Marlene was born September 30, 1919. She was a successful lawyer. Her husband, Bob, a successful businessman died six years ago. Their combine wealth was over $5 mil. They owned various pieces of real property, stocks, and bonds. Marlene and Bob had four children. One of the four children, John, took over his father’s (the family’s) business, when his father died. Over the last four years, the business went into the tank, and John needed money to keep it afloat. He asked Marlene for a loan, which became a series of loans: $350,000, $100,000, $50,000 and on totaling nearly $2mil.
John also convinced Marlene to take a loan out on an apartment complex they owned. The money was to be used for improvement to the building. John prepared the loan paperwork for Marlene to sign, he took Marlene to a bank to open up an account for the proceed to go, and he was signed on as power of attorney for the account. A month after the loan was wired to the account, Marlene stopped receiving bank statements. It was later discovered that John had changed the address of the account to his home address. John also enticed Marlene to execute a master lease where she would be the landlord, he the tenant, and that he would sublet the apartments. The apartment building generated $30,000 a month in rents. John agree to pay his mother $7,500 a month.
Marlene went to a lawyer to have an estate plan. At the first meeting, the lawyer inquired what her assets were and how she was covering her monthly living needs. At that point it was realized that John had “borrowed” all but $500,000.00 of the estate.
In another case, Mildred and Ron had three children. Ron was a union worker for his life, Mildred stayed at home to take care of the kids. One of the children, Amy, was the pride and joy of Mildred and Ron. Although the youngest of the family, she was the first of any of the family to graduate from High School. She would be asked to explain complex documents and fill out forms. Her parents paid for her to go to a business college. Amy wanted her family to live with her parents, so she suggested that Mildred, she and Ron take out a loan on the family household. (Ron was now retired. Both he and Mildred were in their early seventies. There was no outstanding mortgage. They took out a $250,000 loan and built a second unit. The second unit is where Amy had her family. Mildred helped raise the family. Since Amy wanted the loan to build for her family, she needed to be placed on the deed. Thus, the deed reflected Amy, Mildred and Ron. Over time, the loan was refinance. Eventually, through the guise of another need to refinance, Amy brought a new deed for her parents to sign. Mildred and Ron, trusting their daughter, signed the deed. The transaction occurred in the house; Amy did not recommend her parents seek legal counsel. As it turned out, this deed removed Mildred and Ron from ownership of the property, making Amy the sole owner. At this point, Amy obtained a $450,000 re-finance. A few years later, Ron wanted a loan to buy a car. He learned that he did not own the house anymore.
“The Legislature recognizes that elders and dependent adults may be subjected to abuse, neglect, or abandonment and that this state has a responsibility to protect these persons. The Legislature further recognizes that a significant number of these persons are elderly. The Legislature desires to direct special attention to the needs and problems of elderly persons, recognizing that these persons constitute a significant and identifiable segment of the population and that they are more subject to risks of abuse, neglect, and abandonment.” [i]“Elder” means any person residing in this state, 65 years of age or older. [ii]
California Welfare and Institutions Code Sec 15610.30 defines “Financial Elder Abuse.” Financial abuse” of an elder or dependent adult occurs when a person or entity 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,… for a wrongful use or with intent to defraud, or both. (3) Takes, by undue influence.”
Undue influence consists: 1. In 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; 2. In taking an unfair advantage of another’s weakness of mind; or, 3. In taking a grossly oppressive and unfair advantage of another’s necessities or distress. [iii]
The standard for demonstrating elder abuse is low: Elder abuse is presumed to have occurred when the person or entity knew or should have known that this conduct is likely to be harmful to the elder or dependent adult.[iv]
In each of our examples above, the children were persons in whom parents reposed confidence. What parent doesn’t?
Yet, the result in Marlene’s case is that did not have remaining finances to live out their lives comfortably. She could not continue to live in the living facility she had moved to. She could not live the life she had grown accustomed to, and so rightly deserved.
In Mildred’s case, she no longer owned the house that she and her husband had bought, paid off and raised their family in. The daughter, having loan out this home, bought another home where she and her husband lived. When the economy went south, she was faced with foreclosure. She evicted Mildred from her residence, sold the home and paid of that debt. She was able to save her own home.
The range of possible schemes that might be addressed by remedies for financial abuse is too broad for comprehensive treatment. Each scheme, however, will be presumptively fraudulent or the product of actual fraud, undue influence and/or mistake. Common examples are:: Family theft or overreaching: Family members are quite capable of overreaching in order to secure the outright grant of money or property, or a favored place in a testamentary instrument. Caregiver theft or overreaching: Caregivers, particularly those who come into the home to provide home care, commonly take property or money. Lawyer or accountant misconduct: Such professionals may overreach in their relationships with elders or the infirm, resulting in a loss of money or property. Bankers and tellers: Individuals at financial institutions may take advantage of friendly and trusting elders with knowledge of their financial affairs. Insurance and annuity salespersons: The highly profitable insurance and annuity industry may invite the trust and confidence of the elder who will purchase financial products (e.g., insurance policies, annuities) for which there is no need. Imagine an 80–year-old purchasing a 25–year “guaranteed” annuity, or such a person purchasing a large policy of life insurance with premiums costing more than the elder can afford. Mortgage brokers: Elders on relatively small fixed incomes cannot support a mortgage, but will be induced anyway to borrow on their homes, perhaps in order to purchase a “guaranteed” annuity; or the cost of the loan will be unreasonably expensive.
Be cautious when approached. When in doubt, say “I can’t do this right now, I need time to think about it.” Then, call your lawyer.
[i] Cal Wel & Inst Code § 15600.
[ii] Cal Wel & Inst Code § 15610.27
[iii] Cal Civ Code § 1575
[iv] Cal Wel & Inst Code § 15610.30.
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McDowall Cotter provides comprehensive legal services in three areas of practice: civil litigation; business; and wealth preservation. To learn more visit us at https://www.mcdlawyers.net. We are a San Mateo based law firm and for more than 50 years, McDowall Cotter’s chief objective has been to deliver exemplary legal services that are personalized, effective and efficient.