Iowa is extremely close to following the rest of the Union in criminalizing undue influence acts against elders.
This month, the Iowa House Judiciary Committee unanimously supported a bill that would make it a crime for any person in a confidential relationship with an older adult to use their apparent authority over the elder to acquire an improper favor from his/her estate. If the Iowa Senate approves SF 522, the bill would become law when Governor Reynolds signs the legislation.
Iowa currently is the only state without distinct elder abuse/undue influence criminal laws designed to protect older, vulnerable Iowans from estate fraud and from estate asset hijackings.
Undue Influence Acts Across America Climb
Undue Influence is the type of crime where the victims know their abusers—often family members or fiduciaries who hold legal duties to always act in the elder’s best interests. According to statistics posted at the US Justice Department website, about ten percent of American seniors have or will have suffered elder abuse this year, which includes undue influence activity.
Elders in Iowa reported 5,800 abuse acts from 2020 to 2021 (a 40% increase from the year prior), according to state health and human service agencies. Yet, law enforcement only investigated fifty percent of the incidents because existing criminal elder abuse legislation states that senior victims must be “dependent adults” and abusers must be official “caretakers” before officials can take action.
The new legislation would close the wording loophole in the law to better protect vulnerable Iowan elders from physical harm, mental anguish and financial exploitation by making it a misdemeanor or felony, depending on the circumstances, for engaging in elder estate fraud or elder undue influence.
Prior to SF 522, undue influence cases were only actionable in civil or probate court. Today’s only remedy to recover a vulnerable elder’s stolen estate property or assets after his/her death is to sue the wrongdoer in district court—most defendants never deal with criminal charges for their misconduct.
Hopefully soon, along with having to pay back what they stole, wrongdoers who take property and assets from seniors by intentionally influencing, deceiving, or coercing them into drafting or modifying their estate plans could face jail time too.
Fiduciaries May Face Criminal Sanctions
Legal professionals and business entities who manage an elder’s estate would also encounter criminal penalties under SF 522 for breaches of fiduciary duty—acts that include embezzlement or knowingly commingling the elder’s real property, belongings, or assets with one’s own for personal benefit.
Estate fraud and breach of ethical duty among fiduciaries are common practices in Iowa and across the country. These wrongdoings are best explained by considering a real life example.
Attorney Fiduciary Takes Siblings Inheritances
The Idaho Supreme Court recently upheld a probate court’s undue influence ruling, holding a lawyer financially exploited his elderly mother through Power of Attorney (POA) abuse after he transferred her estate property to himself—effectively eliminating his sibling’s inheritances.
According to the probate court, the 100-year-old decedent owned nearly $30 million in real property and assets in 1990, and it was around this time the elder drafted and executed her original testamentary documents.
Nine years later, the senior’s attorney-son persuaded her to execute POAs that named him as the fiduciary and only agent to her estate.
The son personally drafted his mother’s POAs, and he did not let the elder seek independent outside counsel before executing the legal documents. The attorney-agent was also the only witness found in a modified Will that entered probate when the woman passed away in 2012.
Before the elder died, the son had been working as his mother’s exclusive attorney for almost twenty-five years, and at the time of her death, the mother’s Will would have transferred her assets to only one beneficiary—her agent son.
Courts Find Undue Influence and Police Investigate
An Ada County Court set aside the deceased’s testamentary documents, holding that her Will was an obvious “product of [her son’s] undue influence.”
Upon deeper scrutiny, the Idaho Supreme Court found that soon after the elder executed her POA documents, the attorney-agent formed a limited corporation (LLC) where he and his mother were the only members of the company.
Two days after the attorney established the LLC, he used his POA power to bring the decedent’s assets to the new firm, and thereafter, transferred the elder’s interest in the company to himself.
So, when the mother died in 2012, her POA agent held “exclusive ownership and control of all of [his mother’s] property assets,” according to the Court.
The mother’s other children challenged the Will in probate, claiming their mother had promised to make them beneficiaries before she died. The lower court agreed with the children and ultimately found the transfer of the mother’s property to the LLC was actually a gift to her son and that the elder’s POA documents did not allow the agent to make gifts to himself.
The district court then ordered the son to perform an estate accounting of all assets and real property and ordered court supervision and preservation of the deceased’s estate.
Idaho currently holds elder abuse protection statutes similar to Iowa’s SF 522 bill—the elder’s son is now under law enforcement investigation to determine whether he violated the state’s elder abuse laws, where if found guilty, the attorney could face jail time and disbarment.
What Makes Seniors Vulnerable to Elder Abuse
According to the AARP website, undue influence among elders is now widespread, especially after the most recent COVID-19 isolation decrees—the organization dubs elder financial exploitation as “the crime of the 21st century.”
Seniors are exceptionally vulnerable to undue influence acts because:
- They are wealthy and own many assets—the median net worth of elders today is nearly $250k, making them targets for undue influence and power of attorney abuse.
- They need others to make financial decisions for them—seniors gradually lose the capacity to make good decisions as they age, which increases their financial exploitation vulnerability.
- They are not a tech savvy society—influencers and fraudsters often use the Internet and social media to target seniors who are unaware of how to protect themselves online.
Signs of Undue Influence
Family members can help ward off undue influence activity by looking for signs suggesting that someone may be taking advantage of an elder loved one:
- Real property, cash, and personal assets disappear without justification.
- Unfamiliar agent or fiduciary empowered to manage the elder’s estate.
- Bills pile up and the elder can’t explain why.
- Communication with family members stops.
- Cash or checks missing from the elder’s bank accounts.
- A new “best friend” appears in the elder’s life, who he/she adds as a joint tenant on bank signature cards or real estate deeds.
- Investment or IRA accounts close with no regard to penalties.
- Frequent or expensive gifting activity to caregivers
- Transfer of property to friends or distant family members.
SF 522 advocates believe Iowa’s new elder abuse laws, at minimum, may make people think twice before engaging in undue influence activity. Fiduciaries and business entities committing willful undue influence acts, charging excessive fees or engaging in conflicts of interest may also see SF 522 as an enormous red flag.
Will and Trust dispute attorneys across the state are now following the bill, and if it passes into law, litigators will consider how the new legislation will affect inheritance hijack victims who sue to win back their legacies.