Protecting Wealthy Senior Clients--From Caregivers and "Friends"
By Celia Clark
August 13, 2008
Oftentimes, estate planners and elder law attorneys are faced with the challenge of trying to protect an aging client who is gradually descending into dementia or becoming emotionally needy, making him vulnerable to unscrupulous caregivers, friends and relatives. Typically, while the client is still in full control of his mental functions, he wants to ensure that his testamentary plans won't be changed if he later becomes vulnerable. But he’s equally adamant about not stripping himself of control over his assets unless he's certified as incapable of managing them (that is to say, completely disabled).
These competing desires create a serious dilemma: If the client retains the power to revoke or amend his estate plan, when he becomes vulnerable a third party might exert undue influence to persuade him to make changes contrary to his original (and presumably true) intentions. But depriving him of such power when he’s vital frustrates his desire for autonomy. Also, irrevocably transferring the client's control to a fiduciary may create difficult gift tax issues.
It Happens
This general scenario is, unfortunately, all too common. The NewYork Times reported on one such instance on December 24, 2007,recounting the tale of an elderly man's struggle with vulnerability. An engineer by training, 73-year-old Robert Pyle was accustomed to complete
control over his affairs. However, when his wife died, he became withdrawn and seemed depressed--that is, until he met and befriended Wendy, a young neighbor and struggling single mother. Pyle encouraged her to get a menial job and began driving her to work every day. Over the next eight years, Pyle became increasingly generous, spending more than $650,000 to provide for Wendy. Too embarrassed to explain the situation to his family, he borrowed money until he was forced to sell his home and move in with his stepdaughter. Pyle eventually filed suit under a California statute designed to protect seniors from elder abuse. He sued his mortgage brokers and banks, claiming they had defrauded him in helping him obtain loans they knew he could not afford. According to the Times, these types of lawsuits often settle. Sharon Merriman-Nai of the National Center on Elder Abuse told the Times: "Figuring out how to protect senior citizens from victimization, even when it's caused by their own mistakes, is one of the biggest issues facing us right now...[but] we also have to figure out how to balance our desire to protect vulnerable seniors with their rights to autonomy."
Because of Pyle's unusual lawsuit, his story found its way into the press, but there are many similar situations that remain unpublicized. Pyle is one of many seniors whose situation emphasizes the seriousness of becoming vulnerable later in life.
We recommend that financial advisors and estate planners let their clients know the senior trust is an option permitting them to balance the goals of autonomy with protection of the estate.
The preceding newsletter was adapted from an article in the June2008 issue of *Raymond Zeitoune, an associate at the Law Offices of Celia R.Clark, PLLC, assisted in research for this article.
Copyright © 2008 LexisNexis, a division of Reed Elsevier Inc
Abridged
SOURCE: Insurance News Net
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