ADR full book

The State Bar of South Dakota, The Committee on Continuing Legal Education and the Alternative Dispute Resolution Committee Present:

Alternative Dispute Resolution Mike McKnight, Chair

April 13, 2018 Ramkota Hotel, Sioux Falls Presenters: Marilyn Trefz Judge David Gienapp Elizabeth Rosenbaum

Presenters will discuss emerging trends in family/divorce mediation, what attorneys can do to help facilitate successful family/divorce mediations and how family mediation benefits SD families and attorneys.

Registration – 12:30 pm, Program 1 pm This CLE is free to all active bar members – all others, cost is $100.

Agenda:

1-2 pm

Family Law and Divorce - Marilyn Trefz & Honorable David Gienapp

2-2:10 pm

Break

2:10-3:20 pm

Arbitration Basics - Catherine Duenwald and Michael McKnight

3:20-3:30 pm

Break

3:30 – 4:30 pm

Elder Law Mediation - Charlie Dorothy and Corey Denevan

If you wish to have this program submitted to a mandatory CLE jurisdiction for CLE credit, please see Tracie (tracie.bradford@sdbar.net) or Nicole (nicole.ogan@sdbar.net) at the registration desk or drop them an email.

Family Law & Divorce Marilyn Trefz & Honorable David Gienapp

F AMILY /D IVORCE M EDIATION CLE April 13, 2018

OUTLINE 1) Marilyn Trefz a)

Introduction

b)

South Dakota statutes relating to family mediation

c)

Court approved family mediators

d)

WORKS program (Minnehaha County pilot project)

2) Judge David Gienapp a)

How family mediation can benefit families and attorneys from a bench prospective

b)

What attorneys can do to help the family mediation process

c)

Personal experiences and perspective as an Evaluative Family Mediator

3) Elizabeth Rosenbaum a)

Emerging trends in mediation

b)

Iowa’s pilot program using mediation in family law cases

c)

Personal experiences and perspective as a Family Mediator

PRESENTERS Judge David Gienapp Judge David Gienapp received his bachelor’s degree from the University of South Dakota and his juris doctorate degree from the University of Wyoming School of Law. His past employment includes Clerk for the South Dakota Supreme Court, Special Assistant Attorney General of South Dakota, Assistant US Attorney, Private Practice Attorney in Madison, SD and South Dakota Circuit Court Judge. Now “retired” he stays busy as a Mediator, Arbitrator and Contract Judge.

Elizabeth Rosenbaum Elizabeth Rosenbaum is a 1988 USD Law graduate and resides in Jefferson, South Dakota. She has specialized in the area of family law and domestic relations and is a fellow of the American Academy of Matrimonial Lawyers.

Elizabeth mediates family law and juvenile cases in South Dakota and Iowa.

She has worked on local, state and national committees to promote mediation in family law cases.

Marilyn Trefz Prior to law school, Marilyn Trefz earned her MPA, worked 15+ years in Human Resources and certified as a Senior Professional of Human Resources, she returned to USD Law School. In 2012, Marilyn earned her JD and became a Certified Mediator. In 2017, she opened Redwood Mediation Services & Legal Assistance, now located on Main Street in Vermillion, SD, where she also resides. Marilyn’s focus areas include Family Law/Mediation, Elder Decision Mediation and Employment Law/Mediation.

Family/Divorce MEDIATION APRIL 13, 2018 CLE Judge David Gienapp Elizabeth Rosenbaum Marilyn Trefz

MARILYN TREFZ • Mediator & Attorney • Opened Redwood Mediation Services, LLC in 2017.

• “Empowering families and workplace families to make their own best decisions.”

• Why REDWOOD? With very short, 10-foot root systems, REDWOOD trees can only reach their full, 360-foot potential when their roots connect with roots of other REDWOOD trees, in cooperative and effective ways.

Divorce Mediation Advantages • Decisions remain with the parents.

• Parents are more likely to cooperate with terms of an Mediation Agreement that they create.

• Mediation is informal, private and less expensive than litigation.

• Children’s well-being is improved when parents cooperate as co-parents.

• Well-thought out Mediation Agreements can help children maintain a positive relationship with their parents.

Relevant SD STATUTES • The Uniform Mediation Act – Chapter 19-13A • Family Court Mediator Statutes SDCL 25-4-56 through SDCL 25-4-62

• SDCL 25-4-56 • “In any custody or visitation dispute between parents, the court shall order mediation to assist the parties in formulating or modifying a plan, or in implementing a plan, for custody or visitation and shall allocate the cost of the mediation between the parties.”

•

(Exceptions: cases of domestic abuse, parent convicted of assault, history of domestic abuse, mediation is not appropriate.)

Minnehaha County Pilot Program

• • • • •

Minnehaha County Self Represented Divorce Litigants With Children Assist with Form and Court Processes Provide Limited Mediation

JUDGE DAVID GIENAPP Judge David Gienapp received his bachelor’s degree from the University of South Dakota and his juris doctorate degree from the University of Wyoming School of Law. His past employment includes Clerk for the South Dakota Supreme Court, Special Assistant Attorney General of South Dakota, Assistant US Attorney, Private Practice Attorney in Madison, SD and South Dakota Circuit Court Judge. Now “retired” he stays busy as a Mediator, Arbitrator and Contract Judge.

ELIZABETH ROSENBAUM Elizabeth Rosenbaum is a 1988 USD Law graduate and resides in Jefferson, South Dakota. She has specialized in the area of family law and domestic relations and is a fellow of the American Academy of Matrimonial Lawyers. Elizabeth mediates family law and juvenile cases in South Dakota and Iowa. She has worked on local, state and national committees to promote mediation in family law cases.

UNIFORM MEDIATION ACT CHAPTER 19-13A 19-13A-1 19-13A-2 19-13A-3 19-13A-4 19-13A-5 19-13A-6 19-13A-7 19-13A-8 19-13A-9 19-13A-10 19-13A-11 19-13A-12 19-13A-13 19-13A-14 19-13A-15

Title.

Definitions.

Scope.

Privilege against disclosure--Admissibility--Discovery.

Waiver and preclusion of privilege.

Exceptions to privilege.

Prohibited mediator reports.

Confidentiality.

Mediator's disclosure of conflicts of interest--Background.

Participation in mediation.

International commercial mediation.

Relation to Electronic Signatures in Global and National Commerce Act. Uniformity of application and construction.

Severability clause.

Application to existing agreements or referrals.

19-13A-1. Title. This chapter may be cited as the Uniform Mediation Act. Source: SL 2008, ch 286 (Supreme Court Rule 07-07), eff. Jan. 1, 2008.

19-13 A-2. Definitions. In this chapter:

(1) "Mediation" means a process in which a mediator facilitates communication and negotiation between parties to assist them in reaching a voluntary agreement regarding their dispute.

(2) "Mediation communication" means a statement, whether oral or in a record or verbal or nonverbal, that occurs during a mediation or is made for purposes of considering, conducting, participating in, initiating, continuing, or reconvening a mediation or retaining a mediator.

(3) "Mediator" means an individual who conducts a mediation.

(4) "Nonparty participant" means a person, other than a party or mediator, that participates in a mediation.

(5) "Mediation party" means a person that participates in a mediation and whose agreement is necessary to resolve the dispute.

(6) "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government; governmental subdivision, agency, or instrumentality; public corporation, or any other legal or commercial entity.

(7) "Proceeding" means:

(A) a judicial, administrative, arbitral, or other adjudicative process, including related pre- hearing and post-hearing motions, conferences, and discovery; or (B) a legislative hearing or similar process.

(8) "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

(9) "Sign" means: (A) to execute or adopt a tangible symbol with the present intent to authenticate a record; or (B) to attach or logically associate an electronic symbol, sound, or process to or with a record with the present intent to authenticate a record.

Source: SL 2008, ch 286 (Supreme Court Rule 07-07), eff. Jan. 1, 2008.

19-13 A-3. Scope. (a) Except as otherwise provided in subsection (b) or (c), this

chapter applies to a mediation in which: (1) the mediation parties are required to mediate by statute or court or administrative agency rule or referred to mediation by a court, administrative agency, or arbitrator; (2) the mediation parties and the mediator agree to mediate in a record that demonstrates an expectation that mediation communications will be privileged against disclosure; or (3) the mediation parties use as a mediator an individual who holds himself or herself out as a mediator or the mediation is provided by a person that holds itself out as providing mediation. (b) The chapter does not apply to a mediation: (1) relating to the establishment, negotiation, administration, or termination of a collective bargaining relationship; (2) relating to a dispute that is pending under or is part of the processes established by a collective bargaining agreement, except that the chapter applies to a mediation arising out of a dispute that has been filed with an administrative agency or court; (3) conducted by a judge who might make a ruling on the case; or (4) conducted under the auspices of: (A) a primary or secondary school if all the parties are students or (B) a correctional institution for youths if all the parties are residents of that institution. (c) If the parties agree in advance in a signed record, or a record of proceeding reflects agreement by the parties, that all or part of a mediation is not privileged, the privileges under §§ 19-13A-4 to 19-13A-6, inclusive, do not apply to the mediation or part agreed upon. However, §§ 19-13A-4 to 19-13A-6, inclusive, apply to a mediation communication made by a person that has not received actual notice of the agreement before the communication is made.

Source: SL 2008, ch 286 (Supreme Court Rule 07-07), eff. Jan. 1, 2008.

19-13A-4. Privilege against disclosure--Admissibility--Discovery. (a) Except as otherwise provided in ยง 19-13A-6, a mediation communication is privileged as provided in subsection (b) and is not subject to discovery or admissible in evidence in a proceeding unless waived or precluded as provided by ยง 19-13A-5. (b) In a proceeding, the following privileges apply: (1) A mediation party may refuse to disclose, and may prevent any other person from disclosing, a mediation communication.

(2) A mediator may refuse to disclose a mediation communication, and may prevent any other person from disclosing a mediation communication of the mediator.

(3) A nonparty participant may refuse to disclose, and may prevent any other person from disclosing, a mediation communication of the nonparty participant. (c) Evidence or information that is otherwise admissible or subject to discovery does not become inadmissible or protected from discovery solely by reason of its disclosure or use in a mediation.

Source: SL 2008, ch 286 (Supreme Court Rule 07-07), eff. Jan. 1, 2008.

19-13A-5. Waiver and preclusion of privilege. (a) A privilege under ยง 19-13A-4 may be waived in a record or orally during a proceeding if it is expressly waived by all parties to the mediation and: (1) in the case of the privilege of a mediator, it is expressly waived by the mediator; and (2) in the case of the privilege of a nonparty participant, it is expressly waived by the nonparty participant. in the case of the privilege of a nonparty participant, it is expressly waived by the nonparty participant. (b) A person that discloses or makes a representation about a mediation communication which prejudices another person in a proceeding is precluded from asserting a privilege under ยง 19-13A-4, but only to the extent necessary for the person prejudiced to respond to the representation or disclosure. (c) A person that intentionally uses a mediation to plan, attempt to commit or commit a crime, or to conceal an ongoing crime or ongoing criminal activity is precluded from asserting a privilege under ยง 19-13A-4.

