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We've got a tremendous program for you today at the nearing the end of a turbulent and sultry summer with lots of heat, lots of rain.
And let's introduce you to our two great co-stars again, Sean Xavier, our studio engineer.
I'm your mere lowly moderator, John Jacobson, the
two giants in the house are Joe Piper, J.D.
Esquire, and this gentleman is an Iowa Hawkeye Law alum.
And then, of course, we have Nicholas Cortelli, Esquire, J.D.
with offices in Des Moines, New York and London, as he is an English barrister.
Joe, of course, with Ag and Business Solutions therein.
Hiawatha right outside of Sea Rapids.
Welcome to the show, Joe and Nick.
Great to be back.
You know, this week we've got a follow-up on where we were last week.
We're talking about guardianships, conservatorships, and we only scratch the surface.
There's more to talk about today.
And among the things is, you know, can you get out of a guardianship or conservatorship?
What if things change?
How do you do it?
How does a protected person get out of them?
What's the burden of proof that it takes to open up a guardianship or conservorship?
What do we have to prove?
And then among the things that Nick and I have discussed is that we have to decide what happens if the guardian or conservator is not doing the things the way they ought to be.
How do we protect ourselves as a guardian or conservator from getting sued by the barrister?
and what's our best protection other than not becoming a guardian or a conservator for our loved
one.
Good questions, Joe.
And it's one that I think that everyone needs to think about.
We take a look around us in our family, for example.
How are we going to deal with that when mom or dad or brother or sister are no longer able to
take care of themselves and to take not only their daily needs but their legal needs and relationships or that type of thing.
We do have a moral responsibility to take care of our family member and make sure they're okay.
I get a bit jaded on this because I always see it when it goes bad.
I never see the situation where it all works well and we have a loving family and they're taking care of mom and dad, the bills are being paid.
when someone's alleging that you know they're stealing from mom and dad or they're squandering out or they're not keeping informed they want to sue it's just kind of a prelude to a lawsuit so I've kind of a jaded view on this and it's good to hear from you to find out that these things the vast majority of them really do go well uh because I can't help but look at it and go you know what could we have done to have avoided all this the law looks good uh but but it
It seems that at times people will put their own needs ahead of their loved ones.
And I know that a few years ago, and John, you may be able to address this, the legislature changed a lot of reporting requirements with respect to what conservators and guardians have to do.
And frankly, it's quite confusing to me because I don't deal with it every day.
But Joe, I know you do because you're taking care of
your family.
Yeah, Nick.
It's a great point, Nick.
And I think
is one of those best intentions having unintended consequences scenarios.
We have some academics from College of Law weighing in on protecting folks rightfully so.
However, the paperwork burden became onerous to the extent that it basically blacked out of the pool of people eligible to have guardianships and conservatorships.
A large chunk of folks that simply couldn't no longer afford the minimum fee
to get a guardianship conservatorship because the costs of guardianship conservatorship legal work went up because of all the accompanying documentation.
Joe, what was your take on that rollout and how things have gone subsequent?
The rollout was a shock compared to what we had to do before.
It was a lot more work, a lot more extensive work, and, you know, as I said before, government typically has a one-size-fits-all and doesn't fit anybody as well as it should.
At the same time, given the fact that there's been a lot of elder abuse from the standpoint of people stealing assets and not doing the right thing, there was time to change.
It was time to do something about it.
And I'm thinking maybe we'll step back a little bit and thinking of the phrase, parents, patriotic.
which means parent of the country.
It's a legal rule.
It gives the state and the courts the power to protect people who cannot take care of themselves, like children, people of mental illness, or others who need a guardian.
That's really where this is all coming from.
And Nick had said there's a moral obligation.
That's exactly right.
And if there aren't people willing to do this, then we're sitting in there and the state has to do it.
And the state can step in.
They take children out.
I call it child in need of assistance.
They take them out of homes at times when the parents aren't doing their job.
And, you know, it's good that we have this available.
And I think the rollout, though, of the new requirements made it a lot more difficult from the standpoint of the small ones.
And I think they could revisit that and perhaps make it less onerous than it is to deal with it.
I think there still needs to be oversight.
And I think we need to be thinking about
uh from the legislative standpoint you know can we refine it now we've addressed the big problem but now can we refine it and do a better job
maybe something akin to a small estate affidavits or a short form tax return for the uh smaller less problematic accounts maybe a winnowing and a refining and a reduction in some of the uh paperwork involved joe that might be a way of taking
us
cut at it
that's what i'm thinking about
Okay, Joe, go down this road a bit.
Look at it from my viewpoint, from the courtroom standpoint.
What I normally end up with in these cases is brother versus sister or vice versa, where they're claiming that this other sibling who was appointed the guardian of the person as well as the conservator of the assets has somehow or another done something.
And we all know that
There's always family disputes with respect to this type of situation.
It's one thing to say, well, let's go get a bank or some neutral party to be the conservator, to take care of the money.
And the banks do that.
They do a good job of it.
But I know a lot of people are reluctant, saying, wait a minute, I got to pay them 2% of all the assets just to be the watchdog.
