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Prevention and Remedying Financial Elder Abuse

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Redline Version Of Slides 20110706

  1. 1. Protecting your client<br />Andrew H. Hook, CELA, CFP®<br />M. Bradley Brickhouse<br />Stephen E. Taylor<br />Oast & Hook, PC<br /><br />
  2. 2. Case ANALYSIS NUMBER One<br />Client suffers from dementia<br /><ul><li>Widow with no children
  3. 3. Door to Door “termite inspections”
  4. 4. Completed “needed repairs” on her home
  5. 5. She deeds her house to company as payment
  6. 6. Company deeds property to its owner</li></li></ul><li>Case ANALYSIS NUMBERTWO<br />Client suffers from dementia<br />Estranged from her family<br />Numerous bank withdrawals to numerous “friends”<br />Renters “close friends” add themselves to POD accounts<br /> Over $500,000 in assets re-titled<br />
  7. 7. Case ANALYSIS NUMBERTHREE<br />Blended family.<br />Account transfers under the cloud of Medicaid planning.<br />Abusive use of a power of attorney. <br />Stepdaughter uses POA to transfer Stepmother’s entire state to her husband (stepdaughter’s father) in ICU<br />Has father executes new LWT after transfers<br />Leaves entire estate (except for minimum amount to satisfy elective share) to his children.<br />Same lawyer drafted all documents<br /> Met wife only for POA signing <br />
  8. 8. Introduction<br />The population is getting older, by 2030 24% of the Virginia population will be 60+<br />In 2004, APS nationally received a total of 565,747 reports of abuse<br />20% growth rate from 2000<br />Under reported<br />Physical abuse: 1 in 14 reported<br />Financial abuse: only 1 in 25 reported<br />
  9. 9. VICTIMS<br />65.7% were female<br />42.8% were age 80+<br />77.1% were Caucasian<br />89.3% occurred in domestic settings<br />
  10. 10. PerpetratorsSubstantiated Reported Cases<br />52.7% of perpetrators were female<br />75.1% of perpetrators were under age 60<br />32.6% were children<br />21.5% were other family members<br />
  11. 11. Categories<br />
  12. 12. Types of AbuseVirginia APS<br />
  13. 13. Governmental ActionDomestic Setting Self Neglect<br />
  14. 14. APS<br />Investigation, voluntary or involuntary intervention, and reporting of Elder Abuse.<br />If protective services are needed and accepted by the individual, APS may arrange for a variety of health, housing, social and legal services, including home-based care, transportation, adult day services, adult foster care, nutrition services and legal intervention. <br />Services may also be arranged for individuals in emergency situations who lack the capacity to consent to services.<br />Primary Responsibility for protection of Adults. <br />
  15. 15. Reporting<br />
  16. 16. Criminal Law<br />Section 18.2-369: Abuse and neglect of incapacitated adults; penalty. <br /> A. It shall be unlawful for any responsible person to abuse or neglect any incapacitated adult as defined in this section. Any responsible person who abuses or neglects an incapacitated adult in violation of this section and the abuse or neglect does not result in serious bodily injury or disease to the incapacitated adult is guilty of a Class 1 misdemeanor. Any responsible person who is convicted of a second or subsequent offense under this subsection is guilty of a Class 6 felony. <br />B. Any responsible person who abuses or neglects an incapacitated adult in violation of this section and the abuse or neglect results in serious bodily injury or disease to the incapacitated adult is guilty of a Class 4 felony. Any responsible person who abuses or neglects an incapacitated adult in violation of this section and the abuse or neglect results in the death of the incapacitated adult is guilty of a Class 3 felony. <br />
  17. 17. Prevention of Financial Elder Abuse<br />Employment of Care Manager/Coordinator<br />Power of Attorney<br />Guardianship<br />Direct Deposit<br />Representative Payee<br />Trusts<br />Commercial Bill Paying Service<br />
  18. 18. Prevention of Financial Elder Abuse<br />Employment of Care Manager/Coordinator<br /><ul><li> Helps avoid common pitfalls
  19. 19. Support and guidance for the family
  20. 20. An independent perspective</li></li></ul><li>Prevention of Financial Elder Abuse<br /><ul><li> HIPAA and federal laws could be helpful.