Source: SL 2008, ch 286 (Supreme Court Rule 07-07), eff. Jan. 1, 2008.

19-13 A-6. Exceptions to privilege. (a) There is no privilege under § 1913A-4 for a mediation communication that is: (1) in an agreement evidenced by a record signed by all parties to the agreement; (2) made during a session of a mediation which is open or is required by law to be open, to the public; (3) a threat or statement of a plan to inflict bodily injury or commit a crime of violence; intentionally used to plan a crime, attempt to commit or commit a crime, or to conceal a ongoing crime or ongoing criminal activity; sought or offered to prove or disprove a claim or complaint of professional misconduct or malpractice filed against a mediator; (4) intentionally used to plan a crime, attempt to commit or commit a crime, or to conceal an ongoing crime or ongoing criminal activity; (5) sought or offered to prove or disprove a claim or complaint of professional misconduct or malpractice filed against a mediator; (6) except as otherwise provided in subsection (c), sought or offered to prove or disprove a claim or complaint of professional misconduct or malpractice filed against a mediation party, nonparty participant, or representative of a party based on conduct occurring during a mediation; or (7) sought or offered to prove or disprove abuse, neglect, abandonment, or exploitation in a proceeding in which a child or adult protective services agency is a party, unless the matter has been referred to mediation by a court under §§ 254-56 to 25-4-62, in which case the terms of those statutes shall apply. (b) There is no privilege under § 19-13A-4 if a court, administrative agency, or arbitrator finds, after a hearing in camera, that the party seeking discovery or the proponent of the evidence has shown that the evidence is not otherwise available, that there is a need for the evidence that substantially outweighs the interest in protecting confidentiality, and that the mediation communication is sought or offered in: (1) a court proceeding involving a felony or Class 1 misdemeanor; (2) except as otherwise provided in subsection (c), a proceeding to prove a claim to rescind or reform or a defense to avoid liability on an agreement arising out of the mediation. (c) A mediator may not be compelled to provide evidence of a mediation communication referred to in subsection (a)(6) or (b)(2). (d) If a mediation communication is not privileged under subsection (a) or (b), only the portion of the communication necessary for the application of the exception from nondisclosure may be admitted. Admission of evidence under subsection (a) or (b) does not render the evidence, or any other mediation communication, discoverable or admissible for any other purpose.

Source: SL 2008, ch 286 (Supreme Court Rule 07-07), eff. Jan. 1, 2008.

19-13A-7. Prohibited mediator reports. (a) Except as required in subsection (b), a mediator may not make a report, assessment, evaluation, recommendation, finding, or other communication regarding a mediation to a court, administrative agency, or other authority that may make a ruling on the dispute that is the subject of the mediation. (b) A mediator may disclose: (1) whether the mediation occurred or has terminated, whether a settlement was reached and if so the terms thereof, and attendance; (2) a mediation communication as permitted under ยง 19-13A-6; or (3) a mediation communication evidencing abuse, neglect, abandonment, or exploitation of an individual to a public agency responsible for protecting individuals against such mistreatment. (c) A communication made in violation of subsection (a) may not be considered by a court, administrative agency, or arbitrator.

Source: SL 2008, ch 286 (Supreme Court Rule 07-07), eff. Jan. 1, 2008.

19-13A-8. Confidentiality. Unless subject to ยง 1-25-1, mediation communications are confidential to the extent agreed by the parties or provided by other law or rule of this State.

Source: SL 2008, ch 286 (Supreme Court Rule 07-07), eff. Jan. 1, 2008.

19-13 A-9. Mediator's disclosure of conflicts of interest--Background. (a)

Before accepting a mediation, an individual who is requested to serve as a mediator shall: (1) make an inquiry that is reasonable under the circumstances to determine whether there are any known facts that a reasonable individual would consider likely to affect the impartiality of the mediator, including a financial or personal interest in the outcome of the mediation and an existing or past relationship with a mediation party or foreseeable participant in the mediation; and (2) disclose any such known fact to the mediation parties as soon as is practical before accepting a mediation. (b) If a mediator learns any fact described in subsection (a)(1) after accepting a mediation, the mediator shall disclose it as soon as is practicable. (c) At the request of a mediation party, an individual who is requested to serve as a mediator shall disclose the mediator's qualifications to mediate a dispute. (d) A person that violates subsection (a) or (b) is precluded by the violation from asserting a privilege under ยง 19-13A-4. (e) Subsections (a), (b), and (c), do not apply to an individual acting as a judge. (f) This chapter does not require that a mediator have a special

qualification by background or profession.

Source: SL 2008, ch 286 (Supreme Court Rule 07-07), eff. Jan. 1, 2008.

19-13A-10. Participation in mediation. An attorney or other individual designated by a party may accompany the party to and participate in a mediation. A waiver of participation given before the mediation may be rescinded.

Source: SL 2008, ch 286 (Supreme Court Rule 07-07), eff. Jan. 1, 2008.

19-13A-11. International commercial mediation. (a) In this section, "Model Law" means the Model Law on International Commercial Conciliation adopted by the United Nations Commission on International Trade Law on 28 June 2002 and recommended by the United Nations General Assembly in a resolution (A/RES/57/18) dated 19 November 2002, and "international commercial mediation" means an international commercial conciliation as defined in Article 1 of the Model Law. (b) Except as otherwise provided in subsections (c) and (d), if a mediation is an international commercial mediation, the mediation is governed by the Model Law. (c) Unless the parties agree in accordance with § 19-13A-3(c) that all or part of an international commercial mediation is not privileged, §§ 19-13A-4 to 1913A-6, inclusive, and any applicable definitions in § 19-13A-2 also apply to the mediation and nothing in Article 10 of the Model Law derogates from §§ 1913A-4 to 19-13A-6, inclusive. (d) If the parties to an international commercial mediation agree under Article 1, subsection (7), of the Model Law that the Model Law does not apply, this chapter applies.

Source: SL 2008, ch 286 (Supreme Court Rule 07-07), eff. Jan. 1, 2008.

19-13A-12. Relation to Electronic Signatures in Global and National Commerce Act. This chapter modifies, limits, or supersedes the federal Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7001 et seq., but this chapter does not modify, limit, or supersede Section 101(c) of that Act or authorize electronic delivery of any of the notices described in Section 103(b) of that Act. Source: SL 2008, ch 286 (Supreme Court Rule 07-07), eff. Jan. 1, 2008.

19-13A-13. Uniformity of application and construction. In applying and construing this chapter, consideration should be given to the need to promote uniformity of the law with respect to its subject matter among States that enact it.

Source: SL 2008, ch 286 (Supreme Court Rule 07-07), eff. Jan. 1, 2008.

19-13A-14. Severability clause. If any provision of this chapter or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of this chapter which can be given effect without the invalid provision or application, and to this end the provisions of this chapter are severable.

Source: SL 2008, ch 286 (Supreme Court Rule 07-07), eff. Jan. 1, 2008.

19-13A-15. Application to existing agreements or referrals. (a) This chapter governs a mediation pursuant to a referral or an agreement to mediate made on or after January 1, 2008. (b) On or after January 1, 2008, this chapter governs an agreement to mediate whenever made.

Source: SL 2008, ch 286 (Supreme Court Rule 07-07), eff. Jan. 1, 2008.

FAMILY COURT MEDIATOR STATUTES 25-4-56. Custody and visitation disputes--Mediation order--Exceptions-Investigation--Allocation of costs. In any custody or visitation dispute between parents, the court shall order mediation to assist the parties in formulating or modifying a plan, or in implementing a plan, for custody or visitation and shall allocate the cost of the mediation between the parties. However, mediation shall not be ordered if: (1) One of the parents has been convicted of domestic abuse as defined in subdivision 25-10-1(1); or (2) One of the parents has been convicted of assault against a person as defined in subdivision 25-10-1(2), except against any person related by consanguinity, but not living in the same household; or (3) One of the parents has a history of domestic abuse; or (4) Mediation is not readily available or the court determines that mediation is not appropriate based on the facts and circumstances of the case.

The court may also direct that an investigation be conducted to assist the court in making a custody or visitation determination and shall allocate the costs of such investigation between the parties. A history of domestic abuse may only be proven by greater convincing force of the evidence.

Source: SL 1989, ch 218; SDCL Supp, § 26-5A-31; SL 1994, ch 193; SL 2008, ch 123, § 1.

25-4-57. Court appointment of mediator. For any mediation ordered pursuant to § 25-4-56 the court shall appoint a mediator from a list of qualified mediators approved by the court.

Source: SL 1996, ch 163, § 1.

25-4-58. Adoption of court rules establishing minimum qualifications of mediator.

The Supreme Court shall adopt rules establishing the minimum qualifications of a mediator. To be included on a list of qualified mediators approved by the court, a person must possess the minimum qualifications.

Source: SL 1996, ch 163, § 2.

25-4-58.1. Minimum qualifications for family court mediators. To be eligible as a court appointed family court mediator under § 25-4-56, a mediator must have the following minimum qualifications: (1) A mediator must file an approved application on the prescribed form with the presiding judge for the circuit or circuits in which the mediator will

conduct mediations. See prescribed form attached as Exhibit A. (2) A mediator must have both a minimum of forty (40) hours mediation training, plus experience in actual mediation sessions by consulting with a mediator approved under this rule for at least three mediation sessions. In place of forty (40) hours' training and consultation, a person may, with court approval, qualify as a mediator if that person has had five years' experience in mediating custody and visitation issues with a minimum of twenty (20) mediations during that period. A mediator must have competence in the following areas: (a) General knowledge of the South Dakota court system and its procedures in contested family matters; (b) General knowledge of South Dakota family law, especially as applied to custody and visitation issues; (c) Knowledge of child development and specifically the impact of divorce or separation on family members; (d) Knowledge of resources available in the state to which the parties and the children can be referred for assistance; (e) Knowledge of interviewing and mediation techniques applicable to the family setting.

(3) A mediator must be committed to and participate in continuing education courses.

25-4-58.2. Conduct of Family Court Mediators. Mediators are expected to conduct themselves by the highest ethical standards. Mediators should conduct themselves and mediations according to the following general principles: (1) A mediator should recognize that mediation is based on participation and selfdetermination by the parties. A mediator shall conduct the mediation process fairly, diligently, impartially and in a manner consistent with assisting the parties in reaching a voluntary, uncoerced agreement on the issues outstanding between them.

(2) A mediator shall fully disclose to all parties involved in the mediation any actual or potential conflicts of interest. A mediator shall not accept or shall withdraw from any mediation in which the mediator has reason to believe he or she cannot conduct the mediation in an impartial manner. After full disclosure of an actual or potential conflict of interest to the parties, the mediator shall withdraw from the mediation if requested by any party to do so.

