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People in the United States are living longer than they ever have, and as baby boomers age, the elderly population has grown older and more populous than ever before. With a larger elderly population comes higher rates of dementia and diminished capacity.
California's Legislature has recognized the inherent vulnerability of an elderly population that is reliant on others for assistance in day-to-day tasks. Coupled with a general trend in diminished capacity, the elderly population is at risk of falling victim to financial abuse by family, caretakers, fiduciaries, and opportunists. While physical and emotional elder abuse is prevalent and of serious concern, this article will focus on the complicated legal issues that can arrive when the elderly population is abused financially. Addressing financial elder abuse is particularly difficult when the elderly victim suffers from dementia or diminished capacity.
There are two paths available to address the problem of an elder's susceptibility to financial abuse due to dementia or lack of capacity. First, if you are approached before any financial abuse has occurred but after the onset of dementia or loss of mental capacity, a conservatorship of the person, the estate, or both will allow a trusted spouse, family member, or friend to protect an elder from being subjected to financial abuse. Second, if you are retained after fraud or financial elder abuse has already been perpetrated, filing a civil lawsuit under the Elder Abuse and Dependent Adult Civil Protection Act (Welfare and Institutions Code §§ 15600 et seq.)1 allows a plaintiff to take advantage of presumptions that account for a plaintiff's lack of memory—due to dementia or other memory issues associated with age. While it is possible that your client will be the elder himself or herself, it is more likely that you will represent the spouse, family, or friends of the elder.
A conservatorship is a protective court proceeding. While a conservatorship may be sought over any adult, they are common among the elderly population because of the difficulties that elders face in caring for themselves and their estates as their bodies age and, often, mental capacity diminishes. While a conservatorship can be established after financial abuse is discovered, it is most impactful when used to protect vulnerable elders before they are financially abused or controlled. For a conservatorship to be established, the proposed conservatee must be shown to lack capacity in certain regards, either to provide for the conservatee's own personal needs or to manage his or her financial resources.2
There are two kinds of conservatorships: conservatorship of the person and conservatorship of the estate.3 In a conservatorship of the person the conservator, a court-appointed fiduciary, manages the personal care for an adult who cannot properly care for his or her physical health, medical care, food, clothing, or shelter.4 In a conservatorship of the estate, the conservator manages the financial affairs of a person who is "substantially unable to manage his or her own financial resources or to resist fraud or undue influence."5 Susceptibility to fraud and undue influence increases as the mental capacity of an elder decreases. In the case of an elder who suffers from dementia or Alzheimer's disease, a conservator of both the person and estate may be advisable, particularly as the disease progresses. For of an elder that suffers from memory problems or is generally scatterbrained or forgetful, a conservatorship of the estate is likely enough.
The first step in obtaining a conservatorship for someone that may need one is to file a petition for conservatorship using the Judicial Council forms required under Rule 7.101(a) of the California Rules of Court.6 A petition may be filed by the proposed conservatee or his or her spouse; relative; or any interested friend, entity, or agency.7 A conservatorship petition must identify the proposed conservator, give notice of the petition, and state why the conservatorship is necessary.8 A petitioner must also give notice of the petition and of any court dates to the proposed conservatee's relatives.9
Additional forms will be required depending on the facts particular to that case. Cases involving dementia require specific forms. A capacity declaration must be submitted if the petitioner alleges any one of the following: the proposed conservatee will be unable to attend the hearing on the petition,10 the proposed conservatee lacks the capacity to give informed consent to medical treatment,11 or the proposed conservatee has dementia and would benefit from dementia medications or should be placed in a secured-perimeter facility.12 Obviously, if the basis for seeking a conservatorship is the proposed conservatee's apparent onset of dementia, a capacity declaration will be required to show that capacity is diminishing and the proposed conservatee requires assistance in managing his or her person, estate, or both.
Whether the petition for a conservatorship is contested or not, the court will hold a hearing to determine the appropriateness of the proposed conservatorship. If a conservatorship of the person is implemented, the conservator will have the "care, custody, and control" of the conservatee, which necessarily includes the determination of where the conservatee is to live.13 A conservatorship of the person does not give the conservator the authority to control the conservatee's financial resources for the conservatee.14 By contrast, under a conservatorship of the estate, a conservatee is presumed to lack capacity to contract; to sell, transfer, or convey property; to make gifts; to incur most debts; to delegate powers; to waive any rights; or to serve as a fiduciary.15
By seeking a conservatorship at the onset of dementia, family and close friends can protect an elder from potential financial abuse. The courts view a conservatorship as a protective action, so good cause must be shown to justify such an imposition into an elder's life. The onset of dementia is grounds for a conservatorship of the person and estate, particularly in the absence of an advanced healthcare directive or power of attorney instrument. Conservatorships themselves can be used as a sword in an attempt to perpetrate financial elder abuse, but in their proper form, they are a protective tool that family and trusted persons can use to protect the financial well-being of elderly people suffering from dementia or diminished mental capacity.