And they don't really want to pay the watchdog, and I get that.
I understand that.
If you've got, say, a family with two kids, a brother and a sister, what's wrong with naming both of them co-guardia and require both of them to sign on this or that so they both watch each other?
John, you've lived in this world many times, both as a bank trustee.
What do you think about co-conservatories?
Well, it would work in a situation where you've got brotherly love, Philadelphia,
However, many modern relationships model the biblical model of Cain versus Abel.
And unfortunately, where there's money, there is sibling rivalry on steroids.
And a lot of times there's emotional baggage going back to childhood, parenting, those sibling relationships that makes rational decision making something that is three standard deviations away from what would be the ordinary mean of rationality.
So say that in English.
Brothers and sisters were always fighting, and in a tie, who wins?
It's better to have a competent officer of the court, especially Nick.
Let me put it boldly here.
Taking care of dad and mom is one thing.
Managing the investment portfolio is a whole kettle of fish different, and most lay people have no time or talent to be able to monitor and invest prudently.
a portfolio of assets in accord with law.
It's a prescription for disaster.
It's really unfair to the kids.
And again, you get what you pay for.
You need a fiduciary who can do a proper investment protocol along the lines of what's mandated at law, the Uniform Putin Investor Act, as codified by each of the individual states from the monolac.
Okay, well that's assuming, John, there's enough money in there to run, you know, investment accounts and doing all that high-level financial stuff.
But what if you don't have that?
What if you've got just a plain mom and pa with a house in the suburbs or that type of thing?
And you got to keep them going.
You got to get enough money coming in off the Social Security or insurance or whatever it is to pay the nursing home.
You know, they're not really concerned about investing it and growing it.
They're just concerned about paying the bills to keep mom or
dad alive.
It has worked if you've got congenial fraternity going on among the siblings.
However, I still believe it's important to have a backstop, at least some sort of advisor.
or corporate fiduciary as at least an agent for you.
Maybe you are the conservator, you are the guardian, maybe you're even the trustee.
But remember, most of these people at least have automobiles, they at least have homes and something left in an IRA or a 401k.
And Nick, add those two together today, you're at half a million dollars, one way or another.
Okay, it's a half a million dollars, the amount that you think there has to be before it makes sense for a corporate fiduciary to jump in.
You know, I would say this Joe, it's a pretty good threshold because if you consider a 2% fee for the management of that, that's about 10,000, and you break that up, that's $800 a month, and that tails possibly
farmer asset investments, tax lot tracking, basis tracking on taxes, filing of tax returns, filing of reports with the court, paying the bills, ascertaining what the bills are, finding where the income due is owed, collecting the income that is due.
All of those are pertinent to being a conservator.
And yeah, $800 doesn't go very far.
Shoot, that's two hours of legal billing for a
corporate fiduciary bank it's much less per hour but still you know it's one thing to put the money in invidia if you put it into junk bonds and lose it all
not only is the family legacy squandered, but maybe the nursing home money for dad and mom.
John, I can't sell that to my clients.
I'll be honest with you.
If I'm going to say, look, we need to hire a bank here at 800 bucks a month to monitor and take care of mom and dad's funds, okay?
They're going to have, I have a hard time selling that to the average person.
Is there a better way?
That's my price for a watchdog, John.
You know it is, except if you're a nationally renowned trust company that has an average annual return in their conservative portfolio of 10%.
They're still netting 8% a year after the fee.
You've got to look at it from that vantage point too.
But yeah, Nick, you're dubious.
There's a shortcut.
Then you need to get
a family in agreement, a priori, about how things are going to go down.
There's got to be an esteemed, premised inter-Paris, first among peers, sibling that's willing to step up the task, or you have joint siblings that are involved, either as powers of attorney or guardians, and you have a way to break the tie.
And I mean, yes, a good counselor, a good attorney, Nick, you're the mediator of all
mediators, you can find common ground.
The problem, Nick, is always that one bad apple in the bunch.
If there's three siblings, usually one is a problem.
If there's five, one or two are a problem.
And beware of the outlaw in-laws, they're the ones that always are the wild card.
You may have five siblings that love each other dearly, but if a daughter-in-law or brother-in-law gets in the mix and gets a little too potty,
It throws the hole, it just comes up all the works.
Okay, what about a friend?
Let's keep it outside of the family.
I'll say another relative, an uncle, a brother, somebody like that.
Forget the siblings, because I get that.
I mean, they'll fight.
We all know that.
But what if you just go outside of that?
John, and get a trusted friend or an uncle or that type of thing.
Sure, that's fine as long as uncle doesn't go to the casino and spend all the money gambling overnight or doesn't go to Vegas and blow the wad there.
The problem is, who's the recourse if that person in charge of the assets steals it or fitters it away?
At least
with
the corporate,
yeah, go ahead.
Okay, John, I think I can solve that.
What about getting a bond?
You know, we wave bonds all the time, and I'm on the other end of these cases going, why would you do that?
You're waving the only resource you have to get any of this money back.
Yeah, yeah.