(3) A mediator should maintain confidentiality at all times except as provided by law or court order. A mediator may otherwise disclose information regarding the mediation only with the expressed consent of the parties.

(4) A mediator shall fully disclose to the parties and explain the basis of compensation, fees, and other charges to the parties. This disclosure should occur at the first meeting of the mediator and the parties.

Source: Supreme Court Rule 96-7; Supreme Court Rule 97-42.

25-4-59. Privacy of mediation proceedings. The mediator shall conduct the mediation proceedings in private. The mediator may exclude counsel from participation in the mediation proceedings.

Source: SL 1996, ch 163, § 3

25-4-60. Confidentiality of mediation communications and mediator's work product.

Any communication, oral or written, in a mediation proceeding pursuant to § 25-4-56 is confidential and inadmissible as evidence in any proceeding. A mediator appointed pursuant to § 25-4-56 may not be a witness, and the notes and work product of the mediator are not subject to discovery or subpoena in the proceeding in which the contested child custody or visitation is at issue.

Source: SL 1996, ch 163, § 4.

25-4-61. Written mediated agreement--Signing--Court approval. The mediator shall reduce to writing any agreement of the parties. The mediator shall inform the parties of their right to review the agreement with counsel before they sign the agreement. After the agreement is signed by the parties, the mediator shall present the agreement to the court.

The agreement is not binding upon the parties until approved by order of the court.

Source: SL 1996, ch 163, § 5.

25-4-62. Recommendation by mediator to court upon parties' failure to agree. The mediator may report to the court at any time that the parties are unable to reach an agreement. The mediator may recommend to the court that the full hearing on the custody or visitation issue be held within thirty days. The mediator may not make a substantive recommendation to the court concerning the contested issue of custody or visitation.

Source: SL 1996, ch 163, § 6.

EXHIBIT A MEDIATOR APPLICATION FORM UNIFIED JUDICIAL SYSTEM OF SOUTH DAKOTA _______ CIRCUIT COURT

Name: ______________________________________________________________ Name of Business Organization: __________________________________________ Address: _____________________________________________________________ Day Time Phone: ______________________________________________________ E-mail Address: ________________________________________________________

Instructions: Please complete the following questionnaire as specified under each section. If additional space is needed, attach a sheet for each area making sure to indicate the section of the questionnaire to which you are responding. This form must be filed with the Presiding Judge for each circuit in which you intend to participate in court appointed mediation.

1) Provide your professional background including degree(s), certificate(s), practice specialization(s), years of experience and special training:

_____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________

Page 1 of 4

UJS-380 MEDIATOR APPLICATION Rev. 06/2015

2) Provide a full and complete disclosure of all professional employment experiences whether in the field of mediation or in any other field:

_____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________

3) Provide complete information regarding any training, seminars, workshops, etc., you deem pertinent to mediation:

_____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________

4) Provide the number of mediations in which you have been involved giving approximate dates of those mediations if available. Please indicate how many of the mediations were successful.

_____________________________________________________________________________________ _____________________________________________________________________________________ Page 2 of 4

UJS-380 MEDIATOR APPLICATION Rev. 06/2015

_____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________

5) Describe methods of mediation you have used and time required to conduct a typical mediation:

_____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________

6) Please describe how fees and costs are calculated for completion of a typical mediation:

_____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________

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UJS-380 MEDIATOR APPLICATION Rev. 06/2015

7) Please describe the requirements for payment of fees:

_____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________

I am aware of and agree to abide by the principles and guidelines set out in South Dakota Codified Law and as promulgated by the Supreme Court of South Dakota.

_____________________________________________ Signature of Applicant

Date

NOTE: This form must be updated as changes to the information occur or at least annually.

Approved: _____________________________________________ Signature of Presiding Judge

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Date

UJS-380 MEDIATOR APPLICATION Rev. 06/2015

Arbitration Basics Catherine Duenwald & Michael McKnight

Catherine Duenwald has been employed as the Chief Hearing Examiner since January 2016. Ms. Duenwald began her legal career with the State of South Dakota as a Department of Labor Administrative Law Judge in November 2003. She started with Unemployment Insurance hearings and moved to Workers Compensation and Labor Issues. She then spent 8 months as Legal Counsel to the Bureau of Administration before taking her current position with the Office of Hearing Examiners. Prior to her tenure in Pierre, she spent time as a Deputy State’s Attorney in Meade County and two years in Aberdeen clerking for the Fifth Circuit.

Before entering Law School, she did a short stint with the Office of Human Rights/ Highway Safety in Pierre. This gave her valuable insight to the existence of administrative law and the need for practitioners in the field. In her spare time, she volunteers with Rotary and other local organizations.

Mike McKnight is a 1986 graduate of the University of South Dakota School of Law. With over thirty (30) years of practice experience, Mike is now focusing his practice in the areas of mediation and arbitration.

He is on the employment and consumer panels for the American Arbitration Association. He has over fifty (50) hours training in mediation, is a qualified neutral under Rule 114 of the Minnesota Rules of Civil Procedure and a member of the National Academy of Distinguished Neutrals. Mike is also on the panel of Resolute Systems Inc and has lectured and written extensively on the topic of alternative dispute resolution.

Alternative Dispute Resolution Arbitration Basics A.

What is arbitration?

1.

Simple Arbitration Clause 2.

Complex Arbitration Clause

B.

Mandatory vs. Voluntary 1.

Mandatory - must 2.

Voluntary - can

C.

Binding vs. Nonbinding 1.

Binding - decision is final with very limited grounds to set aside 2.

Nonbinding - aim toward fostering settlement, can agree to be bound later

D.

Selecting an Arbitrator 1.

What does the agreement provide?

2.

Stipulate differently

E.

Arbitration Agencies 1.

American Arbitration Association, JAMS (Judicial Arbitration and Mediation Services), National Arbitration Forum 2.

Cost based on amount in dispute.

3.

The parties can stipulate out if it 4.

Insurance for the process and that it is handled properly

F.

Other Considerations 1.

What are the rules?

2.

What type of award?

3.

Record made or not?

4.

Timing and location of hearing?

5.

Timing of decision?

6.

Amount of discovery?

G.

Pros and Cons 1.

Pros: more friendly, cheaper, faster, flexible, simplified, private 2.

Cons: limited recourse, lack of transparency, cost of filing with agency, lack of objectivity

H.

A Judge’s Perspective 1.

Differences between an ALJ and an Arbitrator a. Legally - Some b. Actuality – Few 2.

Judge Recommends ADR -a. Can the judge see the outcome already? Why?

b. Is this a situation that is best resolved in ADR? c. No recommendation for ADR 3.

Discovery & Evidence a. Experts & Depositions b. Requests for Admissions & Interrogatories c. Time Deadlines d. Briefs – Pre or Post – Timing of Decision

4.

The Attorneys’ Attitudes & other Ethical Considerations a. Facts b. Law c. Argument d. Procedural Maneuvers e. Zealous vs. Alarming

5.

Appealing - It is. But can you?

ALTERNATIVE DISPUTE RESOLUTION Arbitration Basics

Presented by:

Catherine Duenwald Mike McKnight

A. What is arbitration?

1. Simple Arbitration Clause 2. Complex Arbitration Clause

B.

Mandatory vs. Voluntary

1. Mandatory - Must

2. Voluntary – Can

C. Binding vs. Nonbinding

Binding – decision is final with very limited grounds to set aside.

Nonbinding – aim toward fostering settlement; can agree to be bound later

D. Selecting an Arbitrator 1. What does the agreement provide?

2. Stipulate differently

E. Arbitration Agencies 1. American Arbitration Association JAMS (Judicial Arbitration and Mediation Services National Arbitration Forum

2. Cost based on amount in dispute.

3. The parties can stipulate out of it.

4. Insurance for the process and that it is handled properly.

F. Other Considerations 1. What are the rules?

2. What type of award?

3. Record made or not?

4. Timing and location of hearing?

5. Timing of decision?

6. Amount of discovery?

G. Pros and Cons PROS:

CONS:

• More Friendly • Cheaper • Faster • Flexible • Simplified • Private

• Limited recourse • Lack of transparency • Cost of filing with agency • Lack of objectivity

H. A Judge’s Perspective 1. Differences between an ALJ and an Arbitrator

a. Legally - Some b. Actuality - Few

2. Judge Recommends ADR -a. Can the judge see the outcome already? Why? b. Is this a situation that is best resolved in ADR? c. No recommendation for ADR.

3. Discovery & Evidence a. Experts & Depositions b. Requests for Admissions & Interrogatories c. Time Deadlines d. Briefs – Pre or Post – Timing of Decision

4. The Attorneys’ Attitudes & Other Ethical Considerations

a. b. c. d. e.

Facts Law Argument Procedural Maneuvers Zealous vs. Alarming

5. Appealing – It is. But can you?

QUESTIONS?

Catherine Duenwald Chief Hearing Examiner Bureau of Administration Office of Hearing Examiners 523 E. Capitol Avenue Pierre, SD 57501

Michael S. McKnight Boyce Law Firm, LLP 300 S. Main Avenue P.O. Box 5015 Sioux Falls, SD 57117-5015

Elder Law Mediation Charlie Dorothy & Corey Denevan

Charles graduated from the University of South Dakota in 1971 with a major in Public Administration. He entered the University of South Dakota School of Law in 1971, and graduated in 1974.

Following graduation from law school, he engaged in the private practice of law in Rapid City, South Dakota. In 1976, he joined the staff of the South Dakota Attorney General. He served as an assistant attorney general from 1976-1978. In 1978, he joined the staff of the Minnehaha County States Attorney as a prosecutor, leaving in 1980 to engage in the private practice of law. He has engaged in the private practice of law in Sioux Falls since that time.

He is admitted to practice before the courts of the state of South Dakota, the United States District Court of South Dakota, and the Eighth Circuit Court of Appeals. From 1974 to 1990, he handled numerous civil lawsuits in these courts, as well as courts in Iowa, Minnesota, and North Dakota.

Since 1990, his practice has focused on assisting clients with the acquisition, management and disposition of assets. His practice includes the creation of new business entities or the purchase of existing businesses, the management of those entities, and the disposition of the owner’s interests in those entities by sale or upon death. It includes documentation of various internal and external transactions, acquisitions, buy/sell agreements between owners, death or retirement of an employeeowner, the restructuring of debt, various contractual arrangements, powers of attorney, wills, and revocable trusts. He has engaged in probate, conservatorship, and guardianship proceedings.

Following completion of a Minnesota Supreme Court Certified Mediation Skills Training course in 1997, he became active in mediation, both as a mediator and as an attorney counseling those engaged in mediation. He has for a number of years been a member of the South Dakota Bar Association Alternative Dispute Resolution (ADR) Committee. He has authored several articles regarding mediation in the South Dakota Bar Association Newsletter.

In 2015, he updated his skills as a mediator by completing a Florida Supreme Court Certified Mediation Skills Training course.