It is not always possible to recognize that an elderly person needs protection or is particularly vulnerable until a wrong has already been committed against him or her. If financial elder abuse is discovered, the Elder Abuse and Dependent Adult Civil Protection Act authorizes a civil cause of action.
Financial elder abuse is defined very broadly in Welfare and Institutions Code section 15610.30. A person is liable for financial elder abuse under the law if he or she does any of the following:
(1) takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both;
(2) assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both; or
(3) takes, secretes, appropriates, obtains, or retains, or assists in taking secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in Section 15610.70." Conduct that amounts to financial elder abuse includes, but is not limited to, transfers of real property, entering into a contract, financial transactions, or scams targeting the elderly population.
The first two methods of proving financial elder abuse require the plaintiff to affirmatively show that property was taken for wrongful use or with the intent to defraud. The third method of proving financial elder abuse is to show that property was taken by undue influence.
The third method is especially beneficial when the elder in question suffers from dementia, diminished capacity, or memory problems. Welfare & Institutions Code section 15610.70 defines undue influence as "excessive persuasion that causes another person to act or refrain from acting by overcoming that person's free will and results in inequity."16 In determining whether or not an elder's free will has been overcome improperly, section 15610.70(a)(1)-(4) lists a number of factors for the fact finder to consider. The list of factors includes:
• Vulnerability of the victim. Indications of vulnerability may include, without limitation, age, lack of education, impaired cognitive function, emotional distress, and dependency. The factor also considers whether the influencer knew or should have known of the vulnerability;
• Influencer's apparent authority. A fiduciary or confidential relationship; family relation; or the influencer's status as care provider, health care professional, legal professional, spiritual adviser, or any other kind of expert may be evidence of apparent authority.
• Actions or tactics used. The court may consider, without limitation, the influencer's (A) control over the necessaries of life, medication, interactions with others, or access to information or sleep; (B) use of affection, intimidation, or coercion; or (C) initiation of changes in personal or property rights, use of haste or secrecy in effecting those changes, effecting changes at inappropriate times and places, or claims of expertise in effecting changes; and
• The equity of the result. Factors in an inequity analysis may include, without limitation, economic consequences to the elder, divergence from elder's prior intent or course of conduct or dealing, the relationship of the value conveyed to the value of any services or consideration received, or the appropriateness of the change in light of the length and nature of the relationship.
This expansive definition of undue influence was enacted in January 2014 and has much more clarity and specificity than Civil Code section 1575, which defines undue influence as "the use, by one in whom a confidence is reposed by another, or who holds a real or apparent authority over him, of such confidence or authority for the purpose of obtaining an unfair advantage over him." Section 15610.70 codifies much of the case law discussing section 1575, codifying the factors aimed at protecting elders from abuse.
This method of proving undue influence has the benefit of allowing an elderly plaintiff to make a base showing and then shifting the burden of proof onto the defendant to show that the transaction or taking at issue was legal. Therefore, a plaintiff seeking to prove that an elder was subjected to financial elder abuse may use the undue influence statute to shift the burden of proof to the defendant and require him or her to show that the transaction or conduct at issue was not abusive. This is a huge advantage in a legal landscape where the plaintiff otherwise almost always has the burden of proof.
To activate the presumption of undue influence and shift the burden of proof to the defendant, a plaintiff must prove two things: (1) that a fiduciary or confidential relationship between the parties existed17; and (2) that the transaction was not to the elder's benefit. In order to prove the existence of a fiduciary or confidential relationship, a plaintiff must show that the elder placed trust and confidence in the integrity and fidelity of the defendant.18 Familial relationship and control over the property of another are two of the most important factors in establishing a fiduciary or confidential relationship.19 When the plaintiff proves that a fiduciary relationship existed and that the transaction was not beneficial to the elder, the law presumes that the property was taken through undue influence, and the burden shifts to the defendant to rebut the presumption.