A bond could be a way of solving that.
If you've got amenable people, and of course, the court will have some ability to vet for appropriateness, this other relative coming in, and you see this a lot, you will see a trusted
Cousins sometimes in many situations what we have seen you'll have a childless couple or a couple whose children have not survived them or a situation where there are no children perhaps living in the country You know for whatever reason they're in absentia and yes, then you go to Some consangrious or blood relative.
Maybe it's a second cousin twice removed, but someone with a bearing
on the case, and of course, Nick, the key there is to ensure that that person is not such a beneficiary, that their judgment could be clouded.
You have to maintain the propriety and the lack of a conflict, which begs the question, if you're in line to inherit a third or a half of it, does that cloud your judgment, especially vis-a-vis this?
What happens if you've got an income beneficiary like a widow
And you've got children that will inherit after the widow's demise, and they're looking for appreciation.
You already are juxtaposed with an immediate conflict just in taking care of senile dad with the second wife and the kids from the first marriage.
Problem, problem, problem.
I've seen it over and over and over.
But you're talking about a bond here, Nick.
So let's assume that you've got people, maybe they've got
a couple million dollars to deal with and we're not doing the corporate fiduciary so you want to get this trusted uncle and you want them to have a bond.
Are you going to be asking for a bond for two million bucks?
Sure.
Okay, so now you're going to ask for a bond for two million bucks.
And John, what's that bond going to cost?
That's going to be an expensive bond.
I haven't checked rates lately, but you're going to be back up to several thousand dollars.
And then we go a little further.
The bonding company's not going to bond me for two million bucks unless I'm worth two million bucks just in case I steal it.
That's the rub.
See, it always comes back to who's got the deep pockets.
This is why I've always said, why be bitter at Uncle Harry if he goes on a bender or spends the money on loose women in Vegas?
You got no recourse.
At least if a national bank with trust powers screws up, you're going to get your money back, folks.
These guys are so regulated, they have to have such deep pockets, not only
in their trust reserves, but in their errors and omissions and all the other coverages.
All right, so I'm trying to figure out a way to save these people money, John.
How about you do this?
You get old Uncle Harry here, and you're concerned that he's going to go on a bender out of prairie meadows or whatever it is.
But then you have another watch that you get two people to have co-conservators, okay, to watch each other.
You're very present.
We have a thing at law called a trust protector, which can do that very soon.
Then you can save all that
money
a month.
I was the night talking about somebody else whose job it is to watch Uncle Harry, to make sure Uncle Harry doesn't do something stupid, and Uncle Harry's job is to make sure that Uncle Steve doesn't do something stupid.
Is that what I'm hearing?
Yeah, and you have to pay the trust protector.
So I always say you get what you pay for, and you got to pay the piper at some point.
Okay, but you brought up a term, trust protector.
Now that's a new term in the law, okay?
A few years ago,
The concept of a trust protector was put into the trust code.
And you were the legislature, I think, John, at the time that occurred or somewhere in there.
What exactly is a trust protector?
Nick, as like Joe said, it's an overseer.
You know, it's a check and balance.
You guys were always talking about checks and balances in our government.
A trust protector, in a way,
It's not a perfect analogy, but for those familiar with dealing with cases of children, it's almost like a guardian ad litem where you have somebody making sure that the trustee or that person is doing their job appropriately.
And again, where that comes in, they can interdict and sniff out.
bad behavior, believe it or not, oftentimes there is bad behavior by powers of attorney holders, by guardians, by conservators, as well as by trustees.
And again, it's just another series of checks and balances.
You point out something, it's really a delicate balance.
As we said,
Well, with the Iowa law faculty and wanting to impose more accountability in guarding conservatorship law, it addressed the need that was out there.
There was a huge explosion of senior and elder abuse due to largely the increased longevity, but also the even greater value of Iowa farmland, which all of a sudden
20 years ago, crept up above 10,000 acre with no end in sight.
Yet on the other hand, indeed, Nick, what you have is an unaffordability question for people under half a million to have somebody really competent manage the money or manage that portfolio.
Therefore, I think the solution is a streamlined process for small conservatorships, along with essentially
a default trio of asset allocation investment silos that can be chosen by default under a statutorily created elective option where you would not have to have active financial management that would be paying loads, funding back in loads, or even investment advisor fees, but would be more akin to investing in essentially low-cost
index funds, like a Vanguard fund, an index fund that's low cost, that's not managed aggressively or actively, and would not need to be done so.
This would really mitigate the costs of the investment wing of things, and it reduced some of the draconian reporting requirements to essentially a short-form federal tax return.
I think you can thread the needle here.
and have safeguards and prudence without costing folks a fortune.
The other onus I would put on all professionals, attorneys do this all the time, but I truly believe that an appeal to noblesse oblige, so to speak, at
our national bank.
I'm not following you, John.
What do you mean a noblesse oblige?
Explain in English.
Yeah, I mean that in my career,
At my law and career, I worked for three tremendous bank operations with trust powers.
All three, some were giant, some were smaller.
We had Papa Bear, Mama Bear, and Baby Bear.
