Paul O. Dillon, Attorney at Law

How to Prepare for Cognitive Changes in Your Life

Planning for the cognitive decline that often accompanies aging can prevent expensive mistakes, says a recent article from U.S. News & World Report, “How to Minimize 4 Financial Management Disasters That Come With Aging.” Planning for cognitive decline can make our later years less stressful.

Age and Vulnerability to Financial Elder Abuse. Simple tasks like paying bills can become problematic as our cognitive abilities diminish. This also leaves people more susceptible to fraud and scammers—today’s thieves’ prey on the elderly through telephone, online, mail and in-person schemes. Add a layer of protection by having a trusted person or family member oversee accounts. A professional fiduciary or a bill-pay service could be used if no family member is available or trustworthy enough.

Freezing a senior’s credit with major credit bureaus can make it harder for thieves to steal their identity, take out loans, or open credit cards under their names.

Financial documents should be organized, and their location should be shared with loved ones. Your estate planning attorney, financial advisor and CPA should have the contact info of a trusted person who can step in to manage your affairs, if necessary. Your estate planning attorney can create a Financial Power of Attorney, so they can act on your behalf.

You can appoint a representative payee with the Social Security Administration, so another person can help you with Social Security matters.

The Death or Disability of the Family’s Financial Person. One person in the household very often runs the business side of life, paying bills, balancing checkbooks and keeping an eye on investments. If that person dies or becomes disabled, the spouse needs to be able to take over finances. To do this, they’ll need to know more than the usernames and passwords on accounts—although they’ll need to know this information as well. Regular check-ins on financial matters with a spouse and a trusted adult is a good practice.

Planning for Long-Term Care Expenses. Failing to prepare for the cost of long-term care or to protect a couple’s assets with Medicaid planning can be financially catastrophic. Medicaid can help with the cost of nursing home care. However, if the family has assets, they must be used up before the person is eligible for care. Medicaid also has a five-year lookback period, meaning any transfers or sales of assets taking place five years from the date of application will delay eligibility. An estate planning attorney can help with the use of irrevocable trusts, often referred to as Medicaid Asset Protection Trusts. There are also trusts designed to protect assets for the healthy spouse. A consultation with an estate planning attorney long before long-term care is needed is critical to avoiding this mistake.

Outliving Your Money. Experts believe nearly two-thirds of Americans nearing retirement age are unprepared for two, three, or even four decades of retirement. The past year’s skyrocketing costs of living have prevented many from adding to their savings during the end of their working lives, and many don’t even have emergency savings. Having a financial plan and an estate plan is important at every age and stage of life.

Cognitive changes don’t happen to everyone as they age. However, it is still wise to have your estate planning done long before any changes occur. Having a will and any necessary trusts created and executed while you are at full capacity allows you to be the one making these decisions.

Reference: U.S. News & World Report (June 26, 2024) “How to Minimize 4 Financial Management Disasters That Come With Aging”

Caregiving and Estate Planning Provides Peace of Mind for All Generations

If your goal is to keep the farm, ranch, or small business in the family, planning, including estate planning and caregiving, is the number one strategy to making it happen. Families may dissolve the farm or business without advance planning to pay for long-term care expenses. A recent article from AgWeek, “Caregiving plans can provide peace of mind for farming and ranching families,” explains what needs to be done.

Part of the issue is that most ranchers and business owners won’t qualify for Medicaid because they own a significant asset. Having to sell off something they’ve worked their entire lives to build is often a result of no planning.

If you have a long-term care insurance policy, it needs to be carefully reviewed to determine what conditions need to be met for benefits to be paid. For example, most policies have a “waiting period,” so you’ll need to plan how to pay for caregiving during the months before the policy kicks in.

There’s also confusion about the difference between Medicare and Medicaid. Medicare is health insurance for medical expenses, while Medicaid is usually used for long-term care and caregiving needs. However, Medicaid is a needs-based program. An estate planning attorney can help the family determine what needs to happen in advance, whether the goal is to protect the farm, ranch, or small business while helping the aging parent become eligible for Medicaid.

