In re Disciplinary Action Against Fett

790 N.W.2d 840, 2010 Minn. LEXIS 720, 2010 WL 4781430
CourtSupreme Court of Minnesota
DecidedNovember 24, 2010
DocketNo. A09-1862
StatusPublished
Cited by9 cases

This text of 790 N.W.2d 840 (In re Disciplinary Action Against Fett) is published on Counsel Stack Legal Research, covering Supreme Court of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Disciplinary Action Against Fett, 790 N.W.2d 840, 2010 Minn. LEXIS 720, 2010 WL 4781430 (Mich. 2010).

Opinion

OPINION

PER CURIAM.

On September 29, 2009, the Director of the Office of Lawyers Professional Responsibility filed a petition for disciplinary action against Donald Fett, an attorney duly licensed to practice law in Minnesota, alleging that Fett violated Minn. R. Prof. Conduct 1.11 and 1.4(b)2 by advising a client to act in a manner contrary to the express terms of a Minnesota statutory short form power of attorney. After a hearing on the Director’s allegations, the referee we appointed found that Fett had committed professional misconduct and recommended that Fett be publicly reprimanded and placed on unsupervised probation for a period of 1 year. Fett con[843]*843tests several of the referee’s findings and conclusions of law and the referee’s recommended discipline. We conclude that the referee did not err in his findings of fact and conclusions of law, and we publicly reprimand Fett and place him on unsupervised probation for a period of 1 year.

Donald Fett was admitted to practice in the State of Minnesota in 1977 and, since 2002, has practiced exclusively within the areas of estate planning and elder law.

The current disciplinary matter arose from Fett’s advice to R.G. On July 9, 2008, R.G. met with Fett to discuss medical assistance planning for his brother, M.G. At the time, M.G. was 88 years old and suffered from dementia, depression, and blindness. M.G. was in a nursing home and was no longer competent to handle his own legal affairs. R.G. explained to Fett that he wanted M.G. to receive the care he needed, while protecting M.G.’s assets for distribution according to M.G.’s wishes, after M.G.’s death.

During the meeting on July 9, Fett learned that M.G. had assets of approximately $607,000, monthly expenses of approximately $6,600, and income from social security of $900 per month. R.G. and a third brother were authorized signatories on M.G.’s checking account.3 With the exception of the checking account, all of M.G.’s assets were in forms that allowed for transfer at death.

In addition, Fett learned that R.G. was attorney-in-fact for M.G. under a Minnesota statutory short form power of attorney. See Minn.Stat. § 523.28 (2008). By a power of attorney, a principal grants certain powers to an attorney-in-fact. A statutory short form power of attorney lists 13 specific powers, such as the authority to enter into real estate, banking, or gift transactions on the principal’s behalf. Id., subd. 1. These powers are denominated (A) through (M) in the first part of the form. Id. Option (N) includes “all of the powers listed in (A) through (M) above and all other matters.” Id. On the statutory short form, M.G. checked option (N), thereby giving R.G. broad authority to act for him. But in the third part of the statutory short form, principals must also state whether they will allow transfer of assets to the attorney-in-fact. Id. On his power of attorney form, M.G. made a check next to the statement “This power of attorney does not authorize the attorney-in-fact to transfer my property to the attorney-in-fact.”

During the July 9 meeting, Fett provided R.G. with a retainer agreement. Several days later, R.G. signed and delivered the retainer agreement and a check for one-half of the retainer fee to Fett’s office.

On July 17, 2008, Fett sent a letter to R.G. This letter stated that its purpose was to summarize the July 9 meeting and “to outline and review my recommendations.” In the letter, Fett first summarized M.G.’s financial situation and R.G.’s goal, namely, “to protect some of the remaining inheritance your brother had hoped to leave to you, your siblings and charities.” Fett explained that M.G. could not qualify for medical assistance if his assets totaled more than $3,000. See MinmStat. § 256B.056, subd. 3 (2008) (establishing eligibility requirements for medical assistance). Fett advised R.G. to transfer all but about $3,000 of his brother’s assets out of the brother’s ownership “as soon as possible.” To accomplish this, [844]*844Fett advised that M.G.’s assets be liquidated and the proceeds deposited into M.G.’s checking account, on which R.G. was an authorized signer. Fett advised that R.G. “then write a check or checks to accomplish the gift in a total amount that will leave about $2800 in your brother’s account.”

Once M.G.’s assets had been reduced to $2,800, the July 17 letter advised R.G. to apply for medical assistance for M.G. “to trigger the penalty period.” This is an apparent reference to Minn.Stat. § 256B.0595, subd. 2 (2008). Under section 256B.0595, an individual who makes uncompensated transfers of assets is ineligible for medical assistance for a period of time, the length of which is determined by dividing the uncompensated value of the assets transferred by the average per-person medical assistance rate for nursing facilities in the state in effect on the date of the application for medical assistance. The July 17 letter advised R.G. that if all of M.G.’s assets could be transferred out of M.G.’s name by the end of July, the “penalty period” would begin as of July 1. During the penalty period, Fett advised, R.G. should deposit funds into M.G.’s checking account as needed to pay for his care. Once the penalty period ran, Fett advised, R.G. should reapply for medical assistance for M.G., who “will then qualify for the benefit.”

The letter advised R.G. to ultimately deposit M.G.’s funds into an account in which M.G. himself had no ownership interest, but in which funds would remain available to pay for M.G.’s care until he qualified for medical assistance. Fett acknowledged that the short form power of attorney executed by M.G. “does not allow you to transfer assets to yourself’ and described “the ownership and control of the gifted portion” as “problematic.” The July 17, letter nevertheless advised: “From the standpoint of simplicity, it is easiest if you own it, invest it and continue to transfer funds into your brother’s account to pay his expenses” and further advised that once M.G. qualified for medical assistance, “[t]he remainder of the gift to you will be yours to keep.” The letter then lists “some problems with this approach,” such as the fact that R.G. would have to pay taxes on income generated by the funds in the account and the possibility that M.G.’s other siblings “may be very suspicious of your ownership.” But the letter does not explain how to reconcile Fett’s recommendation that R.G. deposit his brother’s assets into an account in R.G.’s name with the provision of the statutory short form power of attorney that barred R.G. from transferring M.G.’s assets to himself.

Fett also advised that because M.G.’s estate was less than $1 million, “there will be no gift or estate tax consequences.” Fett indicated that R.G. would not have to report receipt of M.G.’s funds on R.G.’s income tax returns, but that any income generated by M.G.’s funds would be income to R.G. that would have to be reported on R.G.’s individual income tax returns.

Fett closed his July 17 letter by urging R.G. to keep Fett “up to date as matters progress,” particularly “as you approach the end of the penalty period,” which Fett indicated the parties would be “recalculating ... as circumstances dictate.” Although the letter encouraged R.G. to call Fett with any questions or “to discuss any of these matters further,” the July 17 letter does not indicate that .any further meetings between the parties were scheduled.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
790 N.W.2d 840, 2010 Minn. LEXIS 720, 2010 WL 4781430, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-disciplinary-action-against-fett-minn-2010.