Corey Denevan attended the University of Missouri – Columbia School of Law, which is consistently ranked as a top law school in the country for dispute resolution training. Corey’s practice focuses on both transactional and litigation matters primarily in the areas of trusts, guardianships, probate and elder law.

Corey has been appointed to serve on several legislative projects during his career. He is also a frequent speaker at continuing legal education seminars on topics such as drafting estate plans, managing fiduciary responsibilities, litigating probate, trust and guardianship cases, attorney ethics and fiduciary ethics.

ELDER LAW MEDIATION

by Corey T. Denevan • 605-731-0202 • ctdenevan@boycelaw.com

PRESENTATION OUTLINE 1. Should a drafting attorney include himself/herself as the mediator/arbitrator in a POA, Trust or Will 2. Types of Mediation Styles for Elder Law Issues a. Facilitative Mediation b. Evaluative Mediation c. Transformative Mediation 3. Learning how to mediate 4. Statutory authority for court ordered mediation

OUTLINE OF MEDIATION AND COUNSELING ARE THE BEST WAYS TO DEAL WITH THE DIMINISHED MENTAL CAPACITY OF THE ELDERLY BY CHARLES L. DOROTHY 1. Introduction.

2. Assistance or Control?

-­‐The right to do what one wants to do, and can do, regarding his or her affairs.

-­‐The challenge for the elderly person and the agent named in the elderly person’s power of attorney is whether the elderly person just needs a little assistance or is experiencing mental incapacitation such that the agent should take control of the elder person’s affairs.

-­‐ That same challenge exists for the elderly person who has executed a Revocable Trust Declaration and the Successor Trustee named in the Declaration.

-­‐Unresolved conflicts regarding this challenge can result in costly litigation that forever damages the personal and working relationship with the elderly person.

3. Mediation is well suited to assist with the resolution of conflicts between the elderly person and his or her agent or successor trustee regarding the mental capacity of the elderly person.

4. Should powers of attorney be contingent upon the incapacity of the elderly person?

-­‐Arbitration, with its privacy and speed, is well suited for incapacity determinations but those advantages must be weighed against the increased

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cost.

5. If the maker of a power of attorney or revocable trust wants mediation or arbitration to be used to resolve disputes regarding incapacitation, the document should state that.

6. Suggested definition of incapacitation.

7. Drafting suggestions for revocable trust declarations regarding the use of mediation and arbitration in determining incapacitation.

8. Drafting suggestions for powers of attorney regarding the use of mediation and arbitration in determining incapacitation.

9. Drafting suggestions for reporting requirements in powers of attorney and revocable trust declarations to prevent abuse similar to the reporting requirements in guardianships and conservatorships.

-­‐Assets and liabilities.

-­‐ Income and expenses -­‐Living arrangements and health care

10. South Dakota Rules of Professional Conduct 2.3 and 2.4 are the ethical basis for providing counseling and mediation to the elderly and those they have named in powers of attorneys and revocable trusts to handle their affairs if they become incapacitated.

11. Should an attorney act as a mediator concerning the incapacity of the maker of a power of attorney or revocable trust if he or he (1) drafted the document (2) presently represents the maker on legal matters or (3) has represented the maker on legal matters in the past?

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-­‐Rules of Professional Conduct 1.7 and 2.4 allow that attorney to act as mediator, if the elderly person and the agent or successor trustee agree in writing.

-­‐Subsection C of Standard III of the ABA Model Standards of Conduct for Mediators allow that attorney to act as mediator, if the elderly person and the agent or successor trustee agree in writing.

12. Rule of Professional Conduct 1.14 (B) sets forth a Lawyer’s ethical responsibilities to a client with diminished mental capacity.

13.The aging of the baby boomers presents a responsibility and an economic opportunity for the legal profession.

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MEDIATION AND COUNSELING ARE THE BEST WAYS TO DEAL WITH THE DIMINISHED MENTAL CAPACITY OF THE ELDERLY BY CHARLES L. DOROTHY According to a report by the PEW Research Center, starting in January of 2011 10,000 baby boomers began turning 65 every day in the United States, and would do so for 19 years.

According to the United States Social Security System, a male is expected to live to be 84.5, and a female is expected to live to be to be 86.6.

Somewhere between the ages of 65 and 85 most Americans experience declining

mental skills that are significant enough to require assistance with financial and personal matters. When that time comes, they are vulnerable to being taken advantage of financially and physically.

To prevent such abuse, state legislatures adopted guardian and conservator laws.

Because of various procedural requirements in these statutes, the time expended by

attorneys, accountants, guardians and conservators increased the costs of such proceedings. Partly in an attempt to avoid such costs, attorneys began recommending the use of revocable trusts and powers of attorney rather than guardianships and conservatorships.

For several reasons, a good deal of litigation regarding revocable trusts and powers

of attorney occurred. The language used provided differing and often ambiguous definitions of the incapacity that triggered the authority of the agent or successor trustee to handle the affairs of the maker of the power of attorney or revocable trust. The language often did not require mediation and arbitration in resolving disputes regarding the maker’s incapacitation. The language often did not provide for accountings regarding financial matters or living and health arrangements by the agent to the maker of the power of attorney, or by the successor trustee to the maker of the revocable trust, or others legitimately concerned with the maker’s well being. The language in the powers of attorney often did not set forth the responsibilities of the agent in any detail. The language often did not provide for the agent or successor trustee only handling those matters the maker could not handle or did not want to handle.

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Partly in response to the proliferation of litigation regarding powers of attorneys, in

2006 the National Conference of Commissioners on Uniform State Laws adopted the Uniform Power of Attorney Act, which provided standardized definitions, and principles regarding powers of attorney and duties of agents. The act is available for viewing, downloading and printing on www.uniformlaws.org.

From 2006 to 2017, twenty-­‐two states adopted some form of the Uniform Power of

Attorney Act.

In 2018, the South Dakota Legislature tried unsuccessfully to adopt some version of

the Uniform Power of Attorney Act. A bill to adopt the Uniform Act passed the House but was tabled by the Senate Judiciary Committee and never was sent to the full Senate for a vote.

Consequently, in South Dakota, powers of attorney continue to be governed by SDCL

Title 59 entitled “Agency”.

Since Title 59 does not deal with the many issues involved with powers of attorney,

South Dakota attorneys need to become familiar with the Uniform Power of Attorney Act and incorporate in the powers of attorney they draft those concepts they feel should be in the document.

ASSISTANCE OR CONTROL

Often mental skills diminish incrementally over a period of time. Often an elderly

person can still handle some aspects of their life even though they need assistance with other aspects of their life. Assisting an elderly person through the journey from some mental impairment to complete mental disability requires frequent contact with the elderly person by family, friends, and other caregivers, and consultations with attorneys and other advisors when necessary.

The challenge for the elderly person and the agent named in their power of attorney

or the successor trustee named in their revocable trust is whether the elderly person just needs a little assistance or is experiencing mental incapacitation such that the agent or successor trustee should take control of the elderly person’s affairs.

It is important that the agent or successor trustee have regular contact with the

elderly person and initially offer to just assist with various matters such as paying bills, living arrangements, and reviewing contracts. At a minimum, such contacts should be

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yearly. This allows the agent or successor trustee to become familiar with the elderly person’s wants and needs, as well as providing the opportunity to determine if the elderly person just needs some assistance or the agent or successor trustee should take control and manage the elderly person’s affairs.

The concept of only doing for the elderly person what the elderly person

cannot do for himself or herself should be incorporated into the power of attorney with language such as: In furtherance of the personal freedom and responsibility of the Principal, in the case of the incapacitation of the Principal, the Agent should only do for the Principal what the Principal cannot do or does not want to do.

South Dakota attorneys drafting declarations for revocable trusts should consider including language such as:

In furtherance of the personal freedom and responsibility of the Principal, in the case of the incapacitation of the Trustor, the Successor Trustee should only do for the Trustor what the Trustor cannot do or does not want to do.

This language is consistent with the fundamental concept of personal freedom and responsibility, and is similar to language in the South Dakota Guardianship and Conservatorship Act (SDCL 29A-­‐5), and the Uniform Power of Attorney Act.

Conflicts can develop between the elderly person and their agent or successor

trustee in carrying out this concept, or in dealing with the issue of complete incapacitation.

If those conflicts are not resolved through meaningful communication between the elderly person and their agent or successor trustee, costly ligation may occur, which could forever damage the relationship between the elderly person and their agent or successor trustee.

MEDIATION IS WELL SUITED TO ASSIST WITH THE RESOLUTION OF CONFLICTS BETWEEN THE PRINCIPAL AND THE AGENT AND THE MAKER OF A REVOCABLE TRUST AND THE SUCCESSOR TRUSTEE REGARDING WHAT THE PRINCIPAL OR MAKER CAN AND SHOULD DO AND WHAT THE AGENT OR SUCCESSOR TRUSTEE SHOULD DO

Mediation, with its collaborative and non-­‐adversarial basis and its fundamental 3

principle of client self-­‐determination, is well suited for resolving many disputes regarding mental and physical capacity that may arise between an elderly person and their agent or their successor trustee. Mediation can provide assistance with the journey of allowing the elderly person as much independence as they are able and want to handle.

It should be remembered that revocable trusts, like conservatorships, deal with

property. Powers of attorney can deal with both property, and personal issues such as health care and living arrangements. If the maker has not signed a declaration creating a revocable trust that has a successor trustee provision, the maker’s power of attorney should deal with both property and personal issues. If the maker has signed a declaration creating a revocable trust that has a successor trustee provision, the maker’s power of attorney should deal with personal issues.

The journey regarding health care and living arrangements may include conflicts

regarding whether the elderly person should no longer (a) drive (b) handle his or her checkbook (c) handle his or her bills, (d) handle his or her credit cards (e) enter into contracts (f) continue charitable or other giving and (g) make changes to his or her will, revocable trust declaration, or power of attorney.

The journey may include disputes such as whether the elderly person should (a)

continue to live at home with some help from a home care agency or person (b) move in with a child (c) move to an assisted living center or (d) move to a nursing home.

Those are often emotional issues for the elderly person intertwined with feelings of

anxiety and loss of personal freedom.

Adversarial proceedings, whether in a private arbitration or a public lawsuit, should

not be utilized to resolve disputes over those issues until counseling and mediation have been unsuccessful.

If the elderly person has not lost cognitive skills altogether, mediation may help

them accept their diminishing mental skills and find comfort knowing someone they trust is handling their affairs for them, and yet is accountable to others they also trust.

Such issues are best dealt with through education, counseling, collaboration, and

mediation, not through litigation.

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SHOULD POWERS OF ATTORNEY BE CONTINGENT UPON INCAPACITATION?

There is a dispute among lawyers as to whether a power of attorney should

only become operable when the principal becomes unable to handle his or her own affairs, or whether it should be unconditional and effective immediately.