Estate planning includes planning for incapacity, which can occur at any time but is more likely as we age. Suppose the individual hasn’t completed a power of attorney, healthcare power of attorney, and other medical directives. In that case, the family will need to go to court to obtain conservatorship or guardianship to take over the person’s financial matters and make healthcare decisions on their behalf. An estate planning attorney can help the family prepare the documents and create a plan.

Having an estate plan in place is also another means of protecting the family’s assets from elder abuse. Everything needs to be documented, and records need to be well-organized so every family member knows where documents are, where assets are and the plan for the inevitable events of aging.

Meeting with an estate planning attorney to create the last will and testament, power of attorney and all other planning documents can minimize the stress and costs involved. Without planning, everything becomes far more complicated, costly and stressful for all concerned.

Reference: AgWeek (May 14, 2024) “Caregiving plans can provide peace of mind for farming and ranching families”

What Is a No-Contest Clause?

There are different ways to defend a last will and testament from a claim filed by an individual or a group of individuals who want to alter the terms you put into your will. One way is to hope your executor or, if the issue concerns a trust, your trustee, can effectively defend your choices, says a recent article from Kiplinger, “What Do No-Contest Clauses Have to Do With Undue Influence?” Another is to include a no-contest clause, which would disinherit all claimants if they lose their challenge or for even filing a challenge in the first place.

A no-contest clause can be a strong deterrent for a beneficiary who believes they are entitled to more than the amount provided if they know that just by filing a challenge, they’ll forfeit their share. However, it may not be powerful enough for someone completely omitted from the estate plan altogether. Many estate planning attorneys recommend leaving something for even a disliked heir to give them a reason not to challenge the will.

There are more reasons than disgruntled heirs to have a no-contest clause in your will. A no-contest clause can help if your will omits any heirs at law not specifically mentioned in the document or revoke the share provided for anyone seeking to claim a share in your estate, increase their share, or claim certain assets in your estate.

A no-contest clause is also useful if someone is trying to invalidate your will, or any provision in it or to take part of your estate in a way not specifically described in your last will and testament.

Many no-contest clauses treat a challenger as having predeceased you or having predeceased you leaving no descendants, thereby passing their share according to other terms in the document. In certain states, it is very important to include a specific direction as to what should happen to these forfeited shares. Your estate planning attorney will know how your state’s laws work and how best to include this language in your will.

However, what if the person challenging the will has a good reason to do so? For instance, numerous cases have been brought to court because probable cause existed where the decedent was subjected to undue influence and even elder abuse by a caregiver or a relative in charge of their finances.

In many cases, family members only learn of the abuse after discovering the depletion of the estate and the admission of a new last will to favor the elder abuser over the decedent’s family. The no-contest clause could cause a complete disinheritance for a family member seeking to protect the estate and any other person who appears in court to support the petition.

Not all states treat the no-contest clause the same. Some refuse to enforce them as a matter of public policy. Others strictly construe the clause because they disfavor any forfeitures. Your estate plan should be created with a no-contest clause aligning with the laws of your state. Your estate planning attorney can create a will designed to avoid punishing a challenge brought in good faith.

Reference: Kiplinger (Sep. 1, 2023) “What Do No-Contest Clauses Have to Do With Undue Influence?”

Elder Abuse Lawsuit Against Stan Lee’s Business Manager Settled

The estate of comic book legend Stan Lee is making progress in wrapping up one of several legal battles alleging exploitation and abuse by members of Lee’s inner circle, according to a recent article from The Hollywood Reporter titled “Stan Lee’s Estate Settles Elder Abuse Suit Against Ex-Business Manager.”

Court documents filed in late July show that Lee’s estate has moved to dismiss claims against Lee’s former business manager, Jerardo “Jerry” Olivarez. The settlement does not include claims against Lee’s former attorney Uvi Litvak, which are still pending.

This particularly nasty battle revolves around Lee’s daughter J.C. and people who manipulated her in their efforts to exploit Lee. Lee accused J.C., his only daughter, of verbally abusing him. There were reports of her outbursts turning physical, and most were conflicts over money.

