Conservatorships 102: Who Pays?

Now you may be asking: What will it cost me to start a conservatorship?  And why should I have to pay?

Those are good practical questions which I will try to answer.  I’m going to start with the issue of WHO PAYS.  That is, who will be out the expense of the  attorneys’ fees and the filing fee (and other court costs) that must be paid to start the court case.

Elderly woman and her conservator daughter

A woman and her conservator daughter

California case law has resolved the issue of who pays for the attorney’s work to initiate the Conservatorship.  The person for whom the Conservatorship is established pays for it. This person will also pay the court costs, which include the filing fee and cost of court personnel who investigate the situation.

That makes sense: the person who benefits from the court proceedings pays for the benefit.  But it is not as if the person who is put under the Conservatorship whips out a check book and pays the lawyer and the county clerk.  After all, the whole problem is that this person has lost capacity and may not want the Conservatorship.

Here is what actually happens.  As hypothesized above you have decided it is time to start a Conservatorship proceeding and have selected a lawyer to do it for and with you. The attorney you hire will decide on what financial arrangement to make with you.  The two most likely options are: 1.You will agree to pay the attorney and later the attorney will ask the court to make an order for you to be reimbursed out of the money of the conserved person.  2.  The lawyer will agree to do the work and not be paid until after the Conservatorship is established.  Then the lawyer will ask the court to make an order for his/her fees to be paid out of the money of the conserved person.

There are a few wrinkles in this procedure.  First, a vocabulary lesson: the person who has a Conservatorship established for him is called the conservatee; the person who is put in charge of the conservatee is the conservator.    It may help you to keep the difference straight if you think about the words employer and employee.  In each situation, the boss person is the person whose title ends in "r".

You may wonder what happens if you ask the court to appoint a certain person as the conservator and someone objects to that person being appointed; then ultimately someone else is appointed conservator.  Can you still get a court order to pay the attorney’s fees from the conservatee’s money?  Yes.  This kind of thing happens frequently enough that the court is not surprised if the actual person who becomes conservator is different from the person originally proposed.  The problem would occur if you started a conservatorship proceeding and dropped it before getting a conservator appointed.  In this situation, the conservatee would not have to pay the costs of a half-done case when no Conservatorship was created.

If you have questions about a particular conservatorship or the possibility of starting a conservatorship, call the Law Offices of Julia Wald 415.482.7555. Also, check out her conservatorship web page.

Conservatorships 101: What they Are and How to Establish One

What is a Conservatorship, anyway?

City Courts

Conservatorship is a Court Procedure

First and foremost in California a Conservatorship is a court procedure; a court procedure that happens in the probate court.

The court is asked to declare a person has lost capacity; then, if the judge is given enough evidence that in fact the person has lost capacity, the judge will make an order that says so and that says who will take charge. 

After all, if someone has lost capacity, that means that person cannot make decisions in his/her own best interest and a helper better be put in place to make those decisions.

The person appointed to take charge is called the Conservator.  The person who has lost capacity is called the Conservatee. 

 

Exactly how is a Conservatorship started?

First there is the problem or the perceived problem.

Maybe your mother or your aunt, your brother or your nephew starts to forget things.  Maybe this happens over time, gradually, or maybe it happens very quickly after your dear one has a head injury, is in an automobile accident, suddenly has a stroke or silent heart attack you didn’t even know happened. 

Senior CoupleWhatever the start is, one day you notice this forgetting is getting worse.  At first perhaps you are irritated.  “How could you forget to meet me for lunch?” you say (or think).  “We talked about it just yesterday.” 

 Later you check in with others and discover the forgetting is frequent…then time passes and you discover something like your loved one has late payment charges on unpaid bills, is forgetting to eat, or most undignified of all, forgetting to use the bathroom on time. 

As the forgetting continues and gets more serious, you and others try to talk to the person.  You may ask, “Can I help with the bill paying?”   “Could we arrange for Meals on Wheels to bring you a nice hot lunch?”  But dignity and pride are at stake and FEAR, so much fear.  While you are wondering, “What’s going on here?” the other person may be thinking, “OH NO NO NO, I am losing my mind?”  As the certainty of that sets in, the reactions are as varied as people are, but how could there be no fear? 

In the midst of the fear, if anyone mentions the problem, one reaction may be to deny any problem.  Isn’t sweeping a problem under the rug one way to prevent it, to make it go away?  Another reaction may be irritation and anger.  Almost certainly there will be cover ups.  A question like, “What did you have for lunch?” may get the vague answer, “Oh the ususal”.  If you say, “Oh, a sandwich, was it good?”  Whatever was actually eaten, the answer is likely to be, “Yes, it was perfect….”  and then a quick change of topic, very polite, “And what did you have for lunch?”

