given to you now, because you would not be able to live them. And the point is to live everything. Live the questions now. Perhaps then, someday far in the future, you will gradually, without even noticing it, live your way into the answer.

       Letters to a Young Poet , by Rainer Maria Rilke, 1903.

 ©Barbara Cashman 2013     www.DenverElderLaw.org

 

 

Digital Assets in the Estate and Elder Law Context – Evolving Law in a State of Uncertainty part I

October clouds in Deer Creek Canyon

 

In this first post, I will explore some of the unsettled and unsettling legal aspects of digital assets.  I am going big picture here.  Digital assets are a new kind of property, coming into existence as such by virtue of the technological and communication advancements that are part of our networked online world.  Like any other property, digital assets – an emerging “digital divide” if you will, have both the power to unite people and to distance us from each other.  Flash mobs, crowd sourcing, playbor and lots of other connections are all new ways of collective communication and concerted action which can be used to usher in positive changes, more democratic participation in previously closed institutions, and many other efforts.  Here’s a good recent example in an 11/5/13 post on the CBA/CLE Legal Connection blogpost about “crowdfunding” securities under the federal Crowdfund Act.   The new federal statute allows crowdfunding, a previously prohibited type of sales of unregistered securities over the internet.  Here’s a link to the new proposed regulations – the SEC wants to hear from you about them!

So back to the people and property connection.  I think that a basic question, as Howard Rheingold writes in his excellent 2012 book “Netsmart” is a question of the degree to which each of us embraces change and participation on an individual level so as to become part of something bigger.  Rheingold’s taxonomy of online collective work includes: (1) networking, (2) coordination, (3) cooperation, and (4) collaboration.  (Netsmart at 153-54.)   Some of this work involves hanging out, messing around, geeking out, networking, collaborating, participating – these are just some of the activities that the digital commons can provide participants.  I think conceptualizing digital assets requires a whole new way of thinking about property in this regard.  This virtual message board, marketplace, library, playground or laboratory – however you characterize it – typically defines the “property” by how it is used.  This is a break from tradition, and while this may not be a time for nostalgia really, but there is a looming sense of challenge for many of us when it can become difficult to disengage.   Unless you can bring yourself to shut off your Smartphone while you are with a loved one, on vacation or the like, and otherwise resist the urge to be plugged in 24/7, it can become a huge challenge  even if you don’t “have to.”  Theories regarding the implication s of networked technologies and its implications for human interaction, our sometimes compromised ability to engage in reflective, contemplative and deep thought, and so to an extent, even human consciousness abound.  Last summer I posted on GriefLink’s blog about  the simple power of listening and simple human presence (a/k/a the heart’s ancient technology).   But wait, this post isn’t about the internet as social experiment, it is about digital assets . . . .  there is a distinction, right?

Before I abandon this foray, let me go down one last philosophical path.  What if we consider the networked society and a means to advance the evolution of humans and our civilization (and yes, I am deliberately choosing to ignore that immense sleazy side of the internet)?   Here I will openly borrow from the final post in a series I wrote for the CBA’s SOLOinCOLO  blog:   Interesting to note in this context is “The Evolution of Cooperation: Competition is Not the Only Force that Shaped Life on Earth,” from the July 2012 issue of Scientific American,  and the article by Martin Nowak, “Why We Help.”  Nowak’s article describes a public goods game (inspired by the “tragedy of the commons” of the late 1960s)  that found that people were more altruistic when: (1) they are convinced (educated) that sacrifices for the common good are needed; (2) they are allowed to make contributions publicly (to enhance reputation); and (3)  they feel they are being watched.  Sorry – but this last one sounds positively theological to me, so I have to mention Pierre Teilhard de Chardin, who also had some very forward-looking ideas about the evolution of humanity and consciousness.

Nowak’s final observation is that “the altruistic spirit always seems to rebuild itself; our moral compasses realign.”  I liked this last comment about evolutionary simulations because it looks to be consistent with Teilhard de Chardin’s observations on the drawing together of noospheric effects and offers much promise for realizing the potential of social networks within the Internet.  I love this connection between Nowak, the mathematical biologist at Harvard; Teilhard, the late Jesuit paleontologist/theologian; and … social media.   That’s a glimpse of the “special world” that is all around us today – at least from my point of view.

The power of connection, of collective action made possible by the internet is indeed a force to be reckoned with, and we need also to account for the ways in which people and relationships are subjected to harm.  This is where the networked age is like a death, the demise of the old “information society” – and we cannot ever go back, or return to who we were before it.  This new place, however, is one of wonder.  It reminds me of a favorite poem by Hafiz, the medieval Persian poet, this excerpt is from “Deepening the Wonder” and is from Daniel Ladinsky’s 1996 book “The Subject Tonight is Love,” a translation of many poems written by Hafiz:

Death is a favor to us,

but our scales have lost their balance.

