Most of us recognize that elder financial fraud and undue influence among seniors exist, but some folks may never truly understand these concepts until it touches their own family or their inheritance after a loved one passes away.
Current undue influence trends in Iowa and across the nation are appalling, including the surge in elder financial abuse that has popped up during the COVID-19 pandemic.
According to Iowa case law, family members are the leading defendants in undue influence actions followed by caregivers and business professionals (i.e. fiduciaries, investment managers) being next in line.
People once trusted the above-mentioned parties to care for vulnerable seniors, a trust that was breached when they exploited their authority for personal gain.
After reading these facts, you may ask yourself…
“Can I do something now to protect an elder loved one from undue influence before it happens?”
Absolutely! We answer this question in this blog post, and by the time you’re finished reading the information below, you’ll have a much better idea of what elder financial exploitation is and you’ll learn how to recover a hijacked inheritance when fraudsters and influencers have taken what was rightfully yours.
So, let’s get right to it!
WHY SENIORS ARE VULNERABLE TO UNDUE INFLUENCE
Right out of the gate, it’s important to know that fraud and undue influence among seniors is prevalent in our state. According to pro-consumer advocate, Comparitech, there were an estimated 49,000+ cases of elder financial abuse in Iowa last year where the elder victims lost over $1.08 billion in assets.
Seniors are especially vulnerable to financial exploitation and undue influence because:
- They own valuable assets. The average person from America’s Baby Boom generation often acquires over a quarter million dollars in property and assets before reaching retirement age, making him/her prosperous targets for fraudsters and influencers who strive to steal property away from unwary victims.
- Making sound financial decisions becomes difficult with age. For most elders, financial capacity declines over time, but their belief that they can manage their own finances increases. Such a distortion may support an elevated risk of undue influence or fraud for your loved one, as he/she may be unaware of his/her own financial vulnerability.
- Technology Changes. Technology has surged over the last forty years, bringing increased opportunities for fraudsters to take advantage of elders electronically. Your loved one may not know how to avoid becoming a victim of internet or telemarketing scams.
Unfortunately, when dishonest people take advantage of a senior’s vulnerability and get a hold of an elder’s assets, it usually causes an expensive disinheritance to his/her estate heirs and beneficiaries.
HOW UNDUE INFLUENCE LAWSUITS RECAPTURE LOST INHERITANCES
Most heirs realize that undue influence has occurred only after a loved one’s Will or Trust springs into action. By then, the recipient’s hijacked inheritance has most likely already passed on to the fraudster or influencer, and the heir may assume that he/she can do nothing to recover what was stolen.
There is, however, hope. You may file a cause of action during probate proceedings to recover your hijacked inheritance if you’re a direct/indirect heir or beneficiary of the deceased’s estate. Your undue influence claim thereafter would need to show four requisite elements existed while the deceased was alive:
- Vulnerability—medical evidence establishing your loved one’s weak, sick, or disabled condition exposed him/her to undue influence or deceit.
- Apparent Authority—testimony asserting the defendant (influencer) held an authority position over the deceased.
- Active Participation—proof that the influencer actively procured an improper favor from the estate.
- Inequity—physical evidence confirming that the transfer of estate assets to the defendant took from an inheritance that you expected to receive.
You can prove these elements by offering the probate court expert testimony from witnesses who knew the deceased before passing.
Physicians, healthcare facility workers, caregivers, fiduciaries, and family members are typical witnesses in an undue influence action—these individuals often testify about the existing confidential relationship between the deceased and the defendant and how the two parties behaved while the descendent was alive.
SIGNS OF FINANCIAL EXPLOITATION
Understanding elder financial abuse red flags may help you prevent undue influence from happening during your loved one’s lifetime. According to the US Justice Department, the following indications may suggest financial exploitation and undue influence is taking place:
- The elder’s bank account shows frequent cash withdrawals.
- Your loved one’s estate has vanished or dissolved without explanation.
- The senior suddenly ceases or reduces communication with his/her family.
- Utility bills or mortgage/rent payments become past due.
- Valuable inter vivos gifting to caregivers or healthcare workers takes place.
- Someone forces the elder to execute legal documents (contracts, estate plans) immediately under threat or deceit.
- Sudden transfers of real or personal property titles to friends or family members occur.
- Persons in confidential relationships with the senior accompany him/her to the bank or the elder adds the person as a joint tenant to their account.
- Someone tries to assume management of a senior’s care or finances without proper consent.
- Withdrawals from investment accounts occur without regard to penalties.
WHEN INFLUENCE IS NOT ACTIONABLE
The Iowa Supreme Court in Burkhalter v. Burkhalter (Iowa 2013) ruled that most people assert some sort of influence over others (i.e. via friendship or family relations), which incidentally affects their future inheritance or disinheritance.
Influence, however, turns “undue” when the defendant’s behavior becomes the “dominant motive” for a testator or grantor to execute his/her estate plan. According to the Burkhalter Court, “moral coercion” must also have been present, and the influencer must have “continually and persistently” tried to destroy the testator’s free will throughout the relationship.
The Court further held that just because you receive an unequal distribution of estate does not mean that undue influence took place. Meddling or offering “unsolicited advice” to an aging family member is permitted under Burkhalter—simply put, if an elder truly holds testamentary capacity, he/she can accept or disregard another’s opinion or advice at will.
A mere showing the testator or grantor was physically or mentally weak is also not enough to win an undue influence claim, although you may introduce this evidence at trial to disclose the elder’s vulnerability when proving up the undue influence elements discussed above.
Finally, the Iowa Judiciary has recently held undue influence plaintiffs can prove their cases through a “preponderance of the evidence” (instead of a “clear and convincing” standard), but judges must first weigh the “time, difficulty, and costs” of the claim before moving the plaintiff’s the case forward.
SAFEGUARDING ELDERS AGAINST UNDUE INFLUENCE
The following preventive measures will help mitigate elder fraud, lessen financial abuse among seniors, and reduce undue influence acts that cause estate plan executions and modifications:
- Get Involved. Don’t ignore that new friend that has suddenly appeared in your elder loved one’s life. Invite yourself to dinner, ask tough questions, and let any potential influencers know that you are watching them closely—remember, it’ll be harder for your loved one to stop communicating with you when you’re close to them or actively involved in his/her daily life.
- Document Suspicious Activity. If you suspect elder fraud, financial abuse or undue influence is taking place, document your concerns and establish a record of the behavior—you will need this evidence to halt or reverse the abuse immediately or to support an undue influence claim brought later.
- Get Access to Online Banking. With an elder’s permission, you can obtain his/her internet banking login and password for online monitoring. Here, you can watch for any suspicious withdrawal activity and suspect investment banking decisions—keep in mind that with account access, you’d be assuming implied fiduciary duties and the legal responsibilities that come with the job.
- Hire an Expert. If you do not want to assume a fiduciary role in the elder’s affairs, consider hiring a professional consultant or trusted elder law attorney to help manage your loved one’s finances.
ELEVATED UNDUE INFLUENCE VULNERABILITY DURING COVID-19
Seniors may become more prone to fraud and undue influence during the current COVID-19 pandemic. Throughout this awful time in our nation, the elderly have suffered higher diminished decision-making capacity and have become more dependent on caregivers after a coronavirus infection. Social distancing has further isolated elders from their loved ones and family.
COVID-19 therefore has opened new doors for fraudsters and influencers to target Iowa’s elders and has increased the chance that your loved one may become a victim of undue influence.
Don’t allow COVID-19 to isolate you from a vulnerable elder loved one. Follow the safeguards mentioned above—get involved, monitor online banking business, document suspicious activity—we promise that you won’t regret this decision!