   Then there is the decision to do something.

Pills from the Doctor

Medication may improve the condition for a while

First there might be a doctor’s visit; medication may be prescribed which improves the condition for a while.   But then…

Later, it may be necessary to go to a lawyer, a lawyer who specializes in creating Conservatorships.  You really want to see a lawyer who has done this lots of times before.  Don’t go to your neighbor who does corporate law or personal injury cases or even to your cousin who only does estate planning but has never done the papers for a conservatorship.  My firm, The Law Offices of Julia P. Wald, is one good place to go.  There, the attorneys and paralegals work on Conservatorship matters every day of the week.  Lots of experience makes for better outcomes, and sometimes for finding ways to avoid a Conservatorship all together.  Believe me, you never want to initiate a Conservatorship proceeding  unless there is no way to avoid it.  NEVER.

But you absolutely do want to initiate a Conservatorship proceeding to protect someone who is “losing it” or, even worse, is being taken advantage of and you do need to do it NOW.

In my experience, some potential clients come to me thinking, reluctantly, that a Conservatorship might be needed, really knowing in their heart of hearts that something needs to be done.  In these cases, Dad or Aunt Matty is writing checks to certain charities every time an envelope comes asking for a donation…that is 2, 3, 4 times a month, and sometimes overdraws the checking account, or Uncle Mike’s alleged girlfriend is taking him for a ride for all he is worth and he will be wiped out with no way to pay for his care and you can’t cover his expenses when that happens….  When the well person comes for a consultation for the Conservatorship sometimes they lose heart and go away and do nothing.  DON’T BE ONE OF THESE PEOPLE. 

Julia Wald, Esq

Julia Wald

If you have gone so far as to chose a lawyer, make an appointment AND go the lawyer’s office, you know something must be done.  I have had the reluctant client come back 6 months or a year later, and the mess is so much worse, Aunt Matty has no checking account or the “girlfriend” has left with as much money as she could extract from Uncle Mike. 

For the sake of your loved one, ACT NOW. Retain a lawyer to get the Conservatorship established.

More information is available on Julia’s conservatorship web page.
She may be contacted at 415.482.7555.

No Federal Estate Taxes in 2010?

Now is the time to continue pondering:  
THERE ARE NO FEDERAL ESTATE TAXES IN 2010.

And the problem with that statement:
The law will change before the end of 2010.

so THERE WILL be federal estate taxes for people who die in 2010;
UNLESS THE LAW DOESN’T CHANGE.

This creates the dilemma of what an estate planning lawyer should tell her/his client.

Bay Area Mansion could be in a tax-free estate in 2010

From Your Tax-Free Estate?

To understand the dilemma you need to understand the way federal estate taxes were imposed before 2010.

The law in 2009 provided for an applicable exclusion amount.  This meant that a person dying with an estate worth less than $3,500,000 would NOT have to pay federal estate taxes.

PRETTY GOOD DEAL FOR MANY MANY PEOPLE.
Don’t you agree?

A VERY GOOD DEAL FOR MARRIED COUPLES.

The way this plays out is that a married couple*could plan its estate so that the survivor of them had the combined wealth of the 2 of them of $7,000,000 and not pay federal estate taxes.

(*that is MARRIED as understood in the arcane (and shall I say unjust?) federal law)

You read that correctly.

  • Even when there are federal estate taxes, for a MARRIED COUPLE the survivor CAN HAVE THE COMBINED WEALTH  OF THE TWO OF THEM OF  SEVEN MILLIONS DOLLARS WITHOUT PAYING FEDERAL ESTATE TAXES.

MARITAL DEDUCTION

Federal Estate Tax Law (when it exists, say in 2009 and probably 2010 and forward) makes a really good provision for married couples**.
(**that is MARRIED as understood in the arcane and unjust  federal law.  Why do I keep thinking that the Supreme Court already established that separate is not equal?)

2009 law allowed that any amount of money could pass from one spouse to the other  spouse who is a citizen of the United States without taxation.

  • Each married person may leave as much property as he or she wishes to his or her (citizen) spouse, free of federal estate tax.

Now you know enough to understand the estate planner dilemma… coming up soon!

Now is the time to continue pondering:

THERE ARE NO FEDERAL ESTATE TAXES IN 2010.

And the problem with that statement:

*The law will change before the end of 2010

so THERE WILL be federal estate taxes for people who die in 2010;

UNLESS THE LAW DOESN=T CHANGE.

This creates the dilemma of what an estate planning lawyer should tell her/his client.

To understand the dilemma you need to understand the way federal

estate taxes were imposed before 2010.

