Death and Taxes - The Blog

Brooke Astor and Guardianship Fees

The court battle over 104-year-old socialite Brooke Astor has been well documented in the news media (Wikipedia has a nice summary here).   A settlement agreement was recently signed by the parties, and now the bills are starting to come due.  According to this New York Times article,...

In the seven weeks since the agreement, those involved in the case have filed bills with Justice John E. H. Stackhouse of State Supreme Court in Manhattan for fees totaling about $3 million for the services of 56 lawyers, 65 legal assistants, 6 accountants, 5 bankers, 6 doctors, 2 public relations firms and a law school professor. Under state law, such payments would come out of Mrs. Astor’s assets, valued at over $120 million.

Sheesh!  Here's more:

The justice denied payments for the public relations firms, the time lawyers spent talking with reporters and the hours logged preparing the fee applications themselves.

I've never hired a PR firm or talked to reporters about a pending case -- I think kind of stuff is generally worthless.  But I will say that -- at least in Cook County -- judges will NOT allow attorneys to be paid for the time they spend preparing their fee petition.  Which makes perfect sense, doesn't it?

Estate of Hoellen and Guardianship Citations

If you read a lot of the cases that involve undue influence of an elderly person, certain patterns become clear.  There tend to be a lot of cases involving younger family members (children and grandchildren) trying to take advantage, as well as some cases involving unscrupulous attorneys.  Another group of individuals who show up with some regularity in these types of situations: police officers.

In re Estate of Theodore Hoellen is one such case, involving a Chicago cop.  The facts are fairly typical for this type of situation:

The record shows that respondent [Donald L. Owsley], a Chicago police officer, first met Hoellen in the summer of 1999 when he responded to a 9-1-1 call from Hoellen's neighbor after Hoellen mistakenly entered the neighbor's home believing it was his home. After the incident occurred, respondent began regularly visiting Hoellen at his home. Hoellen's case was referred to the Public Guardian's office based on allegations that respondent was financially exploiting Hoellen, who lived alone and suffered from dementia.

In most of these cases, the exploitation is only uncovered after the elderly person dies, but here the Cook County Public Guardian's office was on the case.  They "filed a five-count amended petition for issuance of a citation to recover assets alleging that over the years, respondent had engaged in a course of conduct designed to manipulate and financially exploit Hoellen, an 89-year-old physically and mentally impaired senior citizen who, it was argued, was unable to protect himself from such exploitation."  Citations to discovery information and recover assets are used a lot in the deceased estate context, but can be used by guardians of living individuals as well.

Ruth Lilly Guardianship

Last June I blogged about probate litigation involving the widow of a former Eli Lilly executive,  Robert E. Koffenberger -- the link is here.  Now there's word of a probate (guardianship) case involving Eli Lilly's sole surviving great-grandchild, Ruth Lilly (who is 90).  This article discusses in more detail, although the way it's written raises a lot of questions:

1. The article says that "the family of Ruth Lilly wants the court to give them supervision over all of her affairs," but it also notes that Ms. Lilly has been "under court supervision for the handling of her financial affairs" since 1981.  It goes on to say that the petition filed by Ms. Lilly's heirs "proposes to give oversight for Lilly's personal and medical decisions to a niece and nephew Ted Lilly."  Does that mean Ms. Lilly currently doesn't have a guardian of the person (to make health care decisions and the like)?

2. It's unclear from the article who is currently acting as the guardian of Ms. Lilly's estate.  According to the article:

Pictures from a 1998 Eyewitness News investigation showed a frail Lilly who sources said had only limited awareness of her circumstances at the time. The investigation documented questionable spending for things like lavish overseas trips for large groups.

A resulting court review prompted an acknowledgement of lax oversight by National City Bank and a reduction in fees by both the bank and Lilly's personal attorney, Tom Ewbank.

Was National City Bank acting as guardian of the estate?  Was Mr. Ewbank?  I assume it was Mr. Ewbank, since he evidently consented to the above petition, but then why did National City Bank have any duty of oversight regarding Ms. Lilly's finances?  And if the guardian of the estate was acting inappropriately in 1998, why weren't they (or he) removed?