Lee sued Olivarez and Litvak in 2018, accusing both men of seeking to take advantage of him after his wife Joan Lee died. Olivarez was a consultant to J.C. and Stan’s wife Joan Lee’s business interests, before obtaining Power of Attorney for Lee after Joan died.

According to the complaint, Olivarez fired the banker who had worked with Lee for twenty-six years, along with Lee’s team of attorneys. He transferred about $4.6 million out of Lee’s bank account without proper authorization and, after obtaining Power of Attorney from Lee, Olivarez appointed his own attorney, Litvak, as Lee’s attorney, without disclosing the conflict of interest inherent in the move.

Lee said Olivarez also tricked him into lending $300,000 to a company purporting to be a nonprofit, which was actually a merchandising company. He said Olivarez purchased a condo for $850,000, moved nearly $1.4 million from Lee’s accounts using a series of wire transfers and modified Lee’s will, all without his permission.

Lee alleged fraud, financial abuse, elder abuse and misappropriation of his name and likeness, among many other claims.

Prosecutors are still pursuing a case against Lee’s former business manager, Keya Morgan. He was charged with felony theft, embezzlement, fraud and false imprisonment of an elder adult. Lee was granted a restraining order in 2018 against Morgan, who was accused of isolating Lee from his friends and family and using his position to embezzle art, cash and assets valued at more than $5 million.

Elder financial abuse takes many different forms. The National Council on Aging reports up to five million older Americans are abused every year. The annual loss by victims of financial abuse is estimated to be at least $36.5 billion. The best protection for aging parents is to have an estate plan created by an experienced estate planning attorney and to remain actively involved with trusted family members and friends who are looking out for their best interests.

Reference: The Hollywood Reporter (July 27, 2022) “Stan Lee’s Estate Settles Elder Abuse Suit Against Ex-Business Manager”

Does a Trust Protect You From a Lawsuit?

If you have a trust, plan to create one or are the beneficiary of one, you’ll want to understand whether or not a trust can be sued. It’s not a simple yes/no, according to a recent article titled “Estate Planning: Can You Sue a Trust?” from Yahoo! Finance. For instance, a trust generally cannot be sued, but a trustee can.

Understanding when a lawsuit can be brought against a trust should be considered when creating an estate plan, a good reason to work with an experienced estate planning attorney.

A trust is a legal entity used to hold and manage assets on behalf of one or more beneficiaries. A trustee can be a person or business entity responsible for managing the trust and the assets it holds. Trusts can be revocable, meaning the person who created them (the grantor) can make changes, or irrevocable, meaning transfer of assets is permanent (for the most part).

Trusts are used to manage assets while the grantor is living and after they have died. There are many different types of trusts, from a Special Needs Trust (SNT) used to manage assets for a disabled person, or a CRT (Charitable Remainder Trust) used for charitable giving.

A trust cannot always protect the grantor or beneficiaries from litigation. If a person has debt and creditors want to be paid, they can sue a revocable trust, as you have not given up much in the way of control using this type of trust—you still directly own the assets in the trust!

Irrevocable trusts provide more protection. Once assets are in the trust, the grantor has given up control of the assets. However, if the trust was created mainly to protect assets from creditors, a court could determine the trust was created fraudulently, and rule against the grantor, leaving all of the assets in the trust vulnerable to creditor lawsuits.

Can you sue a trust directly? Generally, no, but you can sue the trustee of a trust. You can also sue beneficiaries of a trust.

Here’s an example. If you transfer a car into a revocable living trust and cause an accident leading to the death or serious injury of another driver, the driver or their family could sue the trust for damages indirectly, by suing you as the trustee.

Trustees are bound as fiduciaries to manage the trust assets as directed by the grantor and for the best interest of the beneficiaries. The trustee can be sued if someone, typically a beneficiary, believes the trustee is not carrying out their duties. A beneficiary might sue a trustee, if they were supposed to receive a certain amount of money at a specific time, but the trustee has not distributed the funds. This is known as a “breach of fiduciary duty.”

Trustees are also prevented from self-dealing or using trust assets for their own benefit. If a beneficiary believes a trustee is taking money from the trust for their own benefit, they can sue the trustee.

