bharvey_irac_11523
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Rasmussen College *
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Course
PL140/PLA1
Subject
Law
Date
Jan 9, 2024
Type
docx
Pages
4
Uploaded by MajorDuckMaster194
Rule
Johann and Mary are the grandchildren of Jacob, who has been diagnosed with dementia.
Jacob’s condition has severely impacted both his short-term memory and reasoning abilities.
Jacob’s doctor has recommended a conservatorship due to these debilitating symptoms that
impact his ability to make decisions in his best interest.
Despite Jacob’s doctors suggestions, Johann and Mary have not sought legal protection via
conservatorship for their grandfather. Prior to Jacob’s doctor's appointment where a
conservatorship was recommended for Jacob, Johann and Mary had transferred $100,000
dollars from Jacobs 401k pension plan ($400,000 in total) in exchange for one month of light
housekeeping.
This financial transfer has significantly diminished Jacob's assets. Jacob’s current income
consists of a small rental property and a small Social Security check. Jacob has no other
significant assets.
Jacob’s family members have concerns of elder abuse. Johann and Mary require payment
upfront for any assistance they provide Jacob. Additionally, they constantly remind Jacob of
his failings as a grandparent and claims he did not care for them adequately throughout their
life.
Johann and Mary have been estranged from their parents since their early twenties, as both
siblings have refused to obtain gainful employment.
There is currently a dispute between Johann and Mary and Jacobs doctor about when Jacob’s
dementia began. Jacob’s doctors allege it predates the $100,000 transfer. Johann and Mary
dispute Jacob’s doctor's assessment.
Concerns have risen from Johann and Mary's desire to secure the remaining portion of Jacob's
assets. As a result, they have requested [supervising attorney’s name] draft a contract outlining
their commitment to providing basic weekly housekeeping for Jacob along with check-ins 3
times per week. Johann and Mary are requesting Jacob's remaining funds be paid out to the
siblings over a three-year period. They do not plan on providing any personal care, but plan to
arrange care as needed. Both siblings wish to derive a monthly salary from Jacob's Social
Security and 401K earnings and receive an annual lump sum of $50,000 each.
In the event Jacob's assets are depleted, they propose that Jacob use Medicare and Assisted
Living provided by the state.
Issue
°
Legal Issue
Is fraud or incapacity involved?
Ethical Issue
If the attorney does the contract and no attorney reviews it for Jacob, is that unethical under
the ABA Code or a state code that is similar to the ABA Code of Professional Responsibility?
Analysis
Incapacity and Voidable Contracts
In re M.E., 2023 W. Va. App. LEXIS 270
M.E. had already been diagnosed with dementia at the time a durable Power of Attorney was
obtained by Kevin. Kevin had befriended M.E and managed to obtain a POA over M.E. Kevin
then sold all of M.E’s personal belongings and emptied M.E. bank accounts. Kevin then
attempted to sell M.E’s properties in New Jersey and Maine. The court issued a
Financial
Exploitation Protective Order against
Kevin K and ordered Kevin return all the money and
assets taken from M.E. after it was deemed he fraudulently obtained power of attorney.
Undue Influence
Lange v. Self (In re Lange), 2023 Ariz. App. Unpub. LEXIS 909
James and Robbie Lange were married and had 3 children. James was the biological father
of JP lange, and stepfather to Rene and Rob Self. In 1999 they established a Trust to
preserve their assets and benefits for themselves, as well as their three children. The Trust
was then amended and restated in 2016 with legal assistance from attorney Karen Sinchak.
In 2019, James suffered a brain aneurysm and underwent surgery. At that time, the trust was
amended a second with the help of attorney Kenneth Royer. At that time, Medical Power of
Attorney was granted to his wife Robbie, with Rene listed as a secondary agent.
Distribution of assets were also changed in favor of Rene, who would receive 60% of their
assets, up from 30%.
In March 2020, another amendment to the trust was made, adding Rene as a co-trustee. At
that time, the attorney who prepared the amendment did not witness James and Robbie sign
the documents. At the time, James was living in an assisted living facility, and Robbie was
in hospice care. Robbie passed away on March 10, 2020.
After Robbie passed away, Rene became a co-trustee and managed James's care as his
agent under the previously granted Power of Attorney and Medical Power of Attorney.
