The Risk Manager, Winter 2002
As older adults increase in number so do the legal services they require. While the legal issues are often prosaic, the older adult’s situation frequently involves prickly considerations. Here are a couple of 2001 examples:
- In Virginia an older adult doctor opened a joint bank account with right of survivorship with his daughter. Ten years later the doctor added his wife to the account without the daughter’s consent. In the month preceding the doctor’s death the wife wrote 35 checks for over $100,000 in total. She cashed a check for $75,000 on the day the doctor died. The daughter sued the bank for adding the wife to the account without her consent. The court ruled that the account terms were broad enough to allow the doctor to unilaterally add an additional party to the account and denied the daughter’s claim. Virginia Supreme Court, Caine v. NationsBank, N.A., No. 002615, 9/14/01.
Lessons Learned: Joint bank accounts are often used as a simplistic estate planning tool with the advantage for older adults of getting help with paying bills and avoiding probate for account assets. This approach, however, leaves the older adult vulnerable and may have the unintended result of favoring one relative over others when the older adult dies. A good alternative to the joint bank account is a power of attorney. The attorney-in-fact can help with the management of the account for all practical purposes as well as a joint owner and has a fiduciary obligation to act in the grantor’s best interest that a joint owner does not have. A revocable living trust is another alternative to a joint bank account. In working with older adult clients on these kind of issues ascertain all potential family and intergenerational conflicts – be especially thorough if there are second marriages and step-relatives to consider. Some lawyers use a questionnaire on which clients list all their accounts and joint owners. Document the file with the advice given and with written client consent in all matters involving substantial amounts of money – gifts, settlements, and client trust account disbursements. See “Bank Added Name To Account, Not Liable” by Allison Bianchi, Lawyers Weekly USA 2001 LWUSA 801, 11/15/01.
- In Michigan a lawyer was requested by H on behalf of a widow in her 80s to draft a will for her excluding relatives and leaving everything to H, a durable power of attorney designating H as the widow’s attorney-in-fact, and deeds making H a joint tenant with the widow with right of survivorship. A suit was brought a few months later on the then incompetent widow’s behalf in which it was undisputed that H abused his attorney-in-fact powers by pilfering the widow’s estate. The widow’s appointed conservator then sued the lawyer for malpractice for failing to discourage the widow from appointing H attorney-in-fact. The court found that the widow appeared mentally competent at the time the power of attorney was executed and that the lawyer had reasonably inquired as to the widow’s understanding of the legal significance of the power of attorney. He had no duty to assure that the client chose prudently. The client is in the best position to make that decision and the lawyer had no duty to second-guess the choice. Persinger v. Holst, Mich. Ct. App., No. 224635, 12/4/01.
Lessons Learned: As correct as the court’s decision is in this case seems, it is hard not to wonder about the lawyer. It is not unusual for a third party to contact a lawyer on behalf of an older adult. A lawyer in these circumstances must not forget that the older adult is the client and not the third party even if the third party is paying the lawyer’s fees. It appears that the lawyer in this case saw his function primarily as that of scrivener, simply followed the third party’s instructions, and did not engage in the sensitive client communications that older adult clients require. If he had done so, an older adult client and her family might have been spared a difficult experience.