The impermanence of the body

should give us great clarity,

Deepening the wonder in our senses and eyes

Of this mysterious existence we share

and are surely just traveling through.

                …..

excerpted from The Subject Tonight is Love at 55.

At this point, I will conclude with the theme for the next few posts on this topic, what is digital property, how do we use it (or how is it used by others, sometimes in ways that we do not intend) and how do we manage and protect it?  What do I consider digital property?  The only way to answer this is in the big picture context that is really the only effective way to encompass, intellectually, what is a constantly developing universe: it is any online account you may own or any file that is stored in the cloud.  To be continued . . . .

©Barbara Cashman 2013     www.DenverElderLaw.org

Free Speech and the Digital Age

Marble Daisy

You might be wondering why an estate and elder law attorney would be writing about this topic in a post.  Well, perhaps it’s my years in federal court reading about and listening to civil rights actions, but it is an ongoing interest of mine as well in that it is the evolution of our networked civil society.  Last week I presented a continuing legal education program to a Boulder County Bar Association group entitled “Lawyers on Facebook – Oh My!”  It was an update of a program I presented over a year ago at the Colorado Bar Association (my “5 minute mentor” video here), and although its title is narrowed for comedic effect, it’s really about lawyers using (and misusing) social media.

I  recently read with interest the Wall Street Journal’s post  about the recent decision by the U.S. Court of Appeals for the Fourth Circuit (Colorado is part of the U.S.C.A. for the Tenth Circuit) in Bland v. Roberts.  In that decision, the court held that a Facebook “like” was protected speech under the First Amendment.  As I recall from some previous research I did for a “Lawyers on Facebook Oh My” continuing legal education program I presented, the trial judge (from the Eastern District of Virginia) tossed out on summary judgment a deputy sheriff’s claim that a “like” on Facebook (here it was on the page of the candidate for sheriff who was running against the incumbent sheriff, for whom the deputy worked).  The trial judge entered summary against the deputy (Carter) on his claim, ruling that the “like” was not protected speech because it wasn’t sufficient to constitute speech, let alone protected speech under the First Amendment.  The Fourth Circuit decision changes this.

The deputy sheriffs who were the plaintiffs in this civil rights action under 42 U.S.C. §1983, alleged their former boss retaliated against them for their support of the sheriff employer’s electoral opponent.  The deputies were not reappointed to their positions after the sheriff was reelected. Bottom line for this decision though is that the sheriff defendant is entitled to qualified immunity.  Qualified immunity is an altered version of sovereign immunity, or the historical doctrine of “the king can do no wrong.”  It is a standard defense to civil rights claims asserted in federal courts against state and federal defendants.  The ACLU, Facebook and the National Association of Police Organizations each filed amicus – friends of the court – briefs.  At page 36 of their opinion, the Fourth Circuit examined the claim of the single sheriff’s deputy plaintiff (Carter) who asserted that her liking her boss’s opponent on Facebook was protected speech.   In its multi-page analysis of Facebook speech, the court cited to the amicus brief of Facebook, Inc.  The court determined that “once one understands the nature of what Carter did by liking [the sheriff’s opponent’s] Campaign Page, it becomes apparent that his conduct qualifies as speech.”  Bland v. Roberts, slip op. at 39, relying on two U.S. Supreme Court opinions and going on to determine that the Campaign Page was pure speech as well as symbolic expression.   The court held that Carter’s “liking” was, as a result, expressive conduct with a particularized message, not unlike placing a political sign in one’s front yard.  The court continued its thorough analysis of the nature of the speech and the applicable balancing test and held that Carter’s allegation is sufficient to withstand summary judgment and reversed this determination of the trial court and remanded the issue for trial.  Id at 44.  This is very interesting

The world of social media and internet communication and interaction is constantly evolving.  Apart from the legal issues that particularly interest me as an estate and elder law attorney – digital assets in the probate context – there are many aspects of our social and political discourse that are changing as a result of our interaction with social media.  Stay tuned for the next couple posts about digital assets in the estate and elder law context.

©Barbara Cashman 2013     www.DenverElderLaw.org

 

Estate Planning and other Fearsome Topics: part II

Mesa Verde NP

This post is a continuation of an earlier post about fear-based tactics that are sometimes used to “help motivate” people to plan their estate.  This type of fear based motivation does not appear to help people think clearly about their values and priorities, but rather the fear is designed to sell.  Check out this recent Denver Post article that has helpful information and also instructs people to “walk away from high-pressure tactics.”  One definition I found of “advertising” goes along these lines:

the nonpersonal communication of information usually paid for and usually persuasive in nature about products.  Another definition talks about “driving behavior” and this post will focus on those two aspects in the estate planning context.