Those who favor a power of attorney that does not become operable until the

principal is incapacitated argue that unconditional powers of attorney create the risk that the agent will use his or her authority to steal from the maker.

Those who favor an unconditional power of attorney argue that a power of

attorney which is contingent upon the principal’s incapacitation results in uncertainty for health care providers, banks, and securities companies, and requires litigation to establish incapacitation which cannot be accomplished in a timely fashion.

But, an unconditional power of attorney does not eliminate uncertainty as to

whether the principal is incapacitated such that the agent named in the power of attorney should handle the principal’s affairs, or whether the principal was incapacitated when the power of attorney was executed, and since powers of attorney are revocable, whether the power of attorney being relied upon is the most recent one, which are disputes subject to litigation. See Meyer v. Kneip, 457 NW 2nd 463 (SD 1990).

Also, when SDCL 59-­‐6-­‐3 says that third parties can rely upon the power of attorney

presented them unless they have reason to know it is not valid, why should a person give someone the right to manage their affairs before they are unable to do so themselves just so their health care providers, banks, securities firms and others they deal with do not have to address the issue of their inability to handle their own affairs?

Arbitration, with its privacy and speed, is well suited for incapacity determinations

when a party who will be contracting with the agent or successor trustee wants a definitive incapacitation determination. Using arbitration, that decision can be made quickly and in the privacy of the office of the elderly person’s lawyer or doctor. But the arbitrator will bill for his or her services. So privacy and speed need to be weighted against the additional cost involved.

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IF THE MAKER OF A POWER OF ATTORNEY OR A DECLARATION OF REVOCABLE TRUST WANTS (1) THE AUTHORITY OF THE AGENT OR SUCCESSOR TRUSTEE TO BE CONTIGENT UPON THE MAKER’S MENTAL INCAPACITATION AND (2) MEDIATION OR ARBITRATION TO BE USED TO RESOLVE DISPUTES REGARDING INCAPACITATION, THE DOCUMENT MUST SAY THAT

If the maker of a power of attorney or revocable trust desires that the authority of the agent or successor trustee to handle the maker’s affairs is contingent upon the maker’s mental incapacitation to handle those affairs, the power of attorney or revocable trust must specifically state that.

If the maker of a power of attorney or revocable trust desires that mediation or

arbitration be used to resolve disputes regarding the maker’s incapacitation, or the power of attorney or revocable trust must specifically state that.

DEFINITION OF INCAPACITATION IN THE UNIFORM POWER OF ATTORNEY ACT

Section 102 (5) of the Uniform Power of Attorney Act states: “Incapacity” means inability of an individual to manage property or business affairs because the individual: (A) has an impairment in the ability to receive and evaluate information or make or communicate decisions even with the use of technological assistance; or (B) is: (i) missing; (ii) detained, including incarcerated in a penal system; or (iii) outside the United States and unable to return.

The appropriateness of (B) is questionable for at least three reasons.

First, with the worldwide availability of the Internet, fiber optic cable laid under

the oceans, digital technology, and wireless technology, being outside the United States is no longer an impairment to timely communication, including transmission of signed documents.

Second, being incarcerated does not mean one cannot handle his or her affairs.

Third, the word “missing” is undefined, creating ambiguity as to how long one

must be out of communication with family, business associates or personal acquaintances before they can be considered missing.

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Attorneys drafting powers of attorneys and revocable trust declarations should

consider including a definition of incapacitation similar to the following: “Incapacity” means the inability of an individual to manage property, business affairs, or personal affairs, including living arrangements and health care, care because the individual has an impairment in the ability to receive and evaluate information or make or communicate decisions even with the use of technological assistance.”

This definition would include physical incapacitation, which would apply to the

elderly who have experienced strokes, or adults of any age who are suffering from bodily paralysis below the neck or from injuries or diseases that make writing and talking impossible. People suffering from such diseases may have lost their ability to communicate but not their ability to hear and understand. Sometimes the ability to communicate comes back after a stroke. Sometimes it does not.

DRAFTING SUGGESTIONS FOR REVOCABLE TRUST DECLARATIONS REGARDING USE OF MEDIATION AND ARBITRATION IN DETERMINATION OF INCAPACITATION

South Dakota attorneys drafting revocable trust declarations should consider

including wording such as: If there is a dispute as to whether Trustor is mentally or physically incapacitated to handle Trustor’s own affairs, it shall first be submitted to mediation facilitated by a South Dakota attorney, if Trustor has the mental capacity to meaningfully participate. If the mediation does not occur because of the Trustor’s mental incapacity to meaningfully participate, or the mediation failed to resolve the dispute, the dispute shall be determined by an attorney acting as an arbitrator in a private arbitration proceeding utilizing the laws of the State of South Dakota. The arbitrator’s decision shall be binding for six months. Thereafter, if the dispute remains, the issue can again be presented to the arbitrator every 6 months.

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DRAFTING SUGGESTIONS FOR POWERS OF ATTORNEY REGARDING USE OF MEDIATION AND ARBITRATION IN DETERMINATION INCAPACITATION

South Dakota attorneys drafting powers of attorney should consider including

wording such as: If there is a dispute as to whether Principal is mentally or physically incapacitated to handle Principal’s own affairs, it shall first be submitted to mediation facilitated by a South Dakota attorney if the Principal has the mental capacity to meaningfully participate. If the mediation does not occur because of the Principal’s mental incapacity to meaningfully participate, or the mediation failed to resolve the dispute, the dispute shall be determined by an attorney acting as an arbitrator in a private arbitration proceeding utilizing the laws of the State of South Dakota. The arbitrator’s decision shall be binding for six months. Thereafter, if the dispute remains, the issue can again be presented to the arbitrator every 6 months.

The words “or physically” is necessary for the power of attorney to be effective should the maker becomes physically incapacitated by brain injury or stroke.

DRAFTING SUGGESTIONS REGARDING REQUIRING REPORTING TO PREVENT ABUSE

South Dakota statutes regarding conservatorships require annual accountings to the

Court as to the handling of property.

South Dakota statutes regarding guardianship require accountings to the Court as to

the handling of living arrangement and health care.

The only accounting requirement in SDCL Title 59 is SDCL 59-­‐4-­‐1 which says: “An

agent must use ordinary diligence to keep his principal informed of his acts in the course of the agency.”

One of the reasons that there is so much litigation regarding powers of attorney and

revocable trusts is that the agent or successor trustee does not provide an accounting to the elderly person and immediate family members of the elderly person, or others the elderly persons wants to receive accountings.

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South Dakota Attorneys drafting powers of attorney that deal with both assets and

health care and living arrangements should consider including wording such as the following:

Agent shall provide Principal and the following person(s) at least an annual report summarizing (1) what assets and liabilities Principal has (2) how Agent handled Principal’s income and expenses since the last report and (3) Principal’s health condition, medical care, and living situation: _________________.

South Dakota Attorneys drafting declarations for revocable trusts should consider

including wording such as the following: Successor Trustee shall provide Trustor and the following person(s) at least an annual report summarizing the assets and liabilities of the trust, and how the Successor Trustee handled the income and expenses of the Trust.

SOUTH DAKOTA RULES OF PROFESSIONAL CONDUCT 2.3 AND 2.4 ARE THE ETHICAL BASIS FOR PROVIDING COUNSELING AND MEDIATION SERVICES TO THE ELDERLY AND THOSE THEY HAVE NAMED IN POWERS OF ATTORNEY OR REVOCABLE TRUSTS TO HANDLE THEIR AFFAIRS IN CASE OF THEIR INCAPACITATION.

Rule 2.3 and 2.4 of the South Dakota Rules of Professional Conduct are under the

category entitled “Counselor”.

Rule 2.3 states: (a) A lawyer may provide an evaluation of a matter affecting a client for the use of someone other than the client if the lawyer reasonably believes that making the evaluation is compatible with other aspects of the lawyer's relationship with the client. (b) When the lawyer knows or reasonably should know that the evaluation is likely to affect the client's interests materially and adversely, the lawyer shall not provide the evaluation unless the client gives informed consent.

Rule 2.4 states: (a) A lawyer serves as a third-­‐party neutral when the lawyer assists two or more persons who are not clients of the lawyer to reach a resolution of a dispute or other matter that has arisen between

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them. Service as a third-­‐party neutral may include service as an arbitrator, a mediator or in such other capacity as will enable the lawyer to assist the parties to resolve the matter.

(b) A lawyer serving as a third-­‐party neutral shall inform unrepresented parties that the lawyer is not representing them.

When the lawyer knows or reasonably should know that a party does not understand the lawyer's role in the matter, the lawyer shall explain the difference between the lawyer's role as a third-­‐party neutral and a lawyer's role as one who represents a client.

CAN AN ATTORNEY ACT AS A MEDIATOR CONCERNING THE INCAPACITY OF THE MAKER OF A POWER OF ATTORNEY OR REVOCABLE TRUST IF HE OR SHE (1) DRAFTED THE DOCUMENT (2) PRESENTLY REPRESENTS THE MAKER OR (3) HAS REPRESENTED THE MAKER IN THE PAST?

Without any other clarifying Rule of Professional Conduct, the wording of the first

sentence of Subsection (a) of Rule 2.4 would seem to preclude an attorney from acting as a mediator concerning the incapacity of the maker of a power of attorney or revocable trust if the attorney drafted the power of attorney or revocable trust, presently represents the maker, or represented the maker in the past.

But, Rule 2.4 needs to be read in conjunction with Rule 1.7, which prohibits an

attorney from representing clients with conflicting interests, unless the clients have in writing consented to such representation.

Subsection C of Standard III of the ABA Model Standards of Conduct for

Mediators, entitled “Conflicts of Interest”, states: C. A mediator shall disclose, as soon as practicable, all actual and potential conflicts of interest that are reasonably known to the mediator and could reasonably be seen as raising a question about the mediator’s impartiality. After disclosure, if all parties agree, the mediator may proceed with the mediation.

But, the attorney should consider providing counsel and advice to the client and his

or her agent or successor trustee without utilization of a mediation process, and, if that

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consultation and advice does not result in a mutually agreeable resolution of the dispute, recommending a mediation facilitated by an attorney with no prior dealings with the client or his or her agent.

Having another attorney facilitate the mediation will increase the cost of the

mediation, but the neutrality of the mediator is an essential principle of mediation, and having a mediator who has no conflict of interest will most likely result in the disputants feeling that the mediator is neutral and unbiased, and thereby facilitate the possibility of a mutual resolution of the conflict. It also provides the opportunity for a second opinion (a neutral evaluation) if the parties have not been able to reach a resolution during the initial stages of the mediation. That second opinion, if the same as the attorney’s evaluation during the consultation session, could facilitate a mutually agreeable resolution.

But the mediator will bill for his or her services. So the advantages of retaining

another attorney to act as a mediator must be weighted against the additional cost involved.