And Nick and Joe, every single one of those, believed that they had a moral duty to help the indigent, to essentially de facto for pro bono, to help the widow, the orphan, the veteran.
the person with dementia.
And as all goes back, we've been talking about the ascent of the neo-socialism and wither capitalism and free markets.
Adam Smith, who wrote The Wealth of Nations, the founder of the modern free market system, always believed that undergirding the free market was a consciousness and a conscience, which basically
embodied the Judeo-Christian decalogue values and would help the poor and the needy.
So I saw a lot of my colleagues take up that slack.
But again, every state's different, every region of the state's different, not all firms are the same.
But again, you do have those people standing in the gap to help those who cannot help themselves.
And I saw that a lot.
And I'm very proud of the three institutions for whom I
did this work for First National Bank of Omaha, TS Bank, Trainer State Bank, and Security National Bank of Omaha.
You know, what's time for a station identification, John?
It is, Joe!
Joe Piper would tell you, and Nick would second the notion that you are listening to Iowa Law Talk with Joe Piper, JDS Squire, and Nick Cratelly, JDS Squire, Hawkeye, and Bulldog alums, respectively.
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Back to you, Joe.
We're a little bit after 1230.
Sounds
good.
Nick, we've talked about it when we've seen these high-profile conservatorships.
You may remember Britney Spears was in the news for a long time, and there was a free Britney Spears movement, and finally she was able to get out of the conservatorship that her father had had her in for some time.
If there's somebody in a conservatorship, what does a protected person have to do?
to get out
of it.
Joe, this is huge before Nick answers.
I just want to tell you guys, Joe's just scratched the surface.
Britney Spears.
Let me talk to you about Katie Kasem or even Tim Conway.
Guys, type in Hollywood conservatorships.
Those have been part of some of the most epic battles on Mickey Rooney.
If you guys think this is made up stuff, Hollywood is replete with family warfare, largely because of multiple marriages.
But man,
It is a treasure trove.
So this is really, we're fishing across home plate.
This affects everybody, the rich and the famous as well.
Nick?
Wow.
That's a real can of worms, Joe.
When I read about the Spears Matter in particular, I thought, well, why is she under a conservatorship?
Or a guard, I guess it was a guard.
Yeah, it was a conservatorship.
Why do you place a otherwise healthy adult under a
conservorship where you take away from them the power to make their own business decisions on any kind of legal matter.
Is there something so mentally defective about them that requires that?
I mean, did she agree to it?
voluntarily, if so, why?
And I'll say this, if a client came in here and said, look, my son or my daughter wants to put me under a conservatorship, I'm going to say, why?
What's the purpose for this?
Let's put it like this, folks.
It's unusual in a healthy situation.
It's not unusual in a dementia or on Alzheimer's or
or even a physical, severe physical thing, but it is highly unusual, in my view anyway, when they're not.
John, seeing that and Joe, you've lived in, I think, in such situations.
Yes, and you know, in my brother's situation, he's been mentally handicapped since birth, and so he didn't have the background.
He wasn't going to be able to take care of himself.
So it was easy to set up.
the conservatorship and the guardianship and prove what needed to be proven.
The question was, but in Britney Spears, there were some problems that happened.
And so the question is, what caused her to be in that conservatorship in the first place?
She
had a mental health crisis is what they say.
There's public erratic behavior and a couple of involuntary psychiatric hospitalizations.
So there was a lot going on.
Before she was put in a conservatorship and her father cited concerns for physical emotional and financial well-being and said hey There needs to be a conservatorship set up and must have that the burden of proof now the burden of proof to have a conservatorship is by clear Inconvencing evidence
it was pretty high.
Well.
Yeah, so now let's talk about burdens of proof.
Yeah, we know that
You can't convict a person of a crime unless it is, uh, beyond a reasonable doubt.
And then you've got the clear and convincing evidence, which is less than beyond a reasonable doubt.
And then you've got a preponderance of the evidence.
So if I'm looking at those three, the lowest of those three is preponderance of the evidence.
That's basically 50.01%.
That's preponderance of the evidence.
Clear and convincing.
You're probably up in 60, 70%.
Would you agree with that, Nick?
Yeah.
Yeah.
And then beyond a reasonable doubt, that is, you're looking at having six or 12, however many people you have on the jury, all saying yes.
And they can't say if there's any reason not to.
John, what do you think of those?
Joe, I think that this is just so important.
These are life-changing events for people that can literally destroy the ward if it's not done properly and the idea of helping them.
may end up being hurting them.
Let's look at the Britney Spears situation.
I would just like to take a look at that for a second.
So she had years of struggling with mental health issues.
She had a breakdown in 2007.
As you recall, she shaved her head and was attacking the paparazzi.
So her father had put her under his control, but for a very long time.