In an earlier post I introduced the first two Myths of fear-based estate planning as follows:

   Myth #1: You Need to Avoid Probate (as in probating a will) at All Costs and

   Myth #2: Getting a Trust Will Protect Your Assets from Nursing Home Costs and Medicaid Recovery

Let’s take a look now at two more myths of fear-based estate planning.

   Myth #3: A Living Trust is the Answer to All Your “Problems”

This is where the pitch might be at its most shrill.  Once I got a call from someone who actually hung up on me when I told her that sometimes probate wasn’t a bad thing. . . . !  In my practice, I have seen the dark side of several trusts.  There are many trusts that are generic and not tailored to an individual’s situation in any meaningful way, and because they are so long and complicated, clients don’t have a decent understanding of how the trust works.  The trust may create a completely unworkable management scenario, like when the adult children appointed as trustees can’t get along.  Another important factor to consider in this regard is that the trust document doesn’t usually accomplish anything on its own.  It merely creates the trust.  Often this important detail is not adequately explained to the client or it is completely neglected.  It requires the re-titling of a person’s assets into the trust’s name.    I have opened probates in such situations, where a probate asset was not, much to the surprise of the trustee and an heir, titled in the trust’s name but rather remained in the decedent’s name.  Trusts must be established properly as well as maintained.  Some are rather high maintenance.  If someone is telling you about how much an “average” probate costs – be sure to draw a distinction between the costs of probate and the costs of a probate lawyer.  Many times the trusts that are being sold are much more expensive than the probate alternative!

   Myth #4: Selling a Solution to a Problem You May Not Have

One of the sales tactics used might be for protection against things that people didn’t even know they needed to worry about.  One of these I’m familiar with is to use a trust to protect certain assets in the event an intended beneficiary might someday divorce.  It is always a good idea to ask questions about these kinds of arrangements, which appear to be based on the potential client’s intended response of “well, of course I would want this!”  The basic premise I am getting at here is that the options presented should be based on your own unique situation, and not a one-size-fits-all package that is being sold to you.

Bottom line for this post – find legal assistance that  involves communication that is personal to you.  How else will you know whether your plan is actually designed to work for you?  A hallmark of the attorney-client relationship, enshrined in our Colorado Rules of Professional Conduct,  is the obligation of “informed consent.”  You are probably familiar with this in the medical treatment context  –  but you might not have known that lawyers in Colorado are obligated to meet informed consent requirements.  This is often a two-step process:

(1) the lawyer must relay the necessary information to the client; and

(2) the lawyer must get the client’s consent regarding the lawyer’s next course of action.

What kind of information is relayed, how much information, and when the information is communicated, will typically vary according to the sophistication and experience the client has in legal matters and in making important decisions.  When you meet with an estate planning attorney who is able to ask questions and also listen to your concerns and find out what your unique situation presents, you will be more confident that  you are in good hands and that you are, as a result of informed consent, the one in charge of the attorney-client relationship in that the choices are made by you among a range of alternative communicated by the attorney to you.

There are alternatives available for any plan, and the best way for people to know they have made the decision that is right for them is to choose among the available alternatives.   This is the nature of informed consent.  If the estate planning documents do not suit a person’s or a family’s unique situation, there may be little point of putting a plan into place.

If you have a computer with internet access or you know how to find your local library, you can get plenty of information about estate planning and probate in Colorado (including the 2013 Senior Law Handbook) from the Colorado Bar Association, at www.cobar.org

PS Happy Birthday, Weird Al (Yankovic)!

©Barbara Cashman 2013     www.DenverElderLaw.org

 

Estate Planning and other Fearsome Topics: part I

des Beaux Arbres en Marbre

You might be wondering about the topic of this post, I’ve written about estate planning in the therapeutic jurisprudence context before, so what is this one about?  It is about  . . .  the dark side, or fear-based estate planning.   Is someone or something – perhaps working together and typically referred to as “they“ – out to get you?  Perhaps to rob your heirs of the rightful proceeds of your estate . . .  !   Who is this nefarious individual or entity?

If you read some of the newspaper ads, are you surprised to learn about all the bad things that could happen to you that you didn’t know about?  “Fear based” estate planning is taking the “nightly news” gloom and doom approach to a very individual and personal situation, creating a problem that may or may not exist, but is something that strikes fear, and offering a solution in a tidy little package with a typically rather large price tag.  Estate planning is too individualized, too personalized to an individual or family’s unique circumstances to leave to a fear-based reaction mode of decision making.  Perhaps this is where I transition to myth buster mode, so let’s proceed.