The law in 2009 provided for an applicable exclusion amount.  This meant that a person dying with an estate worth less than

$3,500,000

would NOT have to pay federal estate taxes.

PRETTY GOOD DEAL FOR MANY MANY PEOPLE.  Don=t you agree?

A VERY GOOD DEAL FOR MARRIED COUPLES.

The way this plays out is that a married couple

*(that is MARRIED as understood in the arcane (and shall I say unjust?)

federal law)

could plan its estate so that the survivor of them had the combined wealth of the 2 of them of $7,000,000 and not pay federal estate taxes.

Your read that correctly.

***Even when there are federal estate taxes, for a MARRIED COUPLE the survivor CAN HAVE THE COMBINED WEALTH  OF THE TWO OF THEM OF  SEVEN MILLIONS DOLLARS WITHOUT PAYING FEDERAL ESTATE TAXES.


MARITAL DEDUCTION

Federal Estate Tax Law (when it exists, say in 2009 and probably 2010 and forward)

makes a really good provision for married couples.

*(that is AMARRIED@ as understood in the arcane and unjust

federal law.  Why do I keep thinking that the Supreme

Court already established that separate is not equal?)

2009 law allowed that any amount of money could pass from one spouse to the other  spouse who is a citizen of the United States without taxation..

* Each married person may leave as much property as he or she wishes to his or her (citizen) spouse, free of federal estate tax.

Now you know enough to understand the estate planner dilemma… coming up soon

An Estate Planning Lawyer in a Quandary

Julia P. Wald

Julia P. Wald, blogger

I am an estate planning lawyer and I am in a quandary.  I know, I know, lawyers are suppose to have the answers, or to make them up, but sometimes the world conspires to make this impossible.  Let me start with the facts, such as they are.

There is a federal estate tax law.  As it relates to 2009, 2010 and 2011, it says that in 2009 estates worth less than $3,500,000 will not be taxed.  (Of course I am simplifying but I want to tell the story with a minimum of whereases and the like).  DO NOT TAKE THIS BLOG OR ANYTHING STATED IN IT AS ADVICE, YOU NEED TO ASK AN ATTORNEY FOR ADVICE.)

Okay, back to the problem.  For a person who died in 2009 owning an estate, net of deductions, worth $3,500,000 there are no federal estate taxes due.  For a person who dies is 2010 there are no estate taxes due. For a person who dies in 2011 owning an estate, net of deductions, worth $1,000,000 there are no federal estate taxes due.

Let me say this again.  .  For a person who dies is 2010 there are no estate taxes due. Did you know that?  As the law sits right now, as of 1/1/10, there simply are no federal estate taxes due on an estate of any size.  Warren Buffet, were he to die in 2010, would have a very big estate, but none of that estate would need to be given to the federal government in the form of taxes because there is no federal estate tax liability for any estate in 2010.

Estate Planning and the Scale of Justice

Estate Tax Justice

Somehow this doesn’t seem fair.  We now have an estate tax system which determines how much tax you owe based on the moment of your death.

Also, think about this.  If there is no federal estate tax in 2010, wouldn’t you, were you to have a sizeable taxable estate, have an obligation to die in 2010, the year in which there are no federal estate taxes so that you could leave your loved ones as much money as possible and so that you could die in peace knowing that none of YOUR hard earned money would be going to fund the government’s program of   [ you fill in the blank of your most hated government program…]

If you are thinking, but I want to have the government get some of my hard earned money, so I better not die in 2010, rest assured you can die anytime.  All you have to do is write in your Will that you want to give the federal government say, $10,000 or 20% of your estate.  The feds will accept the check even in 2010, when you have no obligation to pay any federal estate taxes.  I am betting that you never thought that you could make a charitable contribution to the federal government, but I am here to tell you, you can.  In fact you don’t have to wait until you die, you can make a charitable gift to the federal government any day of the year, in any size you choose, but that gift would be related to income taxes or gift taxes and that would be a whole ‘nother story. It is not the story I am telling. Right now the topic is estate taxes and how to plan to avoid them.

U.S. Capitol

U.S. Capitol

The House passed a bill saying that the law of 2009 would apply in 2010.  Here is the surprise.  The Senate hasn’t passed a similar bill.  Naturally, this means that the House bill isn’t in effect.  Rumor has it that AFTER HEALTH CARE REFORM LEGISLATION IS PASSED, the Senate will deal with the estate tax issue.  And then whatever law is passed, will be retroactive to 1/1/10.  So here is another fact that you may have never considered:  the Senate debate on the health care reform legislation gives rise to the lawyer’s dilemma.

I’ve spent so much time talking that I haven’t even gotten to the crux of the estate planning lawyer’s dilemma.  But I will, tune in soon and find out more.