  21. 21. HHS Standards for Privacy of Individually Identifiable Health Information; Final Rule: 45 CFR Parts 160 and 164</li></ul>Law: Pub. L. 104-191,110 Stat. 1936<br />
  22. 22. Prevention of Financial Elder Abuse<br />Power of Attorney<br /><ul><li> A double-edged sword
  23. 23. Bestows Fiduciary Duties on Agent (UPOAA)
  24. 24. Can be used to help remedy the abuse
  25. 25. Can also be easily revoked
  26. 26. Dueling POA’s
  27. 27. No built in oversight </li></li></ul><li>Prevention of Financial Elder Abuse<br />Guardianship/Conservatorship<br /><ul><li>Often the only real solution
  28. 28. Court oversight
  29. 29. Can be used as muscle
  30. 30. Add previous agents as parties
  31. 31. A remedy for self-neglect </li></li></ul><li>Prevention of Financial Elder Abuse<br />Trusts<br /><ul><li>Fiduciary Implications
  32. 32. Beneficiaries can require accountings
  33. 33. Human nature for beneficiaries to watch over other beneficiaries when a trust is employed </li></li></ul><li>Prevention Issues, Continued…<br />Careful selection of Fiduciary – Consider a Professional<br />Oversight – Consider co-fiduciaries or trust protector<br />Accountings<br />Carefully define scope of authority<br />Carefully consider triggers for grants of authority<br />
  34. 34. remedies through Litigation<br />
  35. 35. Breach of Fiduciary Duty<br /><ul><li>A source of financial recovery
  36. 36. Often easier to recover if there is an agency relationship between abuser and a company
  37. 37. Difficult to recover if family member is the abuser</li></li></ul><li>Breach of Fiduciary Duty<br />
  38. 38. Examples of UPOAA Fiduciary Duties<br />Act in accordance with the principal’s reasonable expectations<br />Act in Good Faith<br />Act only within the scope of authority granted<br />Act loyally <br />Act so as not to create a conflict of interest<br />Act with care, competence and diligence<br />Keep records<br />Attempt to preserve the principal’s estate plan<br />Investment duties such as diversification<br />
  39. 39. Examples of Trustee Fiduciary Duties<br />Administer trust in good faith in accordance with its terms and the interests of the beneficiaries<br />Loyalty<br />Prudence<br />Monitor and control costs and expenses<br />Maintain records<br />Keep beneficiaries informed<br />
  40. 40. UPOAA Duties<br />Prudence<br />Diversification<br />Loyalty<br />Manage and monitor expenses<br />
  41. 41. Common Law – Informal Fiduciary Relationships<br />The common law has also embraced the concept that certain informal relationships may provide a basis for the imposition of fiduciary duties. Such “confidential relationships” may arise “where one person trusts in and relies upon another, whether the relation is a moral, social, domestic, or merely personal one.” However, it is axiomatic that not all relationships that involve a high level of trust and confidence can be characterized as fiduciary; instead, the law examines whether “influence has been acquired and abused . . . [and] confidence has been reposed and betrayed.” “Due to its extraordinary nature, the law does not recognize a fiduciary relationship lightly. Whether such a duty exists depends on the circumstances.” <br />
  42. 42. Negligence<br /><ul><li> Negligence is a flexible concept that can be employed in a variety of settings.
  43. 43. Those who are professionals have a higher standard than those who are not, and thus they often have malpractice insurance, which can lead to settlement. However, malpractice companies have also been known to try to outlast plaintiffs.</li></li></ul><li>Assault and battery<br /><ul><li> These classic tort claims involve physical contact (battery) or the apprehension of forthcoming physical contact (assault).
  44. 44. It is noteworthy that even if a touch is “light” nominal damages are available; thus, it is very easy to get somebody’s attention by filing a suit for nominal damages.</li></li></ul><li>Conclusion<br />Hidden Epidemic<br />Under reported<br />Early intervention is necessary to mitigate damages<br />Reporting may not only save assets but a life<br />Adults can increase autonomy and reduce risk by advance planning<br />Practice Tip: Prevention and remedying Elder Abuse will become an important part of Elder Law<br />
  45. 45. Internet Resources<br />National center on elder abuse, http://ncea.Aoa.Gov/ncearoot/main_site/index.Aspx<br />Oast & Hook,<br />Virginia APS,<br />