Myth #1: You Need to Avoid Probate (as in probating a will) at All Costs

Many people have been trained to fear probate, but if you asked them why, it would often be difficult to get a straight answer.  Lawyers, like doctors, must obtain informed consent for their legal services. Informed consent requires that a person’s consent to be competent, voluntary, and informed.   Clients need to be informed of alternatives so that they can make their own informed decisions about how they wish their attorney to proceed.  Fear-based estate planning often threatens this basic requirement.  There may indeed be good reasons for a person or a family to avoid probate, but they ought to be considered in a calm and rational manner.

Since 1973, Colorado has had a version of the Uniform Probate Code.  Probate in Colorado is simplified and the vast majority of it requires no judicial involvement.  Our financial lives in today’s world are seldom simple. Even those of us who are certain that we have updated and appropriate beneficiary designations on our accounts (like a beneficiary designation for an IRA, or a pay-on-death provision for a bank account) can drop the ball over the course of years.

When a person dies without a will, the law that applies to the disposition of the decedent’s estate is known as the law of intestacy.  It is part of our probate code.  Intestacy is designed to approximate what most people would provide in their will, but with some important details left out.  Intestacy can apply in a fairly straightforward manner where there is a “Leave it to Beaver” style family, which is no longer the “typical” scenario.  Modern complications include: married with no children; unmarried committed couple; remarried couple with stepchildren; divorced with minor or adult children; married with assets in a community property state; and a host of other life circumstances that seem to affect the majority of us.

Another option for Colorado probate is to collect an estate via affidavit.  This affidavit can be used where there is no real property involved and (for 2013) the assets do not exceed $63,000.

If there is real property or are probate assets which may include “surprise” probate assets (nonprobate assets which they lack an effective beneficiary designation and which exceed $63,000) then a probate will generally need to be opened.  If you can’t afford an attorney, many judicial districts have assistance available at “self-help” centers.    Many of my colleagues and I assist at these clinics.

At the present time, the statutory filing fee for opening a decedent’s estate is $164.00. Colorado, unlike some other states, does not require judicial supervision of decedent estates (except where there is a will contest or other contested matters which require juridical intervention) and there is no percentage valuation of an estate that goes to either a lawyer probating the estate or the state by virtue of some appraisal of the estate’s value.  Colorado has no estate tax.  The federal estate tax is currently around $5.25 million, so this is not a concern for most people.

Myth #2: Getting a Trust Will Protect Your Assets from Nursing Home Costs and Medicaid Recovery

Medicaid is a federal program for providing health care coverage to aid to indigent persons including children, pregnant women, people with disabilities and older persons.  It is a program for which one must be eligible.  For older persons, one must be sick enough and poor enough to qualify for benefits.   Medicaid is not Medicare.

In Colorado, Medicaid is administered through the Department of Health Care Policy and Financing (HCPF).  This agency really doesn’t care for trusts that some people have created and to which they have transferred title to their residence.  For example, if someone puts their house in the trust’s name and then needs to apply for Medicaid within the five year look back period, there will likely be a penalty, a period of ineligibility based on the amount of the gift (the transfer to the trust for less than fair consideration) and the average costs of care in a nursing home.  It may be necessary for the trust to convey back the title to the person applying for Medicaid so that they can become eligible.  This is not always possible.

A reverse mortgage is another method that some individuals use to tap into equity resources of their home, and these require that the home be titled in an individual’s name, and not in a trust.  Bottom line is that trusts don’t generally work for “keeping your assets out of the hands of nursing homes” where it involves a home that is the primary residence.

I will be back soon with another myth-busting installment on this topic. . . . stay tuned.

©Barbara Cashman 2013     www.DenverElderLaw.org

Colorado’s New Law on Mandatory Reporting of Abuse or Exploitation of Elders

 

An Irish Bridge

Like every other state in our nation, the population of Colorado is getting older.  Longevity and independence can have a price for some of us, and there are many people in our population who are elders and are at risk of exploitation and abuse.

Gov. Hickenlooper signed this act into law on May 16, 2013.  It makes Colorado the 48th state to have such legislation in place. Click here  to read the Act.   Prior to this law, there was no mandatory reporting of elder abuse.  Elder abuse, as defined by the statute, includes physical and emotional abuse as well as financial exploitation.  The new law will provide additional protections to at-risk elders.

So here’s a bit of background:  In 1991, Colorado enacted the Adult Protective Services (APS) system, which is designed to protect vulnerable or at-risk adults who, because of age or mental or physical ability, are unable to obtain services or otherwise protect their own health, safety, and welfare. Under current law, an “at-risk adult” is any person over the age of 18 who meets these criteria.  Prior to Colorado’s new mandatory reporting  law, members of certain helping professions were encouraged to make reports of known or suspected abuse and provides a telephone hotline for all citizens. Among its many provisions, this bill creates a new class of protections for “at-risk elders,” who are defined as any person age 70 or older. The law also makes a number of changes to the APS system.