A trust can also be “contested,” which is different from suing. Contesting a trust occurs when someone believes the grantor was coerced or subjected to undue influence in creating the trust. It also happens if someone believes the trust or amendments to the trust were the result of elder financial abuse, or if it appears trust documents have been forged or fraudulently altered.

Before a trust can be contested, there needs to be a valid suspicion the trust is somehow in violation of your state’s estate planning laws. You also have to have legal standing to bring a claim. The court may or may not side with you, so there are no guarantees.

Reference: Yahoo! Finance (Nov. 17, 2021) “Estate Planning: Can You Sue a Trust?”

Can Elder Financial Abuse Be Stopped?

The numbers are chilling. One in ten Americans age 60+ has experienced elder abuse. One of the most common forms of elder abuse is financial, says a recent article from Forbes titled “What Is Elder Financial Abuse—And How Do We Prevent It?”

Financial elder abuse is defined as when someone illegally or improperly uses an elderly person’s money for their own use. Elderly people are easy victims for obvious reasons. They may be mentally vulnerable, suffering from Alzheimer’s or other form of dementia. They may also be lonely and find the company of a new “friend” is so delightful that it impairs their judgement.

Financial elder abuse occurs most often from adult children, but also in nursing homes and assisted living facilities. Be on the watch for those new friends who enter senior’s lives, especially if they seek to limit contact with family members.

Caregivers or nursing staff have access to resident’s possessions, including checkbooks, ATM cards and credit cards. Monitoring an aging parent’s bank accounts on a regular basis should be part of caregiving by adult children. Unusual transactions, large withdrawals or unlikely purchases by credit card should immediately be reported to their bank or credit card company.

Less obvious and harder to track, is when someone forces a nursing home resident to sign legal documents transferring ownership of homes, cars, bank accounts and even investment accounts. They may also be pressured into creating a new will.

Here are some red flags to watch for:

• New names being added to bank accounts or on credit cards.
• Finding unpaid bills, letters from collection agencies or past due notices from creditors, especially when the person has sufficient funds.
• Relatives who suddenly show up and want to be involved with an aging senior, including estranged children.
• The unexpected transfer of any kind of asset to someone who is not a family member.
• Any change in habits concerning money, including someone who was never worried about money suddenly being concerned about paying bills.

The elderly are often scared to report being victimized. They may fear further loss of control over their lives or be embarrassed to have been scammed. If a caregiver is stealing, they may also be physically threatened, or frightened of losing their familiar care provider.

Talk to your estate planning attorney, speak with the local Adult Protective Services office, or contact the National Elder Fraud Hotline, if you are concerned about a loved one being financially exploited.  If you believe a loved one is in physical danger, contact the local police. Don’t hesitate to ask for help.

Reference: Forbes (Nov. 9, 2021) “What Is Elder Financial Abuse—And How Do We Prevent It?”

What Does It Mean to Be an Adult’s Legal Guardian?

The conservatorship battle over Britney Spears’ life and money is not typical of most guardianship and petitions brought by attorneys for families when a loved one is incapacitated and can’t care for themselves or make informed decisions. In most cases, by the time they reach out to an estate planning attorney for help, things have usually taken a turn for the worse.

According to the recent article, “Why the sensational Britney Spears case is atypical of most conservatorships” from Deseret News, families often wait until there is a crisis to start pursuing conservatorship. Starting the process before an emergency would be better, but it is difficult, as the family must face a harsh reality: their loved one has lost the ability to maintain a normal life.

Family members may have Alzheimer’s disease or another type of dementia but have not been formally diagnosed.

Elder financial abuse is also part of the conservatorship problem. If the family is involved in the person’s finances, they may see large checks being written to strangers or spending that doesn’t follow the person’s behavior.

In some states, a guardian controls the person’s living arrangements and medical care, while the conservator controls the person’s finances. Each state has its own laws, so families need to work with attorneys where their loved one resides.

In the Spears case, the court had to see evidence of incapacity, which seems odd for a person who has spent the last 13 years performing and earning millions. However, it is possible for a person to be incapacitated, while still maintaining some degree of functionality.

