Helping Someone With Dementia Sell the Home

On July 21, 2022September 4, 2022 By Jane Fearn-Zimmer, Esq.In Dementia, Elder Law, Estate Planning, Guardianship, Long-term care, MedicaidLeave a comment

Sometimes, a home must be sold, but the homeowner is no longer able to sign a listing or sale agreement due to cognitive impairment, confusion, advanced dementia or severe and persistent addiction issues (i.e., Wernicke-Korsakoff syndrome), or new onset dementia after recovering from COVID-19. covid-19-pneumonia-increases-risk-of-dementia-study-says Others may be temporarily incapacitated due to cardiac issues, surgery, or severe illness. These conditions can prevent an adult from being temporarily or permanently able to make important financial, medical or legal decisions. Adults who can no longer make decisions may be incapacitated. And in real estate bubble with many residential properties reaching their peak value, it’s critical to act fast to accept the best home sale offer.

Unfortunately, incapacitated adults are unable to enter into a binding contract, such as an agreement to list or sell the home. When this happens, one option may be to use a general durable power of attorney or a real estate power of attorney to sell the home. But that can only be successful where there is already a valid general durable power of attorney or real estate power of attorney in place. If there is a power of attorney, and the homeowner is able to make decisions, the home cannot be sold through a power of attorney without the homeowner’s consent to the sale. Giving a power of attorney to a trusted adult child or friend is like giving them an extra set of keys to the car. You can always take back the keys when you wish.

More to the point, a power of attorney is an important legal document by which the principal (i.e., the person signing the power of attorney) gives authority to an agent to carry out the affairs of the principal. The catch-22 is that in order to make a power of attorney, the principal must have legal capacity. Unfortunately, there are many incapacitated persons who never bothered to obtain a power of attorney before they lost capacity. Another risk is that there may be a valid power of attorney, but the agent named may be deceased, very ill, or no longer available to serve. Once again, there is no one with legal authority to sign the home sale agreement and the house cannot be sold even if there is a buyer.

The solution is to seek a court order for authority to sell the home. This involves filing a lawsuit in the Superior Court for a judgment of incapacitation and award of guardianship. The guardianship process is not a simple one. There are several different types of guardianships and the correct type must be selected. Various court rules, required information and forms must be complied with.

The guardianship process requires doctor’s reports and an investigation into the finances and health of the alleged incapacitated person. As part of the process, the Superior Court judge appoints an independent attorney to investigate these matters and to write a report. This attorney is referred to as the court-appointed attorney. Often, that attorney’s report carries great weight with the court. Testimony by the doctors may be waived, or if the guardianship is disputed, there may be an adversarial hearing. If the evidence, any testimony and the court-appointed attorney’s report indicates that the alleged incapacitated person cannot make any significant decisions as to his person or property, then a plenary guardianship may be awarded.

But this is only the first step in obtaining court-authority to sell the home of the incapacitated person, who may urgently need the anticipated net home sale proceeds to pay for long-term care. The next step is to file a motion with the court to sell the home through the guardianship. The court can potentially award the requested order. Only when such an order is in place, can the home be legally sold.

Not surprisingly, this process requires additional legal work and documentation. The guardian must show that the proposed sale is fair and reasonable and in the “best interests” of the incapacitated person. In deciding whether this standard is satisfied, the judge may consider whether the incapacitated person will ever be able to return to the home to live there independently or with the assistance of paid caregivers, provided there are sufficient funds. The fair market value and the tax-assessed value of the home will also be considered, as will the outcome of any prior attempts to sell the property, the cost of continued homeownership, and whether the anticipated net house sale proceeds are needed to pay for long-term care. In many cases, the home must be sold as a condition of Medicaid eligibility for the former homeowner in a nursing home.

This process takes time. In limited cases where the safety of the alleged incapacitated person is endangered, or a very good purchase offer may be lost without swift court approval, the guardianship process can be expedited in New Jersey.