It should be remembered that mediators do not have to be attorneys. The resolution

of disputes regarding mental incapacitation, health care, and living arrangement would be advanced significantly if practicing psychologists and social workers attended mediation training and were willing to act as mediators for such issues. The reality is that, in nursing home settings, psychologists and social workers are already working with the elderly and their families on these issues.

LAWYER’S ETHIC RESPONSIBILITIES TO A CLIENT WITH DIMINISHED MENTAL CAPACITY

Rule 1.14 (b) of the South Dakota Rules of Professional Conduct for attorneys, entitled “Client With Diminished Capacity”, states: (a) When a client’s capacity to make adequately considered decisions in connection with a representation is diminished, whether because of minority, mental impairment or for some other reason, the lawyer shall, as far as reasonably possible, maintain a normal client-­‐lawyer relationship with the client. (b) When the lawyer reasonably believes that the client has diminished capacity, is at risk of substantial, financial or other harm

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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. (c) Information relating to the representation of a client with diminished capacity is protected by Rule 1.6. When taking protective action pursuant to paragraph (b), the lawyer is impliedly authorized under Rule 1.6 (a) to reveal information about the client, but only to the extent reasonably necessary to protect the client’s interests.

Rule 1-­‐6 deals with client confidences.

THE AGING OF THE BABY BOOMERS PRESENTS A RESPONSIBILITY AND AN ECONOMIC OPPORTUNITY FOR THE LEGAL PROFESSION

Assisting the aging baby boomers with the journey of dealing with their diminishing

mental capacities presents both a responsibility and an economic opportunity for the legal profession.

The profession has a responsibility to urge its members to educate themselves

regarding the issues involved with that journey, and to assist the baby boomers, and their families, loved ones, and agents with that journey.

Individual lawyers who choose to educate themselves regarding those issues and

assist clients with that journey will provide a valuable service and be appropriately compensated for their services.

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MEDIATION AND COUNSELING ARE THE BEST WAYS TO DEAL WITH THE DIMINISHED MENTAL CAPACITY OF THE ELDERLY BY CHARLES L. DOROTHY

ASSISTANCE OR CONTROL (The right to handle our own affairs until we cannot or do not want to) .

Suggested Language For Powers Of Attorney In furtherance of the personal freedom and responsibility of the Principal, in the case of the incapacitation of the Principal, the Agent should only do for the Principal what the Principal cannot do or does not want to do.

Suggested Language For Revocable Trusts In furtherance of the personal freedom and responsibility of the Trustor, in the case of the incapacitation of the Trustor, the Successor Trustee should only do for the Trustor what the Trustor cannot do or does not want to do.

MEDIATION IS WELL SUITED TO ASSIST WITH THE RESOLUTION OF CONFLICTS BETWEEN THE PRINCIPAL AND THE AGENT REGARDING THE PRINCIPAL’S INCAPACITATION, AND WHAT THE PRINCIPAL CAN AND SHOULD DO AND WHAT THE AGENT SHOULD DO BETWEEN THE MAKER OF A REVOCABLE TRUST AND THE SUCCESSOR TRUSTEE REGARDING THE MAKER’S INCAPACITATION, AND WHAT THE MAKER CAN AND SHOULD DO AND WHAT THE SUCCESSOR TRUSTEE SHOULD DO

THE JOURNEY REGARDING HEALTH CARE AND LIVING ARRANGEMENTS INVOLVES MANY ISSUES Whether the elderly person should no longer (a) drive (b) handle his or her checkbook (c) handle his or her bills, (d) handle his or her credit cards (e) enter into contracts (f) continue charitable or other giving and (g) make changes to his or her will or power of attorney.

Whether the elderly person should (a) continue to live at home with some help from a home care agency or person (b) move in with a child (c) move to an assisted living center or (d) move to a nursing home.

SHOULD POWERS OF ATTORNEY BE CONTINGENT UPON INCAPACITATION?

SUGGESTED DEFINITION OF INCAPACITATION Incapacity means the inability of an individual to manage property, business affairs, or personal affairs, including living arrangements and health care, because the individual has an impairment in the ability to receive and evaluate information or make or communicate decisions even with the use of technological assistance.

SUGGESTED LANGUAGE FOR REVOCABLE TRUSTS REGARDING USE OF MEDIATION AND ARBITRATION IN DETERMINATION OF INCAPACITATION

If there is a dispute as to whether Trustor is mentally or physically incapacitated to handle Trustor’s own affairs, it shall first be submitted to mediation facilitated by a South Dakota attorney, if Trustor has the mental capacity to meaningfully participate. If the mediation does not occur because of the Trustor’s mental incapacity to meaningfully participate, or the mediation failed to resolve the dispute, the dispute shall be determined by an attorney acting as an arbitrator in a private arbitration proceeding utilizing the laws of the State of South Dakota.

The arbitrator’s decision shall be binding for six months. Thereafter, if the dispute remains, the issue can again be presented to the arbitrator every 6 months.

SUGGESTED LANGUAGE FOR POWERS OF ATTORNEY REGARDING USE OF MEDIATION AND ARBITRATION IN DETERMINATION OF INCAPACITATION “If there is a dispute as to whether Principal is mentally or physically incapacitated to handle Principal’s own affairs, it shall first be submitted to mediation facilitated by a South Dakota attorney if the Principal has the mental capacity to meaningfully participate.

If the mediation does not occur because of the Principal’s mental incapacity to meaningfully participate, or the mediation failed to resolve the dispute, the dispute shall be determined by an attorney acting as an arbitrator in a private arbitration proceeding utilizing the laws of the State of South Dakota. The arbitrator’s decision shall be binding for six months. Thereafter, if the dispute remains, the issue can again be presented to the arbitrator every 6 months”.

DRAFTING SUGGESTIONS REGARDING REQUIRING REPORTING TO PREVENT ABUSE POWERS OF ATTORNEY Agent shall provide Principal and the following person(s)

at least an annual

report summarizing (1) what assets and liabilities Principal has (2) how Agent handled Principal’s income and expenses since the last report and (3) Principal’s health Condition, medical care, and living situation: _________________.

DRAFTING SUGGESTIONS REGARDING REQUIRING REPORTING TO PREVENT ABUSE REVOCABLE TRUSTS Successor Trustee shall provide Trustor and the following person(s) at least an annual report summarizing the assets and liabilities of the trust, and how the Successor Trustee handled the income and expenses of the Trust ______________.

SOUTH DAKOTA RULE OF PROFESSIONAL CONDUCT 2.3 AND 2.4

These rules are the ethical basis for providing counseling and mediation to the elderly and their agents and successor trustees Rule 2.3 deals with counseling.

Rule 2.4 deals with mediation.

SHOULD AN ATTORNEY WHO (1) DRAFTED THE POWER OF ATTORNEY OR REVOCABLE TRUST, (2) PRESENTLY REPRESENTS THE MAKER ON LEGAL MATTERS, OR (3) HAS REPRESENTED THE MAKER ON LEGAL MATTERS IN THE PAST ACT AS A MEDIATOR CONCERNING DISPUTES REGARDING THE MAKER’S DISABILITY OR LIVING OR HEALTH CARE ARRANGEMENTS? Rules of Professional Conduct 1.7 and 2.4 Subsection C of Standard III of the ABA Standards of Conduct For Mediators

A LAWYER’S ETHIC RESPONSIBILITIES TO A CLIENT WITH DIMINISHED MENTAL CAPACITY ARE SET FORTH IN RULE 1.14 OF THE RULES OF PROFESSIONAL CONDUCT

(a) says “the lawyer shall, as far as reasonably possible, maintain a normal client-lawyer relationship”. (b) says if the lawyer believes the client’s mental impairment could harm the client, “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.” (c) says that, in taking such necessary protective action, the attorney should only disclose enough about the client that the client receives the need help.

THE AGING OF THE BABY BOOMERS PRESENTS A RESPONSIBILITY AND AN ECONOMIC OPPORTUNITY FOR THE LEGAL PROFESSION

MEDIATION AND COUNSELING ARE THE BEST WAYS TO DEAL WITH THE DIMINISHED MENTAL CAPACITY OF THE ELDERLY BY CHARLES L. DOROTHY According to a report by the PEW Research Center, starting in January of 2011 10,000 baby boomers began turning 65 every day in the United States, and would do so for 19 years.

According to the United States Social Security System, a male is expected to live to be 84.5, and a female is expected to live to be to be 86.6.

Somewhere between the ages of 65 and 85 most Americans experience declining

mental skills that are significant enough to require assistance with financial and personal matters. When that time comes, they are vulnerable to being taken advantage of financially and physically.

To prevent such abuse, state legislatures adopted guardian and conservator laws.

Because of various procedural requirements in these statutes, the time expended by

attorneys, accountants, guardians and conservators increased the costs of such proceedings. Partly in an attempt to avoid such costs, attorneys began recommending the use of revocable trusts and powers of attorney rather than guardianships and conservatorships.

For several reasons, a good deal of litigation regarding the incapacitation provisions

in revocable trusts and powers of attorney occurred. The language used provided differing and often ambiguous definitions of the incapacity that triggered the authority of the agent or successor trustee to handle the affairs of the maker of the power of attorney or revocable trust. The language often did not require mediation and arbitration in resolving disputes regarding the maker’s incapacitation. The language often did not provide for accountings regarding financial matters or living and health arrangements by the agent to the maker of the power of attorney or revocable trust or others legitimately concerned with the maker’s well being. The language often did not set forth the responsibilities of the agent in any detail.

Partly in response to the proliferation of litigation regarding powers of attorneys, in

2006 the National Conference of Commissioners on Uniform State Laws adopted the

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Uniform Power of Attorney Act, which provided standardized definitions, and principles regarding powers of attorney and duties of agents. The act is available for viewing, downloading and printing on www.uniformlaws.org.

From 2006 to 2017, twenty-­‐two states adopted some form of the Uniform Powers of

Attorney Act.

In 2018, the South Dakota Legislature tried unsuccessfully to adopt some version of

the Uniform Power of Attorney Act. A bill to adopt the Uniform Act passed the House but was tabled by the Senate Judiciary Committee and never was sent to the full Senate for a vote.

Consequently, in South Dakota, powers of attorney continue to be governed by SDCL

Title 59 entitled “Agency”.

Since Title 59 does not deal with the many issues involved with powers of attorney,

South Dakota attorneys need to become familiar with the Uniform Power of Attorney Act and incorporate in the powers of attorney they draft those concepts they feel should be in the document.

ASSISTANCE OR CONTROL

Often mental skills diminish incrementally over a period of time. Often an elderly

person can still handle some aspects of their life even though they need assistance with other aspects of their life. Assisting an elderly person through the journey from some mental impairment to complete mental disability requires frequent contact with the elderly person by family, friends, and other caregivers, and consultations with attorneys when necessary.

The challenge for the elderly person and the agent named in their power of attorney

or the successor trustee named in their revocable trust is whether the elderly person just needs a little assistance or is experiencing mental incapacitation such that the agent or successor trustee should take control of the elderly person’s affairs.

