(Note: The pdf for the issue in which this article appears is available for download: BIFOCAL Vol. 35, Issue 1.)
Bifocal is pleased to publish this article written by Mr. Zimring for the National Academy of Elder Law Attorneys about one of the roles that elder law attorneys can play in preventing the extensive and expensive problem of elder financial exploitation. While some of the terminology used in the article is California-centric, the issues and ideas posed by Mr. Zimring are national in scope and relevant to practitioners in other states.
In many cases, an Elder Law attorney can be the first line of defense against fiduciary elder abuse. Proper counseling, planning, and drafting of estate planning documents can build protective mechanisms, safeguards, and checks and balances into the estate plan to protect the elder for years to come.
Here are some strategies to help reduce the possibility of financial elder abuse:
Public scrutiny is one of the best ways of keeping people honest. Where a senior’s financial affairs are in the hands of one individual, consider advising the senior to have reports sent to other family members, a friend, or advocate on a regular basis, giving this person oversight, responsibility, or the capacity to inquire regarding financial matters. This is best done in a Durable Power of Attorney for Asset Management or in the client’s Living Trust.
Familiarize yourself with the agent
If a trust or durable power of attorney is used to manage the elder’s assets, consider obtaining the client’s permission to meet with or, at the very least, write a letter to, the agent or trustee to outline what is expected under the document.
A representative payee receives the Social Security or Supplemental Security Income (SSI) payments if the Social Security Administration (SSA) determines that it is in the recipient’s best interests. While the SSA is required to investigate a potential representative payee before the appointment, these investigations may be lax or cursory. Because there is little oversight of representative payees by SSA, a frail elder can be the subject of fiduciary abuse by a person who obtains appointment as representative payee and thereafter converts the elder’s benefits to his own use and benefit. An elder law attorney who believes a client’s Social Security or SSI benefits are being misappropriated should assess ethical and legal responsibilities and consider whether to notify the SSA or a law enforcement agency.
One would think that, since conservators or guardians are already subject to ongoing court supervision, elder abuse would be unlikely in such cases. Unfortunately, this is not true. Given current case loads, it can be years before a court discovers that a conservator has failed to carry out his statutory duties. Thus, the vigilance of family, friends, and advocates can be most helpful in reviewing the periodic accountings filed by the conservator and lodging appropriate objections with the court. A conservator who is determined by the court to have acted improperly may be surcharged for the damages caused by the conservator’s breach of duty or removed from office.
Be on the lookout for power of attorney misuse
A durable power of attorney is an extremely powerful, and therefore potentially dangerous, document. Unfortunately, most durable powers are executed, and often drafted, with little thought to the enormous power contained in them. Since the forms can be obtained from the Internet site, they are seen as a quick and inexpensive method of avoiding the disadvantages of conservatorship or the expense of paying an attorney. Unfortunately, an unscrupulous agent can, without the knowledge of the principal or those around him, change title to assets, empty bank and stock brokerage accounts, rearrange the principal’s estate plan, and be long gone before anyone even suspects something is wrong.
The best way to avoid abuse by the agent is to include provisions designed to address that purpose when drafting the document. For example:
- Consider including some built-in protection for the principal, such as the appointment of “friends,” “advisors,” or “protectors” with whom the agent is required to consult or advise before performing specific acts such as conveying real property, liquidating assets, making gifts, etc. Similarly, the agent could be required to account to a third party or the elder law attorney on a regular basis for actions taken.
- Include prohibitions or limitations on specific kinds of activity, such as prohibiting the sale of the principal’s residence.
By being proactive, a good elder law attorney can give both an elderly client and those who care about the client’s peace of mind a level of security that might otherwise not be available. ■