In May of 2020, Rene had an attorney prepare a Beneficiary Deed that designated property
held by the Lange trust, valued at over $750,000, to Rene upon James's death. James signed
this deed in the presence of Rene and a notary.
The court held that the 2019 and 2020 Amendments, as well as the May 2020 Beneficiary
Deed concerning James' interests were void due to the undue influence based on the
following:
1. Evidence suggested Rene had manipulated James while he was vulnerable from his
medical issues, claiming his other children were pursuing his assets.
2. Rene had exploited James' illness and isolated him from his other children, reinforcing
dependence on Rene.
3. Rene had discreetly made changes to the Trus which significantly increased her own
assets.
4. The court found Renes testimony lacked credibility.
The court found that given James' mental state in 2019 and 2020 due to medical issues the
changes were inappropriate.
Rule 1.14(b): Client with Diminished Capacity
(b) When the lawyer reasonably believes that the client has diminished capacity, is at risk of
substantial physical, financial or other harm unless action is taken and cannot adequately act in
the client's own interest, the lawyer may take reasonably necessary protective action, including
consulting with individuals or entities that have the ability to take action to protect the client
and, in appropriate cases, seeking the appointment of a guardian ad litem, conservator or
guardian.
R
ULE
1.14: C
LIENT
WITH
D
IMINISHED
C
APACITY
,
https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_
professional_conduct/rule_1_14_client_with_diminished_capacity/ (last visited Nov 5, 2023).
Conclusion
The contract proposed by Johann and Mary to secure his assets while providing limited care
raises significant concerns. It also raises ethical questions concerning attorney professional
conduct, and whether Jacob should have independent legal representation to act on his behalf.
Incapacity and Voidable Contracts:
Jacob's dementia diagnosis will likely cast doubt on his capacity to enter into a contract.
Jacob’s ability to understand and make informed decisions is likely compromised and he is
unable to make decisions regarding his best interest. Further, they are ignoring
recommendations made by Jacob’s doctors.
The situation mirrors the case of In re M.E. A possible outcome in the State of Colorado is that
a Financial Exploitation Protective Order could be put into effect to protect Jacob. Further,
Johann and Mary could potentially have to return the misappropriated money and assets if the
contract is challenged in court.
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Undue Influence:
In Lange v. Self (In re Lange), the court ruled against the 2019 and 2020 amendments to the
Lange Trust due to claims of undue influence. In this matter, Johann and Mary, are
demonstrating some concerning behavior towards Jacob, particularly their emotional
manipulation regarding their past. This may very well influence Jacobs decision making
regarding his assets, given his vulnerable state. Given Jacob’s doctor's opinion of when Jacob
developed dementia, the transfer of $100,000 may be looked at as questionable. The courts
may find these transactions are a result of undue influence.
Ethical Considerations:
Rule 1.14(b) of the ABA Model Rules of Professional Conduct states that an attorney who
reasonably believes that a client has diminished capacity and is at risk of substantial harm,
should take protective actions against abuse.
Given the totality of the situation and positions of both Jacob’s other family members and
doctors, it would likely be unethical to assist Johann and Mary with this contract.
Arguments:
Johann and Mary could argue that they are acting in Jacob's best interests and that the proposed
contract is a protective measure, and establish care for his well-being. They may also claim
that an attorney's role is to represent their interests, and it is not unethical to draft the contract,
as it aligns with Jacob's wishes.
Johann and Mary could assert that Jacob willingly transferred the $100,000 from his 401K
to them and that the proposed contract is a legitimate arrangement for their services, such as
housekeeping and multiple visits. They may emphasize that Jacob's doctor's assessment of
when Jacob’s onset of dementia isn’t clear and contest his diagnosis, claiming that Jacob is
still capable of making independent decisions.
Final Thoughts:
The validity of any contract Jacob enters into will likely depend on a thorough examination of
Jacob's capacity, as well as the circumstances surrounding the $100,000 transfer, and whether
Johann and Mary have exerted undue influence. Given Jacob’s medical history and doctor’s
opinion, alongside Jacob’s family’s allegations of elder abuse, challenges will likely arise
regarding the legitimacy of any contract he enters into.
A strong case could be made that Jacob is incapacitated and unable to enter into a contract at
this point in time. Additionally, a strong case for fraud and elder abuse can be made against
Johann and Mary. For that reason, the ethical and legal concerns in this case should be
considered before agreeing to draw up a contract.
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