And listen, her conservorship governed
Nearly every waking moment of her life literally from what she ate to whether or not she was allowed to have another child with her husband She was not even allowed to have a cell phone Okay, she spent nearly 14 years under that strict conservatorship before a judge ordered his dissolution in November of 2021 I mean that's that's really something when you when you look at if it's even over your
Reproductive rights there Brian Wilson from the Beach Boys He had been placed under legal conservatorship at the age of 81 and that wasn't his first time he had been struggling with mental health for many years He'd been hit on the head as a child with a 2x4 Resulting in permanent hearing loss, but he had a breakdown in the 60s had resigned from the concert tour was diagnosed with bipolar schizoaffective disorder and then his psychologists
began controlling everything, and his doctor became his business partner and started controlling every aspect of Brian's life.
He overmedicated him allegedly to make him easier to control, charged him 100,000 per month for his care, and controlled who he could speak to.
He even changed Brian's will to make himself the main beneficiary.
Now, eventually, Brian's cousin was granted a conservatorship, breaking the hold that the doctor had.
and the doctor had his license revoked.
Ryan was on the road to recovery, but in his conservatorship was short lived because then his mental capacity went into decline again, and he had to deal with a second conservatorship due to major neurocognitive disorder, which has been reported as dementia very late in life.
And he agreed to that second conservatorship.
This time though, the second conservators were his two longtime associates, his manager,
and his publicist, and, importantly, all of his seven children were consulted regarding health care decisions.
So guys, just a couple samples there, you know, but Amanda Bynes and Joni Mitchell and Randy Meisner from the Eagles and Casey Kasim as we had alluded to.
That's a very sad story that went on for a long time.
Laika Ohar from the movie The Blind Side.
Very interesting story there.
So guys are touching on all these issues, Mickey Rooney.
And again, sometimes the care can be worse than the malady, so to speak.
You got to vet these things very, very carefully.
Well, that's a good point, John.
As an aside, the Iowa Supreme Court requires that if a lawyer is going to be appointed a conservator or an executor,
or trustee, and so forth, they must have a bond.
That's not waivable.
We have to report that every year to the Supreme Court on our annual reporting, one of our annual reportings.
And yet, Nick, as we alluded, that was a barrier because I heard so many people say, we can't afford a bond.
We can't afford the bond.
It's too hard to get it.
It costs too much.
So that was...
But John, it's also protection.
Everything we've been talking about here.
deals with protection.
Protection costs money.
And you're protecting your family when you do that.
Well, I told people as a trust officer for many years that it costs money.
And of course, it's like paying your lawyer or extracting your own teeth or doing your own plumbing.
You end up getting an abscess, flooding your neighbor's apartment, or sometimes, you know, someone who's his own lawyer in court tends not to fare well, you get.
what you pay for, and it gets back to that pennywise and pound foolish admonition, my friends.
So, Nick, as a guardian or as a conservator, what should I do to minimize the chances that, let's say, my siblings decide I might not be doing things quite right with mom and dad's property?
Keep them in the loop from what I see.
People coming into my office, Joe, wanting to sue.
There's a common refrain.
I don't know what's going on.
They don't tell me anything at all.
Okay, I have no idea what he's doing.
I have no input.
And that's what brings him into our office, Joe, is the lack of, today we'd call it lack of transparency.
And Nick, what I've seen often is if one brother or sister is in charge and lives near dad or mom, and the other is not.
approximately located and they're not as in touch.
They are suspicious.
Oftentimes, routine expenditures is the nearing the benefit of the child living with the parent or maybe being extraneous expenses that aren't even needed by the parent.
They're often afraid, whether justified or with paranoia, that somehow they're getting the shaft on their inheritance because the other brother is somehow gaming the system.
in favor, maybe even as a color TV for dad.
Dad didn't need a color TV.
That's so that my mother can watch weekend football.
I see it
over
and over again.
So it's that accountability of what the checkbooks are, keep the receipts, report regularly, be as transparent as utterly possible, and maybe in your documentation, a good trustee will make sure this is in the documentation when a trust is drawn.
Have in there,
What expenses are envisioned as routine and ordinary, and what the threshold is for extremist expenses?
Okay, so you're telling me, keep the best records I can, keep the other potential beneficiaries informed.
Now, as I inform them, what if they decide they don't like it?
What are their remedies at that point?
So I'm doing everything that John and Nick have just said, but now one of them comes in and says, Nick, sue the bastard.
Right.
Right.
So then, okay, in other words, you've kept them informed that basically they disagree with the way you're doing things.
Correct.
And they come in and I look at it and go, okay, well, I understand disagreement.
But is your disagreement reasonable?
What are you basing this on?
You know, and you deal with that.
So obviously the first, you really have three remedies, Joe.
Number one, you can begin negotiations to try to resolve the dispute.
It's like any dispute resolution, okay?
Call up the lawyer representing the conservator and say, what's going on here?
We've got an issue and try to get it resolved.
If that doesn't work the second remedy that you have is what I refer to as pre litigation mediation and that is we're going to file a lawsuit We're going to claim that there's been a breach of your fiduciary duty You're not complying with reasonable standards and and have basis for it not just a threatening lawsuit But I mean a well-grounded research position and if that doesn't work then you have to file the lawsuit and bring it to the attention of the court There's a lot of
steps in between.