So – how does it work? Starting July 1, 2014, members of helping professions listed in the statute as “mandatory reporters” are required to report known or suspected abuse of at-risk elders.  (You can read a follow-up post about mandatory reporters here.)  The report must be made within twenty-four hours and the penalty for not reporting is a class 3 misdemeanor.   A person who files a report in good faith is immune from civil or criminal prosecution.

Here’s a brief Q&A on this new law…

What else does this new law provide?

The bill also makes applicable existing penalties for theft-related crimes, caretaker neglect, and making a false report for offenses against at-risk elders.

What about changes in how law enforcement handles these matters?

Law enforcement agencies are required to complete a criminal investigation when appropriate and to provide a summary of investigation reports to the relevant county department of social services and district attorney.

How about training for law enforcement personnel?

The Peace Officer Standards Training (P.O.S.T.) Board in the Department of Law is required to develop and implement a training curriculum no later than January 1, 2014. Training is to assist peace officers in recognizing and responding to incidents of known or suspected abuse and exploitation of at-risk elders. On and after January 1, 2015, local law enforcement agencies are required to employ at least one officer that has completed the new P.O.S.T. training. The board is authorized to charge a fee to participants for the training.

And how will the mandatory reporting be implemented?

The Colorado Department of Human Services  (something about APS and county) is directed to implement, beginning  January 1, 2014, a program to raise awareness among both public and the mandatory reported about mistreatment, exploitation and self-neglect among at-risk adults, including at-risk elders.

What about the work that county departments of social services (typically through APS) have been doing so far with their investigations?

County departments of social services are mandated under Section 26-3.1-103, C.R.S., to investigate all reports of abuse, exploitation, or neglect of at-risk adults. Reports are evaluated and investigated according to the rules established by DHS. DHS rules currently classify responses as a referral, no response needed, urgent and requiring follow up, requiring a response within 24 hours or requiring a response within 3 days, followed by appropriate services as needed. Services can range from assisting persons with obtaining public benefits and providing case management to seeking emergency placements and guardianship of the at-risk adult.

Colorado data shows that in FY 2011-12, a total of 11,000 new reports were filed. Of this number, 4,733, or 43 percent, required an investigation. In addition, a total of 1,750 investigations were carried forward from the prior fiscal year. Overall, cases requiring investigation have increased by an average of 2 percent per year.  You can read more important information about the new law here .

I will be blogging more about the topic of financial exploitation of elders, as I have previously.  It will be interesting to see how the approach of law enforcement agencies toward the financial exploitation of Colorado elders will change with this new law – with the reporting requirements as well as with the training that law enforcement will get.  I am optimistic that this law will help soften the bright line distinction that many law enforcement agencies have drawn between what constitutes exploitation which warrants criminal investigation and prosecution and that which is otherwise civil in nature, meaning that the victim must undertake his or her own civil remedies.

©Barbara Cashman 2013     www.DenverElderLaw.org

Financial Abuse of the Elderly and the Durable Power of Attorney

You might be wondering about the ability of elder law attorneys to curb abuse of durable powers of attorney (POAs) by agents who are abusing their authority.  With the ready availability of durable power of attorney forms on the internet, it is simpler than ever to get such a document in front of an elder for their signature.  Unfortunately, it can lead to problems later on because many people don’t understand how a durable power of attorney (or general durable power of attorney, for financial affairs) is designed to work.

A general durable power of attorney (POA) is an arrangement where one person (the principal) appoints another person (the agent) to act on behalf of the principal regarding matters specified within the scope of the POA.   Under Colorado law, powers of attorney executed after Jan. 1, 2010 are by default “durable.”  What makes a POA durable is that it can survive the disability or incapacity of a principal.  A POA is an important tool people can use to allow others to assist them in the event they need help managing finances.

Sometimes I represent a principal whose agent under their POA is behaving badly.  What I often find with POAs is that very few people who have executed them (the principals) really understand how the document is designed to work.  Compounding the problem is the fact that many of the agents acting under POAs do not have a grasp of how they are to perform as agents and they are unfamiliar with the kind of obligations they owe to their principal.  I will use some examples to generally illustrate this kind of situation.

What Can Happen with an Ill-Informed or Rogue Agent:

 

  1. After the principal signs the POA, agent promises to take care of principal and then “takes over” everything and principal is left in the dark and made to feel helpless by their agent who is now “running the show” and not listening to what principal wants;
  2. Agent relishes the new found power over the elder parent – I have heard in this context the agent express  “I have absolute power of attorney over you” – you can imagine how this makes the principal feel – the principal who retains the ability to revoke the POA and fire the agent (as long as principal retains capacity to do so);
  3. Agent is acting under the POA  but is treating the principal’s assets as if they were his or her own assets and not those of the principal, as agent may mistakenly believe that this is one of the purposes of a POA; and
  4. Agent may think, believe, or try to convince others that there is nobody else in the family who cares about the elder principal (typically a parent or other family member), and therefore  whatever agent decides to do for the principal will be just fine, since no one else is looking out for the principal.

