03.16.07

Healthcare Power of Attorney form can create unintended consequences.

Posted in Incapacity planning, Litigation at 8:56 am by gbroiles

A recent California court decision illustrates the importance of reading carefully and paying attention, even when signing apparently harmless documents.

In Hogan v. Country Villa Health Services, a California appellate court enforced an arbitration clause in admission documents for a skilled nursing facility, signed by an elderly woman’s daughter upon admission. When the elderly woman later died while a patient of the skilled nursing facility, her family wanted to sue for wrongful death, eder abuse, and violation of patient rights.

The skilled nursing facility asked the court to rule that the family was forced to bring their elder abuse claim before an arbitrator instead of to a jury, because of the documents signed at the time of admission. The family argued that, even though the daughter had a statutory Heathcare Power of Attorney form signed by her mother, the mother had not authorized the daughter to waive her right to a jury trial in a real courtroom.

The Appeals Court held that the California statutory Advance Health Care Directive form (see Probate Code section 4701), as it was signed by the mother, was sufficient to give the daughter the power to agree to the arbitration agreement.

The unfortunate result is that the elder abuse claim will not be heard in a public forum - even though it’s likely that neither the mother nor the daughter had any idea that was a potential outcome when they signed the documents.

This is an important reminder to always read what you sign - and that it’s helpful to get assistance from someone who can advise you about unexpected consequences, such as the waiver of the right to a trial - because sometimes simple forms have complicated, unintended consequences.

03.12.07

California court upholds asset protection for trust beneficiary

Posted in Litigation, Trust administration at 8:21 am by gbroiles

A California appellate court issued an opinion on February 22, 2007 in Young v. McCoy 2007 Cal App Lexis 224 which will provide encouragement and comfort to trust creators who seek to preserve assets for their beneficiaries.

The court ruled that a creditor cannot force the trustee of a discretionary trust to make a distribution to the beneficiary, if the trustee has reasonably determined that the beneficiary does not need a distribution to provide for their health, education, maintenance, or support.  The practical effect is that - since there is no distribution - the creditor cannot get their hands on the funds which have been preserved for the beneficiary.

This opinion concerns a case where the beneficiary was convicted of attempted murder - but it is likely to be helpful to people in much more mundane circumstances faced by many families, such as divorce, business disputes, and even bankruptcy created by overwhelming medical bills following catastrophic injury or illness.

If your estate plan does not provide asset protection for your family - or if you are using the state’s default estate plan, which does not provide asset protection for beneficiaries - you should think seriously about sitting down with competent estate planning counsel to make sure you’re doing everything you can to provide for the people who depend on you, and the people you care about most.