For example, if you're dissatisfied with the way your brother's monitoring this, then let's figure out a way to get you satisfied.
Let's bring a neutral in, a third party.
Like in any dispute resolution, there are ways to do it.
But each time you ratchet it down, you get further and further in towards the courthouse, folks, it costs money.
And it gets intrusive.
And Nick, one little point, it seems obvious, but it needs to be restated.
Sometimes you see a combination of guardian slash conservator.
I would always recommend those rules be bifurcated and split up.
It's like having an offensive coordinator Bill Snyder under Hayden Frye and having him trying to run Bill Brescher's defense or Bill Brescher trying to run the offense for Coach Frye.
They're two completely different skill sets.
Running asset preservation and growth versus the individual health care
in custodial needs of the ward are two completely different situations.
Only Adam West's Batman could take care of Dick Grayson both financially and as a personal ward, but they were Batman and Robin.
Come on, man.
Okay, what do you expect, right?
What you saying?
Exactly.
Only superheroes can do that job.
So now, okay, we've talked about that, and we're going to provide the best information we can.
We're going to keep them in the loop.
And then we're going to hopefully avoid the courts.
All of this stuff we're talking about here, we talked about John saying, well, 2% or something like that.
And he said $800 a month for a half million dollar estate.
So if we start talking about what it costs to go down the other path, what's that going to start costing us, Nick, if somebody
with this half-million-dollar estate decides that they want to, we've got two siblings in there, and Brother A's, Man at Brother B, Cain and Abel are upset.
What's it going to cost Cain to sue Abel in order to deal with the alleged defalcation?
Joe, why stop it, too?
What about four siblings with four lawyers?
That's how many legal fees you're going to have, Nick.
Well, welcome to my world, guys.
I got about four of these cases going, OK?
And you try to tell people, calm down, OK?
You're going to spend more money in dealing with this, that, and the other thing, that it's not worth it.
We've got one going, and I think the lawyers in the case are all acting reasonably like, you know, get people to resolve this.
And let me throw this out.
When you start dealing with these kinds of cases, these, based on what they are, Joe, they're a lot like their family law disputes, but kind of similar to a divorce.
All the emotions that you get in a divorce with child custody,
and property and maintenance and all that type of stuff, you get in these type of cases.
So one of the things that lawyers like to do is to get it into mediation to get it resolved.
The problem is this.
Mediation can be looked at as either a process or an event, a process or an event.
An event style mediation does not work.
Correct.
It's not a one-time operation because it's emotional.
All right?
The process works well, okay?
So, but it may take, in fact, I just literally sent out an email here before we started this broadcast, a client saying it's going to take at least four meetings to get people to fully event and get it out.
There's a process that you go through.
It's the same process that you go through.
that your doctor experiences when they have to give you bad medical information, like you've got cancer or whatever it is, okay?
Elizabeth Kubler-Ross was a psychologist and she identified that there were five different stages of grief that people go through, okay, before when they get bad information about medicine.
It's denial, anger, bargaining, depression.
and finally acceptance.
Now, I found in my practice that people in highly emotional disputes, in fact, I'll go so far as to say people in almost any dispute have to go through the same process to get to resolution.
Now, when you get some time, I highly recommend that you go to YouTube.
And what I'd like you to type in there is Kubler Ross Giraffe.
K-U-B-L-E-R Ross-R-O-S-S giraffe like the animal.
This is an animal caught in quicksand and he goes through these five stages of grief.
The first one being denial and then he gets into anger and he goes through all of them.
Look at this and listen to what that giraffe is saying.
I see this every day in these disputes, okay?
And that could be, we've had multi-multi-million-dollar international disputes, John, dealing with high-level financial instruments and so forth with some of the world's largest companies, and they all go through the giraffe problem.
Knowing that, you can use it to your advantage, because you can deal with the timing.
It's a process.
In an estate and trust dispute,
Family feud, it's a process on steroids because getting them from anger into bargaining, okay, is the trick.
Okay, how do you make the transition?
And that's where the, you know, a skilled mediator or a conciliator can, you know, can figure out ways to do it.
We have tricks to do that.
Sometimes they work, sometimes they don't.
But that's the process that is used.
Kubler-Ross.
Right.
Nick is brilliant, Nick, literally turning anger into bargaining.
That's where you have to shift.
And that's, that's exactly what a good mediator does.
That's frankly the only way you're ultimately going to resolve.
Right.
And it is a process.
You know why?
You know what that is?
So I have a friend of mine who's a psychiatrist.
We talk a lot about this stuff.
So we start, and he also took some mediation classes.
So we, on Sunday afternoon, we chat about stuff.
So here's what it is.
It's where the dispute is located.
A dispute that we're talking about is located in the amygdala portion of the brain.
This is where emotion resides, you know, the fight or flight, that type of thing.
And they don't care about the money.
Okay.
The lawyer or the decision influencer or the banker is concerned about the money.
What he wants is, hey folks, it's going to cost you too much money.
That's a message they won't even resonate to.
They don't want to settle them at John.
They want a judicial spanking of their
brother.
Oh, it's true.