What the Law Says:

  1. The principal is “the boss of” the agent – not the other way round. The durable POA is a document designed to prevent the need for a protective proceeding (an expensive trip to probate court) and as such is designed to make the principal’s life easier by giving legal authority to an agent to conduct financial transactions on principal’s behalf.  The agent is under a duty, pursuant to Colorado’s Uniform Power of Attorney Act, to provide information to his or her principal.
  2. To the extent the principal is able, he or she directs the activities of the agent.  If principal is unhappy with agent’s job performance, they may revoke the POA and terminate agent’s authority.  This can be complicated if agent has already gained access to a principal’s accounts, as the third parties who recognized the POA and agent’s authority to act must be notified.
  3.  This behavior by an agent is known as “self-dealing” and is not allowed.  An agent owes his or her principal certain fiduciary duties to take care of principal’s assets.
  4. The majority of elder financial abuse in the POA context is perpetrated by an agent who states to others and may believe themselves – that they are the only one who is “helping” the principal.  Sometimes an agent may adopt tactics that are similar to those used by perpetrators of domestic violence – including verbal and emotional abuse, controlling access of others to an elder principal, and alienating the elder from others so that they will be less likely to come to the elder principal’s aid.

From this perspective, I see many disadvantages of a DIY (do it yourself) POA document.  When I prepare durable POAs for clients, I make sure there is the requisite level of trust that the principal has in the selected agent.

It is important that, if you do hire an attorney, they give you adequate information about the importance of naming the right person (especially about avoiding the wrong person) as agent.  As principal under a POA, you may also want to consider whether it is approrpiate for your attorney to be able to speak with your agent about using the POA – that typically requires a waiver of the attorney-client privilege.  Confidentiality is a hallmark of the attorney-client relationship.  If one of my clients, for example an elder principal who executes a POA, answers yes to my question about whether it is okay to speak with his or her adult child agent about how to execute the principals’ wishes according to the POA, I do my best to ensure the client understands what that means and I get that consent in writing.  If you are interested in more of the technical aspects of the fiduciary relationship owed by an agent under a POA to the agent’s principal, read my colleague Dennis Whitmer’s article here.

To assist in actually using the document for its intended purpose, I typically give my POA clients an instruction sheet so that when the client (the principal) talks to their agent about what they want done and under what circumstances they should act on principal’s behalf, the agent will have some instructions about things they must do for the principal and actions they must avoid.  I usually tell clients that I hope they never have to use their POA, but in the event it is needed, it is important that it be “ready to go.”

Mismanagement and abuse of authority by an agent acting under a POA is a problem.  Many elders feel ashamed to talk about the harmful actions of an adult child, and sadly, this can contribute to the loss of security and further isolation of an elder principal.   If you suspect that an elder is suffering financial mismanagement, exploitation or abuse at the hands of an agent under a POA, it is important to know that you can help – don’t wait until it is too late.   The Colorado Coalition for Elder Rights and Abuse Prevention has a helpful website with links to resources.  In addition to criminal penalties for abuse of a POA, there are also civil actions available for redress by a wronged principal.  In a recent trial (March 2013) in Jefferson County district court, a jury returned a verdict in favor of the plaintiff (principal of a POA) who sued her (agent under POA) daughter for abuse of a POA by transferring her mother’s interest in a house to herself.  On claims for civil theft, breach of fiduciary duty, breach of contract and unjust enrichment, the jury found for the plaintiff on all claims and plaintiff was awarded attorney’s fees and costs.  (Hoit v. Newbrough, 11-CV-5117)

 ©Barbara Cashman 2013     www.DenverElderLaw.org

Elder Law Ethics or “Why Am I Left Sitting in the Waiting Room?”

View from the roof of the Denver Art Museum

I am openly borrowing from the title of an American Bar Association pamphlet “Why Am I Left in the Waiting Room?:  Understanding the Four C’s of Elder Law Ethics.”  You can read the pamphlet here.    Estate planning is a law practice area that has historically had joint representation as a feature.  This is typical where a married couple, partners in a civil union, or committed partners, do their estate planning together.  Most lawyers have a written fee agreement for this and for a husband and wife the agreement often contains a joint representation waiver which gives both clients the opportunity to consent to one attorney representing them (this typically makes the most sense from a planning and financial perspective) after the attorney advises them of the unique nature of joint representation.