If Spears’ counsel can demonstrate that she has capacity to manage her own life, health and finances, and if it finds the reasons she needed conservatorship 13 years ago no longer exist, then it is possible the conservatorship will terminate. She will be able to run her life, manage her career and make financial decisions as she sees fit. Those decisions may not be what her father would wish, and there is certainly room for her to make mistakes, just as any other celebrity multimillionaire does.

The LA Superior Court judge suspended Jamie Spears as conservator, appointing a CPA as a temporary conservator until the next court hearing, scheduled for mid-November.

A protected person or an interested party has the legal right to petition a court to terminate a guardianship, if they believe the person is capable of managing their own affairs. Some states have laws serving as a “Bill of Rights” for protected persons, which outline the legal rights individuals have, even when they are under the care of a conservator or guardian.

The best source for information on conservatorship or guardianship is not the entertainment headlines, but from a local estate planning attorney who is familiar with the laws of your state and how this process works for regular people who are sincerely trying to help their family members.

Reference: Deseret News (Sep. 30, 2021) “Why the sensational Britney Spears case is atypical of most conservatorships”

Elder Financial Abuse Increases with Social Isolation

Social isolation, whether because of a pandemic or because an elderly person is alone, is a leading factor contributing to the financial exploitation of seniors. The necessity of quarantining for older adults because of COVID has increased the number of people vulnerable to elder financial abuse, reports the article “Social Isolation and the Risk of Investment Fraud” from NASDAQ.com.

Financial abuse can take place at any time during a person’s life. However, scammers typically strike during times when seniors are more susceptible. It is usually during a health crisis, after the death of a loved one, or when younger family members live far away.

Scammers get information about their prospective victims by reading the obituaries and social media. They also become involved with senior social and support groups to ingratiate themselves into seniors’ lives.

Combine social isolation with lessening cognitive capacity and the situation is ripe for a scam. Senior investors are often flattered when their new-found friends praise their superior understanding of investment opportunities. Decreased judgment paired with a lifetime of savings is a welcome mat for thieves, especially when friends and family members are not able to visit and detect changes indicating that something bad is occurring.

Widowed or divorced seniors are more likely to be victimized. People who suffer from isolation, more and more often turn to the internet as a social outlet. Research shows that people are contacted by scammers through social media or pop-up messages on websites. Those who are dependent and engage more frequently in online life are more likely to engage with a scammer and lose more money than those who are targeted by phone or scamming emails.

How to protect yourself or your aging parents from fraud during quarantine

Scammers isolate their victims. Talk with family, friends, your estate planning attorney, or financial advisor for advice before making any decisions.

Do your homework first. If you don’t know how to do an internet search to see if the website or the person is a scammer, talk with a family member or professional advisor who can. Don’t invest money, unless you fully understand the risks and can verify the legitimacy of the offer and the company involved.

Educate yourself about finances and investments. This is a good project for people with too much time on their own. There are many worthwhile websites where you can learn about investments and finances. Look for well-known financial publishing companies. Don’t bother with marginal websites—that’s where fraudsters lurk.

Don’t be embarrassed to file a complaint. If you think you have been defrauded, you can file a complaint with the SEC, FINRA, and your state securities regulator. Your estate planning attorney will also know what resources you can tap to defend yourself.

Warning Signs of Elder Financial Abuse:

• A new “friend” who suddenly appears and tries to keep family and friends away.
• Someone who presses you to provide financial information and passwords to accounts.
• Fear or anxiety when a certain person calls or sends a text.
• Sudden and unexplained changes in estate planning documents or beneficiary designations.
• Anyone who asks for passwords to financial accounts.

Generally speaking, anyone who promises a high return with no risk is not telling the truth. The same goes for anyone who tells you that you need to act fast.

Seniors who are socially distant can stay in touch with family and friends through phone calls and if they can manage the devices, by video chat. Regular contact goes a long way in preventing strangers with bad intentions from insinuating themselves into your life or your parent’s lives.

Reference: NASDAQ.com (Feb. 11, 2021) “Social Isolation and the Risk of Investment Fraud”

Elder Financial Abuse on the Rise during Pandemic

The same isolation that is keeping seniors safe during the pandemic is also making them easier targets for scammers, reports WKYC in a news report “Northeast Ohio family warns of elder financial exploitation during the pandemic.” While this report concerns a family in Ohio, seniors and families across the country are facing the same challenges.

