by Christian S. Kelso
Most lawyers are familiar with fiduciary duties. Do not self-deal. Do exercise loyalty. Do not profit or benefit without express consent. Do avoid conflicts of interest. Do not fail to exercise due diligence. Do keep the principal informed. I could go on. These rules may be easy to recite on the bar exam, but how do they play out in practice? More importantly, what can a principal do to both care for a loved one and still avoid claims of breach? These are questions clients ask us (and we ask ourselves) with increasing frequency.
Let us assume a client calls you. They feel responsible for the wellbeing of a family member, Grandma, who is declining mentally. Other family members are in the picture, but for whatever reason, your client feels responsible for taking care of Grandma. What do you tell them?
Generally, clients in this position should focus on three goals: First, keep Grandma safe, then do your best to avoid litigation and, finally, try to preserve Grandma’s estate. Sadly, however, these goals often conflict. Almost always, “taking care of grandma” means acting as her fiduciary, whether as a formal guardian, trustee, attorney-in-fact, or under some other arrangement. Thus, covering the legal basics of fiduciary conduct is a must. But if you want to go a step further, consider the list below of practical steps that your client may want to consider.
1) Do put grandma’s needs ahead of your own. It may sound straightforward, but the single biggest problem that fiduciary clients tend to have is putting their own interests in the back seat. Taking care of grandma is not about living in her house, driving her car, spending her money or protecting your interest in her estate. Taking care of Grandma is about making sure that she is able to live out her years in comfort and dignity.
2) Do Not feel (or appear) entitled. Grandma’s property belongs to Grandma. Period. . Grandma’s move to a nursing home is NOT an opportunity for you to get some new furniture or china. Remember that, despite your best intentions, family may perceive your actions as entitled. If Grandma’s belongings must be moved because she cannot take them, address the situation equitably and be the first one to get the short end of the stick.
3) Do know what you are getting into. Taking care of Grandma is going to be hard and take a tremendous amount of time and energy to get right. Your work and family life will suffer. Grandma may not appreciate or understand your hard work and she may become unpleasant to be around. You will need to keep impeccable records to show what a good job you have done, so if you are not detail-oriented, you may want to let someone else take the reins.
4) Do Not go it alone. There are quite a few professionals available to help you help Grandma. It goes without saying that good attorneys, accountants and financial advisors are an absolute necessity. Another very important advisor to find is a good “care manager” who can help you navigate the world in which you have landed and help with day-to-day tasks.. If you are moving Grandma, be sure to consult with a competent senior care placement specialist, preferably someone local. Often, nurses, therapists, hospice providers, religious advisors or other persons will be involved, so use these people as additional “eyes and ears on the ground” to help you monitor facility staff, family members living with Grandma, or anyone else who might be in contact with her. If they will agree to communicate with you via email, all the better because this will provide you with a written record of your effort.
5) Do consider a well-drafted trust. Put simply, holding legal title to assets is a better way to manage them than as an agent under a power of attorney. Banks and other institutions impose fewer limitations on trustees than they do on agents. Also, if Grandma has capacity to be involved, you and she can each be co-trustees initially. As Grandma’s capacity declines over time, control will often transition naturally to you alone without Grandma’s feeling threatened or jarred by an abrupt and overwhelming change in circumstances.
6) Do not withhold contact or information without good reason. Keeping family members away from Grandma is a huge red flag. Obviously, any legitimate threat to Grandma’s physical, mental or financial well-being must be mitigated, but access to Grandma should generally be allowed. Likewise, information about Grandma, and in particular, her estate, should generally be shared with both family, as well as Grandma herself.
7) Do establish clear goals and discuss them with family. Should Grandma’s care be restorative or merely palliative? Are Grandma’s assets reasonably sufficient to provide for her care through the end of her life? If another family member is dependent on Grandma, what, if any, arrangements can be made to continue such care and should they be implemented? What expectations do other family members have with regard to Grandma’s care and the maintenance of her estate?
At the end of the day, each of these rules may or may not apply in a particular case. Or, each may only apply after some modification. Clients may also resist the advice you give them or they may not see a problem looming on the horizon. As their attorney and counselor, however, it is the lawyer’s job to guide clients through this particularly precarious minefield, and these pointers will go a long way towards helping them get through it unscathed.
Christian S. Kelso is an estate planning attorney at Farrow-Gillespie and Heath, LLP. He may be reached at email@example.com.