I've seen people spend $100,000 of legal fees over a $500,000 reserve assets.
That's crazy.
Easily with all the legal fees between all the fighting siblings.
maybe approaching 33% of the whole asset base.
Right.
So that's where the problem is.
They wanted judicial spanking.
So the trick is moving the dispute from the amygdala up to the frontal, the orbital frontal cortex of the brain, where rational decision making cost-benefit analysis is.
Now, the only way you're going to move that is through time and a lot of talking.
Okay, and a lot of
hate to be crass but does a lot of cash assuage the wounds sometimes as a No, it's not
about the money That's the thing that we had and I've seen this with mediators right when I teach mediation Well, we'll just do the offers here.
There's folks.
It's not about the offers.
It's about something that occurred me were 12 Nick, you
know how I can prove that you're right poppers will argue over
over pots and pans.
Poppers, if there's family dynamics to where people that die basically penniless, there will still be a fight over assets.
There'll be fighting over who gets the pots, the pans, the silverware, and it's unbelievable.
It's just amazing.
And so, we're talking about getting it in from the amygdala to the frontal cortex here.
You've got to get all parties to that same stage at about the same time.
one party, your party, and my party.
And if there are three of us, all three parties need to get there at the same time, and then they're ready to do it.
And a lot of times that you're discussing this, we need to hear the other side out.
And as lawyers, we have to tell our client, calm down, you're going to get a chance to say your piece to, you've got to listen to them, and then you're going to get your chance.
And then you keep moving it and keep moving it.
And then if you get going,
if you get some little incremental victories in there we get a couple of things going then we get a third thing going and a fourth thing going and if you get the momentum going you don't want to stop until you write the damn thing up is that right
right so i mean it's all timing but this is it just takes a lot of experience and it's not what i've seen is that we have some very very good mediators in iowa uh that aren't automobile accidents and contract disputes when it comes to these kind of disputes
Okay, you have to realize mediation is a process, not an event.
Yeah.
That's my speech for today.
Sorry about that.
You just asked literally was just working on this stuff.
So guys, we've got a few minutes left before final arguments.
I do want to fill this out to Joe and Nick.
What do you guys see now?
We're in a very, very investment savvy world where we've got people who think they're day traders spending five hours on the computer.
buying stocks and bonds and yes many of these people because of their their incompetence in terms of market timing not being buy and hold but having that day trader mentality they get out at the wrong time they get in at the wrong time and there are many blunders made by amateurs with investment portfolios and everybody essentially has some investment portfolio any mom or pop that you're taking care of
usually has some sort of 401k or IRA or something that involves investments in stocks, bonds, mutual funds, etc.
How do you guys navigate in that world even in a probate situation where you may have an estate that's going to take a year or two to close out due to complexity and assets?
And yet, who's binding the store?
Who is competent to make the investment decisions so as to be immune from an angry relative who says, hey, the market went up 10% this year.
You were down 10.
I'm suing you.
Well, luckily, I don't have to make those decisions, John, because I'm always on the suing end.
I just hope they have a very good lawyer like Joe and these planning and business lawyers can sort this out.
I don't know how you deal with that.
I'm not sure how you deal with that.
I don't do probing.
I've got an answer, guys.
My impression was somewhat rhetorical.
The answer is...
Even if you are the executor or administrator or whatever term each state uses for an estate, you are allowed to delegate.
Under law, you may delegate specific investment management decisions to an expert as long as you have done appropriate asset allocation, which means diversify using modern portfolio theory.
And if you retain even as
a lay person whose dad or mom's executor or administrator.
If you retain, let's say it's not a trust department, but it's an investment advisor, someone from Edward Jones or whatever, you make sure you've got somebody with a fiduciary duty who has the ability to use modern portfolio theory, asset allocation, and select for you.
They don't have to select individual stock and bond portfolios.
That's very expensive.
All they need to do
is figure out what the major asset class style return categories need to be for the risk factor.
Large cap value, large cap growth, small and mid cap stocks, international, long-term bonds, short-term bonds, some cash.
Seven categories, the people who are going to inherit, what's their time horizon, what's their need for immediate cash, what's their risk tolerance.
Once you divide 100% between and amongst those seven asset classes, you are allowed to deputize
a financial expert to make the individual stock and bond investment decisions for you.
What's really great is now you can leverage cheap, no-load, low operating costs, index, mutual funds that will mirror the style returns of the market.
It's awfully hard to outperform the aggregate market without spending excessive money and remain prudent during that year or two during this date.
So if you happen to be appointed in 0809 when there was the housing crisis, or even during the COVID year, when the market was down 33% after the first quarter in 2020, you still have some immunization as having been somewhat prudential in your approach.
Well, John, I'm going to call them the fiduciaries, whether it's the bank or the trustee.
So under the
Co, they have the right to engage professional services.
Absolutely.
That wasn't always the case.
The old widows and orphan standard before the modern trust codes were put in, you could do nothing more than put money into an FDIC insured checking or savings account.
We know the interest rate return on those.
