Elder abuse and undue influence: what to look for and how you can help.(Of Interest)

Elder abuse and undue influence: what to look for and how you can help.(Of Interest)

Source: Leader's Edge

Publication Date: 01-MAY-05

Article printed with permission of Clark Hill PLC, May 2004 

Three case studies illustrate the gravity and complexity of elder abuse--emotional, physical and financial. As financial advisors, CPAs can play an important role in helping to prevent circumstances where elder abuse might occur and in identifying elder abuse situations. 

It is safe to say that elder abuse occurs more frequently than most realize. In some cases, an individual without close family may be victimized because no one other than the abuser has any consistent contact with the victim. The victim may have no means of escape. Even when the victim can escape, he or she may be afraid of retaliation, of losing his or her independence, of being alone, or of the publicity associated with a criminal or civil proceeding. 

Identifying the Problem 

Recognizing a situation of abuse is no easy matter, especially psychological or financial abuse. Even physical abuse can be hard to detect. Dr. Bennett Blum, in his testimony before the Senate Committee on Commerce, Science and Transportation on July 28, 1999, outlined a framework for spotting an abuse situation: 

"A model was developed that is practical and usable by non-specialists. According to this model, four psychosocial conditions must coexist for undue influence to occur. The four conditions are: (1) dependence upon the perpetrator; (2) isolation of the victim from pertinent social contacts or information; (3) emotional manipulation of the victim; and (4) gaining control of the victim's money or property." 

The following examples illustrate undue influence where each of the elements of the model was present. 

Case Study #1 

A 93-year-old widow lived alone. She had no children. Her closest relative, a nephew by marriage, helped her locate and hire a caregiver. 

Over the subsequent two-year period, the caregiver slowly took control of the widow's affairs. Eventually, the nephew was no longer permitted to visit his aunt. 

The nephew filed a petition for the appointment of a conservator. A Guardian Ad Litem was appointed by the court to meet with the widow at her home. The meeting took place in the presence of the caregiver. The widow told the Guardian Ad Litem that she was happy and comfortable and that everything was fine. She indicated that she liked her caregiver very much and did not want to change any of her circumstances. It was then discovered that the widow had executed new estate planning documents with a new lawyer. 

Based on the Guardian Ad Litem's report, a conservator was not appointed by the Court. 

After another year and continuing concern over the widow's care, the nephew was able to remove his aunt from her home and the presence of the caregiver, at which time the widow admitted that she was abused by the caregiver, feared for her physical safety, and was happy to be free. 

Unfortunately, the caregiver filed for personal bankruptcy and the $60,000 judgment obtained against her for wrongfully taken funds could not be satisfied. 

Case Study #2 

A well-to-do elderly widower vowed never to leave his residence, and had the funds to amply provide for "around-the-clock" care. He hired his own providers. Gradually, they took over and ruled the house. Over time, silver, art objects and other valuables began to disappear. Large credit card purchases as "gifts" to the help were observed. 

When confronted with these facts by his children, the widower was very defensive and more often than not took the side of the caregivers. It was clear, however, they were virtually looting the estate. They would often file for overtime pay and other measures designed to take as much advantage of the financial situation as possible. Extremely large bonus checks were paid to the caregivers with checks that were signed only in the presence of the caregivers. 

They knew their worst enemy was the lawyer, so they purposefully persuaded the client to fire the attorney and hire the counsel selected by the caregivers. They changed the locks on the residence so that the children could not gain access to their father. Phone calls were not permitted, and the children became totally estranged from their father. The father was kept on a constant regimen of tranquilizers, and he seemed to be in a constant stupor. 

His unfortunate death terminated the worst of the situation, but it didn't end there. There were claims for back pay, termination pay, etc. It was plain and simple financial--and perhaps physical--abuse. 

The lessons learned here were to use a licensed care agency to provide staffing; separate the financial responsibilities from care-giving, and insist on regular family visits with review of medical records and medications prescribed by the physicians. 

Case Study #3 

An elderly woman's residence was literally put into a shambles by a "loving" live-in caregiver. The caregiver ingratiated herself so deeply with the woman that even when the woman was told of the caregiver raiding her checkbook of over $200,000 per year for three or four years, the woman was willing to forgive and forget because "she is so nice to me." 

In this case, there was also strong inferential evidence of actual physical abuse. (She had been hospitalized with unusual injuries sustained while "sitting in a chair.") It was later found that her meals were only frozen dinners--even though finances could have provided for a well-rounded diet. 

All the love and affection afforded the woman by the caregiver was forgotten when it came to the family of the woman. They were locked out and told the woman did not want to see them any more. What's more, the caregiver accused them of only wanting to visit so they could "get her money." 

It took intervention by the local police department to physically remove the caregiver under threat of prosecution. Fortunately, with a newly secured care agency, the quality of care improved dramatically, and the woman's health improved significantly. She became reunited with her loved ones, and then enjoyed the remainder of her life surrounded by her family. 

There are no doubt thousands of variations on these themes. Unless very adequate plans are made when a client is able to think clearly, the ability of family, financial advisors and legal counsel to address these issues through the legal system too often is not expeditious or satisfactory. 

Access further details about eldercare and legal issues 

Solutions 

Preventative drafting of estate planning documents is possible, but it is not always an ideal solution. Trust agreements can include elaborate requirements for the modification or amendment of the agreement. For instance, a trust agreement could require that any amendment made after the settlor reaches a specified age have attached to it a certification by a physician, independent long-term friend or advisor or perhaps even a probate judge that the settlor is competent and not under undue influence. 

