Category Archives: Guardianship

POA Breach of Fiduciary Duty

A Power of Attorney Holder’s Breach of Fiduciary Duty

There is no question that a financial power of attorney holds what is called a “fiduciary duty” to act in the best interests of the grantor. But what if that power of attorney holder breaches that duty and takes “mom’s” funds for herself? What if her taking of mom’s funds caused mom to be disqualified from Medical Assistance (i.e. Medicaid)? Can she be found liable?

An interested case in Indiana answered that quesion in the affirmative.

An Indiana appeals court rules that a woman breached her fiduciary duty to her mother when, among other things, she refused to cash out a life insurance policy in order to qualify her mother for Medicaid and later profited from the policy. Shaw v. Covenant Care Waldron Home (Ind. Ct. App., No. 73A04-1005-SC-317, March 2, 2011) (unpublished).

Joni Shaw admitted her mother to a nursing home. Ms. Shaw signed the admission agreement on behalf of her mother as her attorney-in-fact. Ms. Shaw applied for Medicaid on her mother’s behalf, but the application was denied due to a life insurance policy. Ms. Shaw refused to cash out the policy, and the Medicaid application was never approved. In addition, Ms. Shaw withdrew funds from her mother’s account and deposited them into her sole account. After her mother died, her brother, who was the beneficiary of the life insurance policy, gave her $8,000 from the proceeds of the policy.

The nursing home had an outstanding balance of $5,709.40, which Ms. Shaw refused to pay. The nursing home sued, alleging breach of contract and breach of fiduciary duty. It argued that an attorney-in-fact who breaches a duty to the principal is liable to third parties as though he or she were the principal. The small claims court found in favor of the nursing home, and Ms. Shaw appealed.

The Indiana Court of Appeals affirms, holding that Ms. Shaw breached her fiduciary duty to her mother. According to the court, because Ms. Shaw profited from refusing to cash in the life insurance policy and she transferred funds from her mother’s account to her own account, it was clear that Ms. Shaw was acting in her own self-interest to the detriment of her mother.

from www.elderlawanswers.com.

The interesting question from a Maryland point of view is what right does the nursing home have to sue the attorney-in-fact. Can other interested family member’s sue on behalf of mom? The answer to that question is “yes.” However, court action will need to be started to give that family member standing to recover the stolen assets.

Guardianship

If My Sister and I both File for Guardianship for our Mother, who has Priority?

The starting point is what type of guardian do you seek. There are two types of guardians. The first is the guardian of the person. It is this person that makes medical related decisions on behalf of the disabled. The second type of guardian is the guardian of the property. This person makes strictly financials decisions on behalf of the disabled. Both types of guardians need not be assigned at the same time. The priority for each, while similar, is different.

Maryland Ann. Code Est. & Trust § 13-707 provides as follows, as it relates to the priority of eligibility of someone asking the court to be appointed as guardian of the person.

Persons are entitled to appointment as guardian of the person according to the following priorities:

(1) A person, agency, or corporation nominated by the disabled person if the disabled person was 16 years old or older when the disabled person signed the designation and, in the opinion of the court, the disabled person had sufficient mental capacity to make an intelligent choice at the time the disabled person executed the designation;

(2) A health care agent appointed by the disabled person in accordance with Title 5, Subtitle 6 of the Health-General Article;

(3) The disabled person’s spouse;

(4) The disabled person’s parents;

(5) A person, agency, or corporation nominated by the will of a deceased parent;

(6) The disabled person’s children;

(7) Adult persons who would be the disabled person’s heirs if the disabled person were dead;

(8) A person, agency, or corporation nominated by a person caring for the disabled person;

(9) Any other person, agency, or corporation considered appropriate by the court; and

(10) For adults less than 65 years old, the director of the local department of social services or, for adults 65 years old or older, the Secretary of Aging or the director of the area agency on aging, except in those cases where the department of social services has been appointed guardian of the person prior to age 65. Upon appointment as guardian, directors of local departments of social services, directors of area agencies on aging, and the Secretary of Aging may delegate responsibilities of guardianship to staff persons whose names and positions have been registered with the court.

So, if a son and daughter both wanted to become guardian of the person for their mother and the daughter was a health care agent of the mother in accordance with Title 5, Subtitle 6 of the Health-General Article, she would have priority of appointment over her brother who was not a health care agent. However, please note that this is only a starting point. If the son could “show cause” why the court should over look this priority, the court may overlook this statutory priority and pick the son, even though he was not the named health care agent.

The analysis for priority of appointment for guardian of the property is different. Maryland Ann. Code § 13-207 provides, in part:

(a) Persons are entitled to appointment as guardian (of the property) for a minor or disabled person according to the following priorities:

(1) A conservator, committee, guardian of property, or other like fiduciary appointed by any appropriate court of any foreign jurisdiction in which the minor or disabled person resides;

(2) A person or corporation nominated by the minor or disabled person if the designation was signed by the minor or disabled person after his 16th birthday, and, in the opinion of the court, he had sufficient mental capacity to make an intelligent choice at the time he executed the designation;

(3) His spouse;

(4) His parents;

(5) A person or corporation nominated by the will of a deceased parent;

(6) His children;

(7) The persons who would be his heirs if he were dead;

(8) A person or corporation nominated by a person who, or institution, organization, or public agency which, is caring for him;

(9) A person or corporation nominated by a governmental agency which is paying benefits to him; and

(10) Any other person considered appropriate by the court.

Please note that section 10 of this section allows the court to appoint “any other person considered appropriate.” So, if all of the interested parties (i.e. children, etc.) are deemed undesirable (for whatever reason), the court could well assign an attorney, not affiliated with any of the interested person, to serve as guardian of the property.

The above listed information is but a snap shot of some of the issues relating to priority. Often, the determination of guardianship is both document driven and fact driven.

Contested Guardianship

Adult contested guardianship can occur when a parent losses the ability to make decisions for her health and/or her financial well-being.

Is There a Need for a Guardian?

Having a properly executed financial power of attorney and advance directive can certainly avoid the need for guardianship in many instances. But, what happens if the financial power of attorney holder or the health care agent abuses his/her role as agent? What happens if a new financial power of attorney or advance directive is created under circumstances where the validity of the document is questionable? One possible, and most likely scenario, involves invoking court oversight by filing a petition for guardianship. The guardianship process can be complex and may not be the appropriate route for all circumstances.

Questions?

Post your contested guardianship questions here.