It is important that the agent or successor trustee have regular contact with the

elderly person and initially offer to just assist with various matters such as paying bills, living arrangements, and reviewing contracts. At a minimum, such contacts should be yearly. This allows the agent or successor trustee to become familiar with the elderly person wants and needs, as well as providing the opportunity to determine if the elderly

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person just needs some assistance or the agent or successor trustee should take control and manage the elderly persons’ affairs.

The concept of only doing for the elderly person what the elderly person

cannot do for himself or herself should be incorporated into the power of attorney with language such as: In furtherance of the personal freedom and responsibility of the Principal, in the case of the incapacitation of the Principal, the Agent should only do for the Principal what the Principal cannot or does not want to do for himself or herself.

South Dakota attorneys drafting declarations for revocable trusts should consider including language such as:

In furtherance of the personal freedom and responsibility of the Principal, in the case of the incapacitation of the Trustor, the Successor Trustee should only do for the Trustor what the Trustor cannot or does not want to do for himself or herself.

This is consistent with the fundamental concept of personal freedom and responsibility. It is set forth in the South Dakota Guardianship and Conservatorship Act (SDCL 29A-­‐5).

Conflicts can develop between the elderly person and their agent or successor

trustee in carrying out this concept, or in dealing with the issue of complete incapacitation.

If those conflicts are not resolved through meaningful communication between the elderly person and their agent or successor trustee, costly ligation may occur, which could forever damage the relationship between the elderly person and their agent or successor trustee.

MEDIATION IS WELL SUITED TO ASSIST WITH THE RESOLUTION OF CONFLICTS BETWEEN THE PRINCIPAL AND THE AGENT AND THE MAKER OF A REVOCABLE TRUST AND THE SUCCESSOR TRUSTEE REGARDING WHAT THE PRINCIPAL OR MAKER CAN AND SHOULD DO AND WHAT THE AGENT OR SUCCESSOR TRUSTEE SHOULD DO

Mediation, with its collaborative and non-­‐adversarial basis and its fundamental

principle of client self-­‐determination, is well suited for resolving many disputes regarding mental and physical capacity that may arise between an elderly person and their agent or

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their successor trustee. Mediation can provide assistance with the journey of allowing the elderly person as much independence as they are able and want to handle.

It should be remembered that revocable trusts, like conservatorships, deal with

property. Powers of attorney can deal with both assets, and personal issues such as health care and living arrangements. If the maker has not signed a declaration creating a revocable trust that has a successor trustee provision, the maker’s power of attorney should deal with both assets and personal issues. If the maker has signed a declaration creating a revocable trust that has a successor trustee provision, the maker’s power of attorney should deal with personal issues.

The journey regarding health care and living arrangements may include conflicts

regarding whether the elderly person should no longer (a) drive (b) handle his or her checkbook (c) handle his or her bills, (d) handle his or her credit cards (e) enter into contracts (f) continue charitable or other giving and (g) make changes to his or her will or power of attorney.

The journey may include disputes such as whether the elderly person should (a)

continue to live at home with some help from a home care agency or person (b) move in with a child (c) move to an assisted living center or (d) move to a nursing home.

Those are often emotional issues for the elderly person intertwined with feelings of

anxiety and loss of personal freedom.

Adversarial proceedings, whether in a private arbitration or a public lawsuit, should

not be utilized to resolve disputes over those issues until counseling and mediation have been unsuccessful.

If the elderly person has not lost cognitive skills altogether, mediation may help

them accept their diminishing mental skills and find comfort knowing someone they trust is handling their affairs for them, and yet is accountable to others they also trust.

Such issues are best dealt with through education, counseling, collaboration, and

mediation, not through litigation.

SHOULD POWERS OF ATTORNEY BE CONTINGENT UPON INCAPACITATION?

There is a dispute among lawyers as to whether a power of attorney should

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only become operable when the principal becomes unable to handle his or her own affairs, or whether it should be unconditional and effective immediately.

Those who favor a power of attorney that does not become operable until the

principal is incapacitated argue that unconditional powers of attorney create the risk that the agent will use his or her authority to steal from the maker.

Those who favor an unconditional power of attorney argue that a power of

attorney which is contingent upon the principal’s incapacitation results in uncertainty for health care providers, banks, and securities companies, and requires litigation to establish incapacitation which cannot be accomplished in a timely fashion.

But, an unconditional power of attorney does not eliminate uncertainty as to

whether the principal is incapacitated such that the agent named in the power of attorney should handle the principal’s affairs, or whether the principal was incapacitated when the power of attorney was executed, and since powers of attorney are revocable, whether the power of attorney being relied upon is the most recent one, which are disputes subject to litigation. See Meyer v. Kneip, 457 NW 2nd 463 (SD 1990).

Also, should a person give someone the right to manage their affairs before they are

unable to do so themselves just so their health care providers, banks, securities firms and others they deal with do not have to address the issue of their inability to handle their own affairs when SDCL 59-­‐6-­‐3 says that third parties can rely upon the power of attorney presented them unless they have reason to know it is not valid?

Arbitration, with its privacy and speed, is well suited for incapacity determinations

when a party who will be contracting with the agent or successor trustee wants a definitive incapacitation determination. Using arbitration, that decision can be made quickly and in the privacy of the office of the elderly person’s lawyer or doctor. But the arbitrator will bill for his or her services. So privacy and speed need to be weighted against the additional cost involved.

IF THE MAKER OF A POWER OF ATTORNEY OR A DECLARATION OF REVOCABLE TRUST WANTS (1) THE AUTHORITY OF THE AGENT OR SUCCESSOR TRUSTEE TO BE CONTIGENT UPON THE MAKER’S MENTAL INCAPACITATION AND (2) MEDIATION OR ARBITRATION TO BE USED TO RESOLVE DISPUTES REGARDING INCAPACITATION, THE DOCUMENT MUST SAY THAT

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If the maker of a power of attorney or revocable trust desires that the authority of

the agent or successor trustee to handle the maker’s affairs is contingent upon the maker’s mental incapacitation to handle those affairs, the power of attorney or revocable trust must specifically state that.

If the maker of a power of attorney or revocable trust desires that mediation or

arbitration be used to resolve disputes regarding the maker’s incapacitation, or the power of attorney or revocable trust must specifically state that.

DEFINITION OF INCAPACITATION IN THE UNIFORM POWER OF ATTORNEY ACT

Section 102 (5) of the Uniform Power of Attorney Act states: “Incapacity” means inability of an individual to manage property or business affairs because the individual: (A) has an impairment in the ability to receive and evaluate information or make or communicate decisions even with the use of technological assistance; or (B) is: (i) missing; (ii) detained, including incarcerated in a penal system; or (iii) outside the United States and unable to return.

The appropriateness of (B) is questionable for at least three reasons.

First, with the worldwide availability of the Internet, fiber optic cable laid under

the oceans, digital technology, and wireless technology, being outside the Untied States is not impairment to timely communication, including of signed documents.

Second, being incarcerated does not mean one cannot handle his or her affairs.

Third, the word missing is undefined creating ambiguity as to how long one must

be out of communication with family or old acquaintances before they can be considered missing.

Attorneys drafting powers of attorneys and revocable trust declarations should

consider including a definition of incapacitation similar to the following: “Incapacity” means the inability of an individual to manage property, business affairs, or personal affairs, including living arrangements and

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health care, care because the individual has an impairment in the ability to receive and evaluate information or make or communicate decisions even with the use of technological assistance.”

This definition would include physical incapacitation, which would apply to the

elderly who have experienced strokes, or adults of any age who are suffering from bodily paralysis below the neck or from diseases that make writing and talking impossible. People suffering from such diseases may have lost their ability to communicate but not their ability to hear and understand. Sometimes the ability to communicate comes back after a stroke. Sometimes it does not.

DRAFTING SUGGESTIONS FOR REVOCABLE TRUST DECLARATIONS REGARDING USE OF MEDIATION AND ARBITRATION IN DETERMINATION OF INCAPACITATION

South Dakota attorneys drafting revocable trust declarations should consider

including wording such as: If there is a dispute as to whether Trustor is mentally or physically incapacitated to handle Trustor’s own affairs, it shall first be submitted to mediation facilitated by a South Dakota attorney, if Trustor has the mental capacity to meaningfully participate. If the mediation does not occur because of the Trustor’s mental incapacity to meaningfully participate, or the mediation failed to resolve the dispute, the dispute shall be determined by an attorney acting as an arbitrator in a private arbitration proceeding utilizing the laws of the State of South Dakota. The arbitrator’s decision shall be binding for six months. Thereafter, if the dispute remains, the issue can again be presented to the arbitrator every 6 months.

DRAFTING SUGGESTIONS FOR POWERS OF ATTORNEY REGARDING USE OF MEDIATION AND ARBITRATION IN DETERMINATION INCAPACITATION

South Dakota attorneys drafting powers of attorney should consider including

wording such as: If there is a dispute as to whether Principal is mentally or physically incapacitated to handle Principal’s own affairs, it shall first be

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submitted to mediation facilitated by a South Dakota attorney if the Principal has the mental capacity to meaningfully participate. If the mediation does not occur because of the Principal’s mental incapacity to meaningfully participate, or the mediation failed to resolve the dispute, the dispute shall be determined by an attorney acting as an arbitrator in a private arbitration proceeding utilizing the laws of the State of South Dakota. The arbitrator’s decision shall be binding for six months. Thereafter, if the dispute remains, the issue can again be presented to the arbitrator every 6 months.

The words “or physically” is necessary for the power of attorney to be effective should the maker becomes physically incapacitated by brain injury or stroke.

DRAFTING SUGGESTIONS REGARDING REQUIRING REPORTING TO PREVENT ABUSE

South Dakota statutes regarding conservatorships require annual accountings to the

Court as to the handling of assets

South Dakota statutes regarding guardianship require accountings to the Court as to

the handling of living arrangement and health care .

The only accounting requirement in SDCL Title 59 is SDCL 59-­‐4-­‐1 which says: “An

agent must use ordinary diligence to keep his principal informed of his acts in the course of the agency.”

One of the reasons that there is so much litigation regarding powers of attorney and

revocable trusts is that the agent or successor trustee does not provide an accounting to the elderly person and immediate family members of the elderly person, or others the elderly persons wants to receive accountings.

South Dakota Attorneys drafting powers of attorney that deal with both assets and

health care and living arrangements should consider including wording such as the following: Agent shall provide Principal and the following person(s) at least an annual report summarizing (1) what assets and liabilities Principal has (2) how Agent handled Principal’s income and expenses since the last report and (3) Principal’s health condition, medical care, and living situation: _________________.

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South Dakota Attorneys drafting declarations for revocable trusts should consider

including wording such as the following: Successor Trustee shall provide Trustor and the following person(s) at least an annual report summarizing the assets and liabilities of the trust, and how the Successor Trustee handled the income and expenses of the Trust.