Elder law practice often encompasses the more traditional estate planning services but there can be nuances to the attorney-client relationship when an adult child brings an elder to an attorney’s office.  It is not uncommon for an adult child to find and “vet” an attorney on behalf of the parent.  Sometimes the adult child may wish to pay for the legal services.  Often the adult child has been very involved in the parent’s day-to-day life, but the nature of the attorney-client relationship has boundaries.  The pamphlet referenced above goes over the “four C’s” which an informed client ought to consider, and with which the attorney is assumed to be familiar.  The attorney, after all, is the license holder who is bound to uphold the Colorado Rules of Professional Conduct.

So – what are the “four C’s?

  1. Client Identification: attorneys must communicate and make clear to the client(s) who is the client, and oftentimes – who is not the client.  Even if the elder is not footing the bill for the consultation, the elder is the attorney’s client.
  2. Conflicts of Interest: lawyers have an ethical duty to avoid conflicts of interest – these can crop up whenever an attorney represents more than one person.  When an attorney represents several people with joint or mutual interests, the lawyer is bound to identify potential conflicts of interest and determine whether joint representation is appropriate or allowed.  This can be particularly problematic in an elder law context where one attorney talks with an elder parent and an adult child and it is not clear who the client is – this is why #1  above is #1! Identifying the client means identifying the person to whom the lawyer owes all applicable duties.
  3. Confidentiality: A hallmark of the attorney-client relationship is communication and lawyers must keep confidential the communication between clients and lawyers confidential.  By way of example, it means that if I represent an elder parent and draft a durable power of attorney for them and they want me to be able to talk to their adult child agent about how to use the POA if the need for using it arises, I need to get specific authorization from them to talk with the adult child agent – because the elder parent is my client and I owe a duty of confidentiality to my client.
  4. Capacity: the ABA pamphlet refers to this as “competency” but I find the term “capacity” more appropriate.  Sometimes an adult child will inquire about getting a will drawn up for their parent who is in failing health. Some folks think that a lawyer can simply take instructions from another person about what the elder wants in their will and present and then present such a document for signature by the elder.  This is not appropriate on many levels.  Lawyers are duty bound to get informed consent from their client – on whose behalf the document is prepared –  for a particular course of action.  This means educating the client about the range of alternatives to choose from and then allowing the client to make their own choice among the alternatives.   This can be challenging in the elder law field – particularly when a client may be hard of hearing, vision impaired, or experiencing temporary or ongoing cognitive decline.  The lawyer must determine (as with any type of client) whether a client has the capacity to enter into an attorney-client relationship.

The bottom line for elder law attorneys is that we don’t want our clients’ wishes and choices made to be subject to scrutiny and undoing at a later date because the lines of 1, 2, 3 and 4 above were blurred!  If you bring your mom or dad or Aunt Ethel into my office, rest assured that I will talk to you as well – but I will have you spend some time outside in my waiting area.  Don’t worry, there are good magazines to read.

©Barbara Cashman     www.DenverElderLaw.org

The Music of Family Relationships

It’s springtime somewhere, but definitely not in Denver this morning where the snow from Monday’s storm has melted only a little.  I got a blizzard alert on my iPhone at about 7:30 this morning!  It’s coming down right now.  We do need the moisture and I, for one, am not anxious to get started on the lawn mowing anytime soon. . . .  So here’s a picture of spring that I took last week in Ireland.

For all of you skeptics (or people who have been to Ireland before) the weather was beautiful and I took many pictures with visible blue sky! I took this picture on the grounds of Glenstal Abbey, where I was lucky enough to spend several days in a warm and welcoming Benedictine community.  I took this picture after walking back from a visit to Mass Rock.  There Irish soprano Noirin Ni Riain told our group about the history of the Mass Rock. She alo sang to us and finished by leading us in song.  She has an amazing voice and her music not only speaks to the soul, but moves it.  I purchased three of her CD’s when I was there and they are all available from Sounds True in Boulder.  Her songs are sung in Irish, but I find that the most moving music is not in my mother tongue of English.  I’m also thinking of Gorecki’s Third Symphony which you can listen to part of it (with beautiful visual accompaniment) here .  My favorite is the original million-seller with soprano Dawn Upshaw.

Music and spring and travel. . . .  That leads me also to an experience I had some years ago when I was visiting a local nursing home in my capacity as JFS para-chaplain.  I was there to lead a service and because I was lucky enough to be accompanied by a guitarist, I sang an old Yiddish song called Oif’n Prippitchik.  About midway into the song something very interesting happened.  One of the residents who attended was a woman with very advanced dementia who, it was reported to me later, had not spoken in over a year.  She started first to hum and then sing along with the song.  She spoke about her grandmother.  The song had transported her right back to a happy memory of childhood, when her grandmother had sung that song to her.  By the means of music, hearing that melody – she was moved in a sort of time travel.  I was most certainly moved witnessing that event.  Another story of music as a means of transport for the spirit comes to mind, it is from Megory Anderson’s book Sacred Dying.