And once hyperinflation hit, we had to change the ball because we were running an inflation rates of 10 to 15% per annum with trust accounts making one to 2% a year.
and the corpus was being invaded and destroyed in five years.
Thus, modern portfolio theory rescued the inflation sort of Damocles, and now we're back to where, even with a 2% fee, if you're making 9% a year on the stock market, you're still getting your client a net annual return to 7%, not bad, bad.
Okay, so now, John, it's all fine and dandy if you've got this liquid set of investments you're talking about.
What if it pops with 500 acres of beautiful Iowa farmland and not much else?
How are you going to deal with that in the year or two during probate?
Yeah, that's where you negotiate with your friendly banker for the equivalent of what our home people might call a reverse mortgage or a HELOC or whatever.
You essentially use collateral, use assets to free up some liquidity to pay bills on the interim.
If you're actually a farm manager and a good one,
you can work the cash flow out where you buy your inputs at the correct time at good prices, where you sell your grains at the correct time, where you store it at the right time, and if you run an efficient farm operation, that's simply cash flow management.
Again, a relative who's not an absentee farm person can really help keep that operation going.
If not, normally what happens under auspices of court
is a farm manager will be appointed.
We have large corporate farm managers out of Cedar Rapids, out of Des Moines.
They will come in under court auspices to manage that, particularly if A, the family is fighting, or B, the next generation or all absentee have no interest in farming and have not a clue how to cash flow it on a day-to-day basis in that interim period.
Great questions, guys.
Okay, let me...
Then we're getting close to the end here.
Very close, very close.
Okay, folks, I told you to take a look at YouTube on the Kubler Ross giraffe.
I think you'll find that entertaining, but also quite frankly, you're going to find it enlightening.
I want you to do something else when you start thinking about planning your estate and leaving your money in trust to children, etc.
I want you to watch a movie.
And the movie's ultimate gift.
This is a 2006 movie, starting the guy that was on Maverick, James Garner.
Garner's a billionaire, okay?
And I may have mentioned this once before, but he decides he's not going to just make his grandson rich.
His grandson's got to earn it.
And he's got to have the right character to be a billionaire and to see to it.
What I'm seeing is that we give our money, okay, to our children and grandchildren and so forth.
They haven't earned it.
They don't know how to deal with it.
And they're just on grandpa's dole.
And are we really helping them?
Seriously, are we helping them?
You know, over my career, I've made many, many people, millionaires, Johnny, through jury verdicts and that type of thing, too many to count.
And I look at them and I go, what have we really done?
Has this helped their life at all?
You know, we say, yeah, I've got a million dollars.
Of course, it's going to help my life.
Really?
I'm not totally seeing that.
So be careful, folks.
When you give your money to somebody down the road, down your inheritance road and so forth, this is all great things.
But are you really helping them?
Where's their character?
Watch that movie, The Ultimate Gift.
That's my pitch, John.
Food for thought.
And that was Nick Cratelli's final argument of this episode.
And now the last word.
Today goes to Joe Piper, J.D.
Esquire of Ag and Business Legal Solutions at Strategies.
He solves them too, but Strategies on Hiawatha Marion and Cedar Rapids.
Joe, final word.
Go.
Important to be a guardian or custodian or a conservative for a protected person, not a ward, John.
They change that in there.
But if you're going to be a guardian or a conservative, understand what your obligations are.
Keep the lines of communication open.
Have open communication with the protected person.
And if you're a conservator and there could be other parties that could get money later on, it's good to have transparency.
File the reports as required.
If you don't do that, you're asking for trouble.
It's common sense.
Keep the transparency there.
keep the receipts and make sure that you're always operating in the best interest of the protected person.
If it's a guardian, it's all their things about keeping them life, liberty and pursuit of happiness.
And if it's as a conservator, it's giving them the things they need and protecting the money or the assets so that's ready to go.
It's important to have transparency.
and to do the right thing.
Spectacular show today, guys, and thanks for writing in your questions to IowaLawTalk at KXCL.com.
John Stewart's questions will be first out of the shoot next week here.
Joe, thanks for making that distinguishing nomenclature between Ward, now a protected person.
I'm still hung up on Ward because Dick Grayson
was Bruce Wayne, Batman's ward, and the actor who played Robin, Dick Grayson, who's still with us, the actor's name in real life is Bert Ward.
So I got Ward in my head here, guys.
Well, maybe this radio station will get an award by the Iowa Broadcast News Association.
I've heard that there are already some nominations going in.
So kudos to Critelli and Piper on that.
This is John Jacobs with Sean Xavier, our great engineer, saying, tell your friends about the show.
Have them go to kxcl.com slash podcasts and click on the various episodes.
of Iowa Law Talk.
We're in our fourth month already.
Or just get on your browser and click Iowa Law Talk KXEL.
You will hear the sage wisdom of Messers Critelli and Piper.
For the whole gang here, John Jacobson saying, be safe, be smart, be good, be strong, be a good, de facto, informal guardian and conservator for all your loved ones.
Thank you, dear Lord, for the rain harvest upcoming.
We are grateful that Iowa still feeds the world.
So we meet again.
Bye-bye.