SOUTH DAKOTA RULES OF PROFESSIONAL CONDUCT 2.3 AND 2.4 ARE THE ETHICAL BASIS FOR PROVIDING COUNSELING AND MEDIATION SERVICES TO THE ELDERLY AND THOSE THEY HAVE NAMED IN POWERS OF ATTORNEY OR REVOCABLE TRUSTS TO HANDLE THEIR AFFAIRS IN CASE OF THEIR INCAPACITATION.

Rule 2.3 and 2.4 of the South Dakota Rules of Professional Conduct are under the

category entitled “Counselor”.

Rule 2.3 states: (a) A lawyer may provide an evaluation of a matter affecting a client for the use of someone other than the client if the lawyer reasonably believes that making the evaluation is compatible with other aspects of the lawyer's relationship with the client. (b) When the lawyer knows or reasonably should know that the evaluation is likely to affect the client's interests materially and adversely, the lawyer shall not provide the evaluation unless the client gives informed consent.

Rule 2.4 states: (a) A lawyer serves as a third-­‐party neutral when the lawyer assists two or more persons who are not clients of the lawyer to reach a resolution of a dispute or other matter that has arisen between them. Service as a third-­‐party neutral may include service as an arbitrator, a mediator or in such other capacity as will enable the lawyer to assist the parties to resolve the matter.

(b) A lawyer serving as a third-­‐party neutral shall inform unrepresented parties that the lawyer is not representing them.

When the lawyer knows or reasonably should know that a party does not understand the lawyer's role in the matter, the lawyer shall

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explain the difference between the lawyer's role as a third-­‐party neutral and a lawyer's role as one who represents a client.

CAN AN ATTORNEY ACT AS A MEDIATOR CONCERNING THE INCAPACITY OF THE MAKER OF A POWER OF ATTORNEY OR REVOCABLE TRUST IF HE OR SHE (1) DRAFTED THE DOCUMENT (2) PRESENTLY REPRESENTS THE MAKER OR (3) HAS REPRESENTED THE MAKER IN THE PAST?

Without any other clarifying Rule of Professional Conduct, the wording of the first

sentence of Subsection (a) of Rule 2.4 would seem to preclude an attorney from acting as a mediator concerning the incapacity of the maker of a power of attorney or revocable trust if the attorney drafted the power of attorney or revocable trust, presently represents the maker, or represented the maker in the past.

But, Rule 2.4 needs to be read in conjunction with Rule 1.7, which prohibits an

attorney from representing clients with conflicting interests, unless the clients have in writing consented to such representation.

Subsection C of Standard III of the ABA Model Standards of Conduct for

Mediators, entitled “Conflicts of Interest”, states: C. A mediator shall disclose, as soon as practicable, all actual and potential conflicts of interest that are reasonably known to the mediator and could reasonably be seen as raising a question about the mediator’s impartiality. After disclosure, if all parties agree, the mediator may proceed with the mediation.

But, the attorney should consider providing counsel and advice to the client and his

or her agent or successor trustee without utilization of a mediation process, and, if that consultation and advice does not result in a mutually agreeable resolution of the dispute, recommending a mediation facilitated by an attorney with no prior dealings with the client or his or her agent.

Having another attorney facilitate the mediation will increase the cost of the

mediation, but the neutrality of the mediator is an essential principle of mediation, and having a mediator who has no conflict of interest will most likely result in the disputants feeling that the mediator is neutral and unbiased, and thereby facilitate the possibility of a

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mutual resolution of the conflict. It also provides the opportunity for a second opinion (a neutral evaluation) if the parties have not been able to reach a resolution during the initial stages of the mediation. That second opinion, if the same as the attorney’s evaluation during the consultation session, could facilitate a mutually agreeable resolution.

But the mediator will bill for his or her services. So the advantages of retaining

another attorney to act as a mediator must be weighted against the additional cost involved.

It should be remembered that mediators do not have to be attorneys. The resolution

of disputes regarding mental incapacitation, health care, and living arrangement would be advanced significantly if practicing psychologists and social workers attended mediation training and were willing to act as mediators for such issues. The reality is that, in nursing home settings, psychologists and social workers are already working with the elderly and their families on these issues.

LAWYER’S ETHIC RESPONSIBILITIES TO A CLIENT WITH DIMINISHED MENTAL CAPACITY

Rule 1.14 (b) of the South Dakota Rules of Professional Conduct for attorneys, entitled “Client With Diminished Capacity”, states: (a) When a client’s capacity to make adequately considered decisions in connection with a representation is diminished, whether because of minority, mental impairment or for some other reason, the lawyer shall, as far as reasonably possible, maintain a normal client-­‐lawyer relationship with the client. (b) When the lawyer reasonably believes that the client has diminished capacity, is at risk of substantial, 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. (c) Information relating to the representation of a client with diminished capacity is protected by Rule 1.6. When taking protective action pursuant to paragraph (b), the lawyer is impliedly authorized

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under Rule 1.6 (a) to reveal information about the client, but only to the extent reasonably necessary to protect the client’s interests.

Rule 1-­‐6 deals with client confidences.

THE AGING OF THE BABY BOOMERS PRESENTS A RESPONSIBILITY AND AN ECONOMIC OPPORTUNITY FOR THE LEGAL PROFESSION Assisting the aging baby boomers with the journey of dealing with their diminishing

mental capacities presents both a responsibility and an economic opportunity for the legal profession.

The profession has a responsibility to urge its members to educate themselves

regarding the issues involved with that journey, and to assist the baby boomers, and their families, loved ones, and agents with that journey.

Individual lawyers who choose to educate themselves regarding those issues and

assist clients with that journey will provide a valuable service and be appropriately compensated for their services.

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POWER OF ATTORNEY AND NOMINATION OF GUARDIAN AND CONSERVATOR ___________ (Principal) hereby grants to his wife, ___________, (Agent) full Power of Attorney to handle Principal’s personal, business, and financial affairs, should Principal become mentally or physically incompetent to do so personally. This would include (1) all medical decisions regarding Principal’s health and health care (2) Principle’s living arrangements (3) selling, transferring, purchasing, and granting a security interest in Principal’s real estate and securities and (4) opening, closing, depositing into and withdrawing assets from Principal’s bank and securities accounts.

Principal desires that Agent handle Principal’s affairs without the involvement of the court system, unless involvement of the court system is necessary to (a) enforce a decision of an arbitrator handling an arbitration proceeding pursuant to the arbitration provisions in this Power of Attorney, or (b) compel a third party to accept the authority of Agent to handle Principal’s affairs pursuant to this Power of Attorney.

If, however, for some unforeseen reason appointment of a guardianship or conservatorship over the person and affairs of Principal is necessary, Principal desires Agent be appointed guardian or conservator, and that Agent act without being bonded.

If____________(wife) is unable or unwilling to act as Agent, guardian or conservator, Principal (1) grants full Power of Attorney to handle Principal’s personal, business, and financial affairs should Principal become mentally or physically incompetent to do so personally to his daughter, _________________ (daughter), who shall have all of the authority of Agent specified above, and (2) desires that (daughter) be appointed guardian or conservator, and that she act without being bonded.

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If____________(daughter) is unable or unwilling to act as Agent, guardian or conservator, Principal grants full Power of Attorney to handle Principal’s personal, business, and financial affairs should Principal become mentally or physically incompetent to do so personally to his son, _________________ (son), who shall have all of the authority of Agent specified above, and (2) desires that (son) be appointed guardian or conservator, and that he can act without being bonded.

Principal desires that this Power of Attorney be a durable one, which means it will not terminate upon the mental or physical incompetency of Principal; but shall commence upon Principal becoming mentally or physically incompetent.

If there is a dispute as to whether (1) Principal is mentally or physically incapacitated to handle Principal’s own affairs, (2) Principal is mentally and physically capable of handling some, but not all, of Principal’s affairs, (3) Agent is properly handling Principal’s affairs or (4) Agent’s authority to handle Principal’s affairs should be terminated because of the improper handling of Principal’s affairs, it shall first be submitted to mediation facilitated by a South Dakota attorney, if Principal has the mental capacity to meaningfully participate. If the mediation does not occur because of Principal’s mental incapacity to meaningfully participate, or the mediation failed to resolve the dispute, the dispute shall be determined by an attorney acting as an arbitrator in a private arbitration proceeding utilizing the laws of the State of South Dakota.

The arbitrator’s decision shall be binding for six months. Thereafter, if the dispute remains, the issue can again be presented to the arbitrator every 6 months.

Principal and Agent shall initially split the cost of the mediator and arbitrator, but the arbitrator can require the losing party to pay all the fees of the arbitrator and/or mediator, if the

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arbitrator determines that there was no substantial legal or factual basis for the position taken by the person the arbitrator rules against.

It is the desire of Principal that, if Principal is found to be mentally or physically incompetent after arbitration, this Power of Attorney shall become effective. It is not Principal’s desire that a guardian or conservator be appointed.

Agent shall, to the extent known, consider Principal’s expressed desires and personal values when making decisions regarding Principal’s affairs. Agent shall act in Principal’s best interests. Agent shall exercise reasonable care, diligence, and prudence in handling Principal’s affairs.

Agent shall use Principal’s assets for (1) Principal’s support, care, and health; and (2) support of any legal dependents of Principal who are under 18 years of age.

Agent shall exercise authority only to the extent necessitated by Principal’s limitations, and shall encourage Principal, to the extent Principal is able, to (1) participate in decisions regarding Principal’s affairs (2) act on Principal’s own behalf, and (3) develop or regain the capacity to manage Principal’s health care, living arrangements, assets, business affairs, and financial affairs.

In making expenditures, Agent shall consider the value and type of assets owned by Principal, the probable time that Principal will need to use his or her assets for his or her own support, care and health, and Principal’s accustomed manner of living.

Agent shall provide Principal and the following person(s) at least an annual report summarizing (1) what assets and liabilities Principal has (2) how Agent handled Principal’s income and expenses since the last report and (3) Principal’s health condition, medical care, and living situation: _________________.

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Being placed under oath by the undersigned Notary Public, I declare that (1) this document is my Power of Attorney and Nomination of Guardian and Conservator, (2) I am over 18 years of age, (3) I am of sound mind, and (4) I sign this document willingly, without any constraint or undue influence.

Dated this _____ day of ______, 200____.

_____________________________ Principal

Being placed under oath by the undersigned Notary Public, we declare that Principal willingly, without any constraint or undue influence, signed this document in our presence; that Principal asked us to witness Principal’s signing of this document and to sign it as witnesses; that, in Principal’s presence, we signed this document after Principal signed it; and that to the best of our knowledge Principal is over 18 years of age and of sound mind.

______________________________ Witness

STATE OF SOUTH DAKOTA COUNTY OF MINNEHAHA

_______________________________ Witness

) :SS )

Subscribed and sworn to before me by Principal and witnesses on the _____ day of ________________, 200__.

______________________________ Notary Public

My Commission Expires: _______________________ (SEAL)

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