In order to rebut the presumption of undue influ- ence, a defendant must prove three things by a prepon- derance of the evidence: that the conduct or transaction was fair, that it was free from undue influence, and that the elder engaged in it with full comprehension of the results.20 An important consideration in this analysis is whether or not the plaintiff had independent advice before the transaction.21 If the defendant fails to prove any of the three factors, the presumption of undue influence remains in place and the defendant is liable for financial elder abuse.
As a population, we are living longer and suffering higher rates of dementia and diminished capacity. The elderly population is particularly vulnerable to financial abuse from family members, fiduciaries, caretakers, and other opportunists. The law affords several approaches to address or remedy financial elder abuse in light of the victims' often-limited or non-existent memories.
There are, of course, other resources and tools available in instances of elder abuse. Duly executed advanced healthcare directives and powers of attorney can significantly reduce the risk of financial elder abuse. Family or friends may also contact Adult Protective Services of law enforcement to investigate and stop physical abuse or isolation to which a vulnerable elder may be subjected. The law also considers over-medication to be physical abuse, especially if used to control or take advantage of an elderly person. Elder abuse restraining orders or civil harassment restraining orders pursuant to Code of Civil Procedure section 527.6 may be available to address ongoing unlawful conduct.
A conservatorship of the person and estate may be a proactive legal step to prevent any future financial abuse for an elder suffering from dementia or diminished capacity that deprives the elder of the ability to manage his or her financial resources. Allowing trusted family or friends to assume authority over finances and business affairs protects the elderly population from opportunists, scammers, and those with inappropriate intentions. If financial elder abuse has already been perpetuated, a civil lawsuit allows a plaintiff with memory limitations to make a threshold showing and shift the burden of proof to a defendant to justify actions and conduct. The onus falls on family, friends, and fiduciaries to ensure that vulnerable elders are not taken advantage of and are fully informed of the impacts and consequences of their financial transactions.
1 Unless otherwise noted, all references will be to California law.
2 Prob. Code §§ 1801(a)-(b).
4 Id. at § 1801(a).
5 Id. at § 1801(b).)
6 Id. at § 1820.
7 Id. at § 1820(a).
8 Id. at § 1821(a).
9 Id. at § 1821(b).
10 Id. at § 1825(b).
11 Id. at § 1890(c).
12 Id. at § 2356.5(f).
13 Id. at §§ 2351-2352.
14 Id. at § 2354.
15 Id. at §§ 1870, 1872.
16 Welf. & Inst. Code sec. 15610.70(b) reads that "[e]vidence of an inequitable result, without more, is not sufficient to prove undue influence." Therefore, there must be more affirmative conduct than merely an outcome that is unfair to the elder.
17 While these are different legal relationships, they have the same effect in the context of undue influence.
18 Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 29-30.
19 Johnson v. Clark (1936) 7 Cal.2d 529, 534; Vai v. Bank of America Nat'l Trust & Sav. Assoc. (1961) 56 Cal. 2d 329, 338.
20 Myrick v. Bruetsch (1936) 13 Cal.App.2d 219, 224; Cox  v. Schnerr (1916) 172 Cal. 371, 379; Sparks v. Sparks (1950) 101 Cal. App. 2d 129, 135-136.
MCLE Self Study Questions
1. T/F A conservatorship of the estate gives the conservator authority over the conservatee's financial resources and business affairs.
2. T/F A conservatorship of the estate allows the conservator to determine where the conservatee lives.
3. T/F A conservatee under a conservatorship of the estate lacks the legal ability to enter into a contract.
4. T/F A conservatorship of the person addresses the conservatee's inability to care for his or her personal needs.
5. T/F A petition for a conservatorship can only be filed by the spouse of the proposed conservatee.
6. T/F For an elder with dementia, you will want to file a petition for a conservatorship of the person and estate.
7. T/F A conservatee under a conservatorship of the estate can serve as a fiduciary for another person.
8. T/F Financial elder abuse can only be established by proving undue influence.
9. T/F An undue influence analysis considers education level of the allegedly wronged party.
10. T/F In the context of a financial elder abuse lawsuit, a confidential relationship and fiduciary relationship have the same legal impact.
11. T/F Familial relationship is an important factor in proving a confidential or fiduciary relationship.
12. T/F An inequitable result is enough on its own to establish financial elder abuse.
13. T/F To prove undue influence, an elder must prove that he or she did not understand the consequences of the action alleged to be financial elder abuse.
14. T/F The legal presumption of undue influence cannot be rebutted.
15. T/F Independent counsel and advice is an important factor in financial elder abuse litigation.