So this post is about connections I suppose, and the beauty of writing blog posts is that I can incorporate things like . . . . a bumper sticker that I saw this morning on my way to work.  It read “love lasts longer than life.”  I nodded in agreement.  This post is also about new varieties of living arrangements in this country, which hearken back to some very old traditional arrangements.  I thought about the post after reading an article about it in the April 2013 AARP bulletin.

The title of the April Bulletin’s article is “Saving Money by Living Together,” and it is about money saving, but I suspect that the approximately 51 million Americans who live in a house with at least two generations in a single home, and many of these most likely have three generations, are enjoying more than just money savings from the arrangement.  The money savings factor in substantially for caring for an elder parent, and the arrangement also give an adult child or children the opportunity to give back to the aging parent some of the care they received from childhood.  This can be a beautiful way of modeling productive multigenerational relationships for young children.   I think it also can foster a productive stage of elderhood for many grandparents, a topic I’ve blogged about previously.

One of the biggest challenges that we face as a society is how to take care of the burgeoning number of elders, some of whom have meager savings and many whose savings have simply run out over the course of a long number of years of paying for health care not covered by Medicare and costs of living in retirement.  I sometimes hear the offhand lament “we don’t take care of our elders in this country,” to which I often quickly respond with the numbers of elders and the fact that the vast majority of those elders needing care receive some or all of their care from unpaid family members.  One of the side effects of longevity is reworking family relationships to support elders in their later years.  As an estate planning and elder law attorney, there are a number of legal arrangements that an individual and family can put in place to manage the legal aspects of these often complicated financial, medical and emotional considerations.  In a multigenerational housing arrangement, it is good to start with a plan.  I liked this article’s list of tips for making such an arrangement work which include:  discuss expectations and responsibilities like financial and privacy issues; talk about parental and filial (adult child to parent) responsibilities; check zoning restrictions about renovations for attached dwellings; and share the responsibilities.  I would also add that it might be wise to have a regular place for the family members to meet all together to ensure things are working and so any conflict can be managed productively and not allowed to proliferate.   Some of my clients have made such arrangements and they are usually mutually beneficial.  It is interesting to note the change in structure that economic and age-related considerations can have for families – for so many of us, it brings our dear ones closer to us.

©Barbara Cashman     www.DenverElderLaw.org

 

 

 

Civil Unions Likely to be Recognized Soon

 

Civil Unions are most likely coming to Colorado!  You can watch a video by Michael Valdez, Director of Legislative Relations at the Colorado Bar Association about the Judiciary Committee approval of SB 13-11 here .  The Colorado Bar Association supports the bill.  The bill has passed the Senate Committee and is very likely to become law.  Read more here.    This is an important development for civil rights and has important ramifications for estate planning and elder law for same sex couples.  The big picture of rights of same –sex couples in the United States is in a major state of flux right now.  Voters approved gay marriage ballot measures in the 2012 election in Maryland, Washington and Maine.   The U.S. Supreme Court will be examining the constitutionality of the (federal) Defense of Marriage Act (DOMA)as a result of the rulings by U.S. Courts of Appeal  (the First Circuit in Boston and the Second Circuit in New York)  that portions of the law are unconstitutional.  What will be interesting from the historical perspective is that the “state rights” reliance, used by southern states to continue segregation in the 1950’s and 1960’s will likely be the undoing of the DOMA.  Such a ruling by the Supreme Court would result in a major change in federal benefits and tax treatment of same sex marriages, but will still leave a checkerboard of state laws regarding whether a same-sex couple can be married.  Right now there are a variety of laws among the states that address marriage, civil unions and domestic partnerships for same sex couples.  Read an article by a Vermont law school professor about that here.

You can read “A Bill for an Act Concerning Authorization of Civil Unions”  (SB 13-11) here.    The bill specifically states that “the rights, benefits, protections, duties, obligations, responsibilities and other incidents under law that are granted or imposed under the law to spouses apply in like manner to parties to a civil union” and includes many provisions – of particular interest for me are the probate laws regarding decedent’s  estates (intestate succession, wills and trusts) as well as “living” probate proceedings such as guardianship and conservatorship matters.  And yes, those who are united in civil union will be subject to the same processes such as dissolution, legal separation and declaration of invalidity as pertain to marriage.

This will obviously be a major improvement for committed same sex couples over the current Colorado law, which includes the Designated Beneficiaries Act.  You can read my article about it here.    Keep in mind that the Designated Beneficiaries Act and a Designated Beneficiaries Agreement is available to two persons who are unmarried, a very broad group of individuals.  I will post updates in the future on these important state and federal developments.