Protecting your client

Andrew H. Hook, CELA, CFP®

M. Bradley BrickhouseStephen E. Taylor

Oast & Hook, PCwww.oasthook.com

Case ANALYSIS NUMBER One

•Client suffers from dementia

•Widow with no children

•Door to Door “termite inspections”

•Completed “needed repairs” on her home

• She deeds her house to company as

payment

•Company deeds property to its owner

Case ANALYSIS NUMBERTWO

• Client suffers from dementia• Estranged from her family• Numerous bank withdrawals to numerous

“friends”• Renters “close friends” add themselves to POD

accounts• Over $500,000 in assets re-titled

Case ANALYSIS NUMBERTHREE

• Blended family.• Account transfers under the cloud of Medicaid

planning.• Abusive use of a power of attorney. • Stepdaughter uses POA to transfer

Stepmother’s entire state to her husband (stepdaughter’s father) in ICU• Has father executes new LWT after transfers• Leaves entire estate (except for minimum

amount to satisfy elective share) to his children.• Same lawyer drafted all documents•  Met wife only for POA signing

Introduction

• The population is getting older, by 2030 24% of the Virginia population will be 60+

• In 2004, APS nationally received a total of 565,747 reports of abuse

• 20% growth rate from 2000• Under reported– Physical abuse: 1 in 14 reported– Financial abuse: only 1 in 25 reported

VICTIMS

• 65.7% were female• 42.8% were age 80+• 77.1% were Caucasian• 89.3% occurred in domestic settings

PerpetratorsSubstantiated Reported Cases

• 52.7% of perpetrators were female• 75.1% of perpetrators were under age 60• 32.6% were children• 21.5% were other family members

Categories

Types of AbuseVirginia APS

Governmental ActionDomestic Setting Self Neglect

APS

• Investigation, voluntary or involuntary intervention, and reporting of Elder Abuse.

• 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.

• Services may also be arranged for individuals in emergency situations who lack the capacity to consent to services.

• Primary Responsibility for protection of Adults.

Reporting

Criminal Law• Section 18.2-369: Abuse and neglect of

incapacitated adults; penalty. 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.

• 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.

Prevention of Financial Elder Abuse

• Employment of Care Manager/Coordinator

• Power of Attorney• Guardianship

• Direct Deposit• Representative Payee• Trusts• Commercial Bill Paying

Service

Prevention of Financial Elder Abuse

Employment of Care Manager/Coordinator

• Helps avoid common pitfalls• Support and guidance for the family• An independent perspective

Prevention of Financial Elder Abuse• HIPAA and federal laws could be helpful.• HHS Standards for Privacy of Individually

Identifiable Health Information; Final Rule: 45 CFR Parts 160 and 164

Law: Pub. L. 104-191,110 Stat. 1936

Prevention of Financial Elder Abuse

Power of Attorney

• A double-edged sword• Bestows Fiduciary Duties on Agent (UPOAA)• Can be used to help remedy the abuse• Can also be easily revoked• Dueling POA’s• No built in oversight

Prevention of Financial Elder Abuse

Guardianship/Conservatorship

• Often the only real solution• Court oversight• Can be used as muscle• Add previous agents as parties• A remedy for self-neglect

Prevention of Financial Elder Abuse

Trusts

• Fiduciary Implications• Beneficiaries can require accountings• Human nature for beneficiaries to watch over other

beneficiaries when a trust is employed

Prevention Issues, Continued…

• Careful selection of Fiduciary – Consider a Professional

• Oversight – Consider co-fiduciaries or trust protector

• Accountings• Carefully define scope of authority• Carefully consider triggers for grants of

authority

remedies through Litigation

Breach of Fiduciary Duty

Negligence

Fraud Undue Influence

Lack of Capacity Intentional Infliction of Emotional Distress

Rescission Assault & Battery

Accounting Conversion

Breach of Fiduciary Duty

• A source of financial recovery• Often easier to recover if there is an agency

relationship between abuser and a company• Difficult to recover if family member is the

abuser

Breach of Fiduciary Duty

Examples of UPOAA Fiduciary Duties

• Act in accordance with the principal’s reasonable expectations

• Act in Good Faith• Act only within the scope of authority granted• Act loyally • Act so as not to create a conflict of interest• Act with care, competence and diligence• Keep records• Attempt to preserve the principal’s estate plan• Investment duties such as diversification

Examples of Trustee Fiduciary Duties

• Administer trust in good faith in accordance with its terms and the interests of the beneficiaries

• Loyalty• Prudence• Monitor and control costs and expenses• Maintain records• Keep beneficiaries informed

UPOAA Duties

• Prudence• Diversification• Loyalty• Manage and monitor expenses

Common Law – Informal Fiduciary Relationships

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.”

Negligence

• Negligence is a flexible concept that can be employed in a variety of settings.• 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.

Assault and battery

• These classic tort claims involve physical contact (battery) or the apprehension of forthcoming physical contact (assault). • 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.

Conclusion

• Hidden Epidemic• Under reported• Early intervention is necessary to mitigate

damages• Reporting may not only save assets but a life• Adults can increase autonomy and reduce risk

by advance planning• Practice Tip: Prevention and remedying Elder

Abuse will become an important part of Elder Law

Internet Resources

• National center on elder abuse, http://ncea.Aoa.Gov/ncearoot/main_site/index.Aspx

• Oast & Hook, www.oasthook.com

• Virginia APS, http://www.dss.virginia.gov/family/as/aps.cgi