Sandra Glazier, Esq. discussed ethical considerations when representing vulnerable adults at the recent 49th Annual Notre Dame Tax & Estate Planning Institute Sept. 20, 2023. The following comments are drawn from her remarks.
The population is aging. The number of people over age 65 will double in next 20 years. One in 10 Americans age 60+ have experienced elder abuse but the statistics are underreported. Almost 60% of elder abuse have been perpetrated by family members. Two-thirds are adult children or spouses. Advisors in every discipline should endeavor to help clients protect themselves before the onset of challenges or, worse, the occurrence of abuse.
FINRA Rules
Financial Industry Regulatory Authority Rules 4512 and 2165 address financial elder abuse. The rules are designed to encourage reporting so protective action can be taken. A key idea is for clients to give their advisor the name of a contact person and authorize contacting them if an issue is suspected. Attorneys need a similar authorization and contact information, but it’s important that attorneys not violate their duty of confidentiality to the client.
Proactive Planning
Attorneys may also be able to proactively help by guiding an aging or ill client to appoint co-trustees and agents before incapacity occurs. Perhaps they can even create a springing power of attorney that permits clients to sign their own certification that agents should have authority to act on their own or in concert with the principal to avoid the need for court proceedings or medical exams to determine whether the agent’s ability to act has been triggered.
Attorneys should be alert to certain issues. It’s important that attorneys carefully consider who’s their client, so they can protect the right person. A family member may bring the proposed client to the attorney for a planning meeting and may even reach out to counsel initially (procurement). But the proposed client is the client during the planning stage, not the family member who reached out and not the trustee of the trust the attorney is creating.
Capacity
Counsel must address the client’s capacity to make decisions. This area of the law is evolving. States are starting to adopt supportive decision making in contrast to substitute decision making, for example, because of diminished capacity. This aims to give the client as must input and independence, with assistance, as possible. There are various levels of capacity. The client may have capacity to engage in a creating and signing a will, which is a lower standard, called “testamentary capacity.” But engaging the attorney may require contractual capacity, which is a higher standard of capacity than testamentary capacity. The standard to create a revocable trust may be under state law the low standard of creating a will but for other irrevocable trusts it may be contractual capacity.
Capacity can be complex. Attorneys should keep notes as to the client’s hygiene, judgement, etc. It might be advisable or even necessary to consult with other professionals but caution is in order. Some of the screening exams mental health professionals use can produce false positives or negatives.