Lillian Glasser and Guardianship Costs

I've spoken about the case of Lillian Glasser -- the New Jersey woman who was taken against her wishes from Florida to Texas by her daughter -- on a number of occasions:

1/4/06 (Thoughts on the Lillian Glasser Case)

1/10/06 (More on Lillian Glasser)

1/16/06 (Lessons from the Lillian Glasser Case)

2/14/06 (Lillian Glasser and the Second Power of Attorney)

My previous posts have focused on the probate litigation aspects of the case, as opposed to the guardianship aspects.  The reason for this is simple: it's impossible for me to have any kind of educated opinion about Mrs. Glasser's mental capacity.  I'm not a medical expert, and I haven't spoken with Mrs. Glasser, so rather than go Bill Frist on the situation, I'd prefer to remain silent. 

That being said, I have handled guardianships in the past, so I know about guardianship procedure.  I have continued to receive e-mails about the proceedings from Mrs. Glasser's son, Mark, and the thing that struck me was this: even if Mrs. Glasser "wins" in the guardianship proceeding, she has in a very real way "lost" because of the immense cost of the proceeding.

Mr. Glasser recently forwarded me an e-mail showing legal and related fees incurred by his mother in the Texas guardianship proceeding. 

Temporary guardian: $71,286

Attorney for temporary guardian: $33,955

Guardian ad litem: $98,856

Attorney for guardian ad litem: $164,375

Mediator: $10,887

Bookkeeping: $3,401

Guardianship accounting: $15,941

The total of the above amounts is $398,701. 

As Mr. Glasser notes, "[t]his is only fees not care for my Mother -- This does not include several hundred thousand dollars in expenses that have not yet been either considered or approved." It also doesn't include New Jersey temporary guardian fees and travel expenses, as well as attorney's fees.  These fees are currently pending in New Jersey and amount to about $125,000.

It's tricky business deciding whether a person is incapacitated and, if so, who should act as their guardian.  However, it can be done.  And it should be done fairly quickly, and with attention to the fees involved.  The fact that Mrs. Glasser has a lot of money doesn't mean that the parties to the guardianship proceeding should be allowed to siphon huge amounts of that money out of her estate.

Estate of Doyle: Powers of Attorney, Revocation, and Guardianship

This month's Illinois Bar Journal has an interesting discussion of the recent 4th district case entitled In re Estate of Doyle (the discussion is available to members of the Illinois State Bar Association here).

The Doyle case involved a power of attorney for property executed by Mary Doyle in favor of her daughter, Rose Marie Doyle, in 1998.  Mrs. Doyle then tried to revoke the power of attorney.  In 2004, Mrs. Doyle's son and son-in-law sought a guardianship for Mrs. Doyle, which was eventually granted (apparently because the court found that Mrs. Doyle's daughter had abused her position as agent under the power of attorney).  The question before the court was this: was Mrs. Doyle's revocation of the power of attorney effective, even though Mrs. Doyle may have executed such revocation when she was incompetent?

The case generated three opinions:

The majority ignored the question of Mrs. Doyle's attempted revocation, finding instead that the court had "implicitly revoked" the power of attorney under a provision in the Power of Attorney Act (755 ILCS 45/2-10) allowing an agent to be removed for cause.

The concurring opinion agreed with that result, but said that an incompetent person can't revoke a power of attorney.

The dissent agreed that an incompetent person can't revoke a property power of attorney (noting that revocation of a health care power of attorney by an incompetent person is specifically allowed under the statute).  But the dissent went on to say that a power of attorney is not implicitly revoked through a guardianship proceeding -- instead, you have to specifically use the procedure set forth in §2-10.

The majority's opinion has evidently been somewhat controversial among practitioners, since it appears to weaken the effect of §2-10.

Guardianships, Alzheimer's, and Love

"Judge must decide if it's love or Alzheimer's"

Now there's a catchy headline, to an article published here.  The story will sound familiar to attorneys and others working with the elderly.  Vic Varallo is 83 years old, and even his lawyers admit that he is suffering dementia, and is probably in the early stages of Alzheimer's disease.  A conservator (i.e. guardian) has been appointed to manage Mr. Varallo's affairs, but Mr. Varallo would really like to marry his 48-year-old fiancée, Sheila White.  Mr. Varallo's children object.