This may be an extreme approach--which is still not beyond legal challenge--but other less extreme approaches may be appropriate in the right case. The problem with this kind of solution is these mechanisms threaten the settlor's independence and could make simple updates very difficult and expensive. 

There are no simple solutions to the societal problem of elder abuse. Still, there are several things a professional advisor might watch for with an older, long-term client. 

Consider the following: 

(1) look for the indicia of the undue influence model; 

(2) where a client has a caregiver, meet with the client away from the home, outside of the presence of a caregiver (the caregiver should not be waiting in your reception area); 

(3) where any of the model conditions are present, meet with the client more than once a year; 

(4) recommend that someone other than the caregiver assist the client with the payment of bills and expenses, if necessary; 

(5) make sure that the client's estate plan is up-to-date, including planning for possible incapacity; 

(6) ask the client for the name, address and telephone number of the person appointed as agent under their durable power of attorney, and for permission to contact that person, if appropriate in your judgment; 

(7) where any form of abuse may be evident and no one else has or is likely to step forward to protect the client, petition the probate court for the appointment of a conservator, and try to make sure the Guardian Ad Litem is not fooled by the caregiver. Michigan law allows a person (including a CPA) interested in the affairs of someone who needs protection, to petition the court for the appointment of a conservator. 

We live in a society where we are assured of our liberty and independence. The due process requirements of the law are intended to protect these rights. In order for the legal system to adequately protect those who are vulnerable from abuse without impinging on these important fundamental rights, advisors like attorneys and CPAs should be aware of the factors that suggest a situation of abuse, and where appropriate, take action to try to help protect the client. 

Legal Issues 

Most of us have a strong sense of independence. This trait can grow even stronger with age. Our concerns as a society about the protection of those who are vulnerable must be balanced with the legal rights of the individual. 

The legal system provides various standards for examination of a person's ability to make decisions on his or her own, depending on the circumstances. For instance, a person has sufficient mental capacity to make a Will if at the time the Will is made, the person had (a) the ability to understand that he or she was providing for the disposition of his or her property at death, and (b) the ability to know the nature and extent of his or her property, and (c) the ability to know the natural objects of his or her bounty, and (d) the ability to know the manner in which the document disposes of his or her property. 

Generally speaking, this standard applies also to the execution of other documents. Even where a person has sufficient mental capacity to execute the document in question, another person may have unduly influenced him to the extent that the influence overpowers his free will and prevents him from doing as he pleases with his property. 

Michigan Civil Jury Instructions define "undue" influence as that which overpowered the decedent's free choice and caused him to act against his own free will and to act in accordance with the will of the person who influenced him. 

Michigan law presumes that a person who is in a position of trust and confidence with respect to a person, and by reason of such relationship had an opportunity to unduly influence the person, thereby deriving or obtaining a substantial benefit for himself or some other person or interest he sought to benefit, has unduly influenced the person signing the document. 

The standards for appointment of a guardian and a conservator are slightly different. A probate court may appoint a guardian to make decisions regarding another person's physical well-being if the court finds by clear and convincing evidence both that (i) the individual for whom a guardian is sought is impaired by reason of mental illness, mental deficiency, physical illness or disability, chronic use of drugs, chronic intoxication, or other cause, not including minority, to the extent of lacking sufficient understanding or capacity to make or communicate informed decision, and (ii) the appointment is necessary as a means for providing continuing care and supervision of the incapacitated individual. 

Under Michigan's Estates and Protected Individuals Code, a probate court may appoint a conservator to manage the property and assets of person if the court determines both of the following: 

(a) The individual is unable to manage property and business affairs effectively by reasons such as mental illness, mental deficiency, physical illness or disability, chronic use of drugs, chronic intoxication, confinement, detention by a foreign power, or disappearance. 

(b) The individual has property that will be wasted or dissipated unless proper management is provided, or money is needed for the individual's support, care and welfare or for those entitled to the individual's support, and that protection is necessary or desirable to obtain or provide money. 

Where a petition seeking the appointment of a guardian or conservator has been filed, the courts will follow certain procedures to protect the rights of the person who is the subject of the petition. In most cases, a Guardian Ad Litem is appointed by the court to meet with the subject of the petition and then report findings to the court. 

The court system is well intended but far from perfect. It is costly, intimidating, frequently slow moving, and often inaccessible for those with physical limitations. Besides, the harm often is done before anyone asks for court involvement. 

What can CPAs do? 

Be aware of factors that suggest a situation of abuse and, where appropriate, take action. 

As professionals, we can also advocate, either directly or through our associations, for stronger laws that permit the Attorney General's office or local prosecutors to bring abusive eldercare providers to justice with stiff punishment, which could provide a major disincentive for engaging in abusive actions. The rights of this most vulnerable segment of our population must be balanced with the protections necessary for their well-being. 

CPAs who provide personal financial planning services can earn the Personal Financial Specialist credential through the AICPA, which offers a variety of resources for financial and non-financial eldercare services. 

Visit the CPA ElderCare/PrimePlus Services section of the AICPA web site for more information. 

J. Thomas MacFarlane and Douglas J. Rasmussen are both members of Clark Hill, a full-service law firm with offices located throughout Michigan. MacFarlane specializes in Corporate, Tax Practice, Tax-Exempt and Charitable Organizations and Trusts and Estates. Rasmussen specializes in Corporate, Tax Practice and Trusts and Estates. E-mail MacFarlane or Rasmussen for further information.