The bottom line, is that when capacity is in issue, selling the home a general durable power of attorney or a real estate power of attorney is much more efficient than through a guardianship. However, selling the home through a guardianship can be done in the difficult cases where there is no legal authority in place to sell the home.

Questions, or if you need help clearing title to sell a home through a guardianship? Let Jane know.

New Elder Justice Resources

On July 15, 2022September 4, 2022 By Jane Fearn-Zimmer, Esq.In Conservatorship, Dementia, Elder Financial Abuse, GuardianshipLeave a comment

black man covering face with hands — Photo by Nicola Barts on Pexes.com

Elder financial abuse involves the misuse of an elderly persons’s money, credit or property. Unfortunately, this is a growing and often unreported problem.

Fortunately, there are resources available to fight elder abuse. One is the statewide criminal referral hotline, found on the elder justice website of the New Jersey courts. Additional information and resources are available online at https://www.njcourts.gov/public/elder-justice.html.

Financial professionals, in particular, should remain alert for behavioral red flags of elder financial abuse. These can include:

new contact information for a financial account (address, email, or telephone)
unusual purchases or withdrawals on the account of someone who is cognitively impaired
an elderly person who seems withdrawn, anxious or afraid
an elderly person who cannot answer simple questions about her account activity
someone new taking great interest in the finances of an elderly person
repeated unsuccessful attempts to contact an elderly account holder
someone without proper identification trying to help an elderly person with bank or brokerage transactions

More information is contained in a government report to financial institutions found online at Advisory on Elder Financial Exploitation

What to Do if You Suspect Elder Abuse.

Your legal recourse may include criminal or civil prosecution, revoking a power of attorney, executing a new power of attorney and/or a guardianship or conservatorship. For strategies and solutions for your unique situation, contact Archer Brogan, LLP at https://archerbrogan.com

Restoration of Capacity?

On March 12, 2019April 1, 2022 By Jane Fearn-Zimmer, Esq.In Caregivers Resources, GuardianshipLeave a comment

If an individual is determined unable to make her own decisions, a judgment of incapacitation and awarding guardianship may issue.

Sometimes, the conditions which led to a judgment of incapacitation are not permanent. In this case, the subject of the guardianship order may seek an order restoring her to legal capacity, which would allow her to resume making decisions for herself.

In the Matter of the Guardianship and Conservatorship of Lois Crist, No. 118-973 (Ct. App. Kansas, February 1, 2019)(per curiam), an 82 year old widow residing in a rural home requested an order restoring her to capacity. At the time of the original impairment order, the ward’s home was uninhabitable due to mold and clutter, and she was dirty and unkempt, and suffering from a gait dysfunction, a vitamin B-12 deficiency, and a urinary tract infection. She was removed from her home, adjudicated impaired, hospitalized, discharged to a nursing home, and then to assisted living, where she thrived. The total value of her estate was over $1.4 million.

Nearly two years after the original hearing, the ward had a falling out with her family and filed a petition for restoration. She argued that her impairment was temporary and attributable to an altered mental state from a urinary tract infection. She was evaluated several times, with disparate results, but two tests determined that she was unable to drive or to manage her housekeeping independently.

The trial court declined to restore her legal capacity for decision-making in part because her answers to the court’s questions regarding how she would live independently in a rural setting were unrealistic.

While we will never know all the facts, it is quite possible that with effective representation and thorough preparation, the petitioner might have been better prepared to anticipate and effectively answer the court’s questions and she might have successfully obtained a restoration of capacity order.

Questions? Let Jane know.

Jane Fearn-Zimmer is an Elder and Disability Law, Taxation, and Trusts and Estates attorney. She dedicates her practice to serving clients in the areas of elder and disability law, special needs planning, asset protection, tax and estate planning and estate administration. She also serves as Chair of the Elder & Disability Law section of the NJSBA.