On the one hand, we have a valid concern about whether Mr. Varallo is competent to make his own decisions (especially considering that he transferred more than $1 million in property to Ms. White, which she later returned to Mr. Varallo's estate under a settlement agreement).  On the other hand, we have a respected man who has reached the last years of his life, and believes that he has found happiness.

I'm sure there are times when it's a lot of fun to be a judge.  This is probably not one of those times.

Guardianships, Control and Pressure

An interesting question was posted on the Illinois State Bar Association transactional law discussion grouplist yesterday.  The fact scenario was something like this:

Minor (let's call him Greg) has a guardianship in Cook County Probate Court.  The assets in Greg's guardianship estate are pretty substantial (let's say $1 million).  Greg, who may have some emotional problems, turns 18 next month -- this is the age when, under Illinois law, the assets in the guardianship estate must be released to the ward.  Greg's guardian doesn't believe Greg is mature enough to handle the money. 

Can anything be done to stop the assets from being released to Greg next month, when he turns 18? I think the short answer is "no," unless you can somehow make the argument that Greg is mentally disabled, and succeed in opening a guardianship estate for him.  Another possibility would be to encourage Greg to place his assets in a trust that restricts his own access to the funds.  Why would Greg want to do this?  The main reason is that the adults in Greg's life could make it worthwhile for Greg to do it, either by wielding a carrot (set up a trust and we'll buy you a car) or a stick (if you don't set up a trust, we'll cut you out of our Wills).  Is that fair?  Maybe not, but in my experience it happens fairly often.

Change in Guardianship Requirements

Section 11-3(a) of the Illinois Probate Act sets forth the requirements for acting as the guardian of a minor.  Until recently this section prohibited all convicted felons from acting as such a guardian.  However, this prohibition was recently changed slightly, to prevent convicted felons from acting...

unless the court finds appointment of the person convicted of a felony to be in the minor's best interests, and as part of the best interest determination, the court has considered the nature of the offense, the date of offense, and the evidence of the proposed guardian's rehabilitation. No person shall be appointed who has been convicted of a felony involving harm or threat to a child, including a felony sexual offense.

Frank Lloyd Wright and the Life Estate Agreement

Back in August, I wrote about the battle between the Cook County Public Guardian and preservationists.  The Public Guardian handles the financial affairs of 91-year-old Carolyn Howlett, who has Alzheimer's Disease.  Mrs. Howlett owns and lives in the carriage house of the Avery Cooney estate, which was designed by Frank Lloyd Wright.  The carriage house roof is in disrepair, and the Public Guardian wanted to fix it cheaply, so that Mrs. Howlett could continue to live there.  However, historic preservation groups wanted the roof to be repaired in a (more costly) way that preserves the building's character.

A solution to this impasse was finally reached, and the Riverside/Brookfield Landmark has the details here.  Essentially, the carriage house has been sold to a third party, but Mrs. Howlett retains a life estate in the house.  As a result, she can stay in the house for the rest of her life, and the third party becomes the owner at her death.

This is a good solution, and one that doesn't get used as often as it should.  Here, it's a real win for Mrs. Howlett: she gets to stay in her home, the roof is fixed, and her estate gets some money from the sale.  Note that the fair market value of a house with a retained life estate is less than the fair market value of a house with no such retained life estate.  How much less?  Presumably the parties to the transaction consulted actuarial tables to determine Mrs. Howlett's life expectancy, and then used an agreed-upon interest rate to figure the present value of the buyer's future interest. 

A Family Lawyer on Guardians

Grant D. Griffiths runs a very good blog with the self-explanatory title of Kansas Family and Divorce Lawyer.  Practitioners of family law and estate planners sometimes work on the same issues, and Mr. Griffiths focused on an area of concern to estate planners in a post dated August 7, on "Choosing a Guardian for Your Children."  If you are having trouble choosing guardians for your minor children as part of the estate planning process (or even if you aren't), this post is a must-read.