Two brothers enjoyed spending their time together throughout their lives. However, for the last three years, one of them, Michael Pekar, has been trying to undo a neighbor’s theft of his brother Ronnie’s estate. A few months before Ronnie died from cancer, a neighbor got involved with his finances, gained Power of Attorney and began stealing Ronnie’s life savings.

The money, more than a million dollars, had been saved for the sons by their mother. Pekar went to see an attorney, who helped uncover a sum of about $1.6 million that had been transferred from Ronnie into other accounts. A civil complaint was filed against the woman and $700,000 was eventually recovered, but nearly $1 million will never be recovered.

How can you prevent this from happening to your loved ones, especially those who are isolated during the COVID-19 pandemic?

An elderly person who is isolated is vulnerable. Long stretches of time without family contact make them eager for human connection. If someone new suddenly inserts themselves into your loved one’s life, consider it a red flag. Are new people taking over tasks of bill paying, or driving them to a bank, lawyer, or financial professional’s office? It might start out as a genuine offer of help but may not end that way.

The possible financial abuser does not have to be a stranger. In most cases, family members, like nieces, nephews or other relatives, prey on the isolated elderly person. The red flag is a sudden interest that was never there before.

Changes to legal or financial documents are a warning sign, especially if those documents have gone missing. Unexpected trips to attorneys you don’t know or switching financial advisors without discussing changes with children are another sign that something is happening. So are changes to email addresses and phone numbers. If your elderly aunt who calls every Thursday at 3 pm stops calling, or you can’t reach her, someone may be controlling her communications.

According to the CDC, about one in ten adults over age 60 are abused, neglected, or financially exploited.

Be sure to check in more frequently on elderly family members during the pandemic because increased isolation can lead them to rely on others, making them vulnerable to abuse.

Reference: WKYC (Nov. 19, 2020) “Northeast Ohio family warns of elder financial exploitation during the pandemic.”

Baseball Champion Sues Daughter-In-Law, Denies Having Dementia

Eighty-two-year-old Giants great Orlando Cepeda filed a lawsuit against his daughter-in-law Camille Cepeda alleging elder financial abuse, fraud and infliction of emotional distress, as reported in the article “Giants great Orlando Cepeda denies having dementia, sues daughter-in-law for fraud” from the San Francisco Chronicle. He also accused her of negligence in handling his finances, after giving her power of attorney in 2018.

Cepeda accuses Camille of spending his money on personal expenses, including lease payments on a $62,000 Lexus, a Louis Vuitton handbag, expensive wine and taking out at least $24,000 in cash from his accounts. It also claims that she has placed all of his baseball memorabilia in a storage locker and will not give him the key or the location of the locker. That includes his National League Most Valuable Player trophy, which he wants back.

This is the latest news from a dispute that began after the Hall of Famer married his second wife, Nydia. They had two of Cepeda’s four sons, including Ali Cepeda, who is married to Camille. The parents are now not speaking to their son, and some of the brothers, four in total, have taken sides and are not speaking to each other.

Cepeda granted his daughter-in-law power of attorney in April 2018, two months after he suffered a heart attack and irreversible brain damage caused by oxygen deprivation. She was to have access to his accounts and pay his bills. Before the heart attack, she had handled his financial and business affairs.

On May 29, Camille filed a petition with the court seeking conservatorship of Cepeda, stating that he has dementia and cannot make his own financial decisions. Two of Cepeda’s sons, including Camille’s husband Ali, filed papers supporting her petition.

In Cepeda’s response, he cited two neuropsychological reports, including one done in May, that declared that he was fit to make his own medical decisions and understands all but the most complex financial issues. Cepeda says that his daughter-in-law filed for conservatorship to cover up the fraud that he is alleging in the lawsuit. He says that he does not need a conservator, and if anyone should have that role, it would be his wife Nydia.

The lawsuit filed by Cepeda offers a glimpse into why he believes she wants conservatorship, saying he doesn’t have the capacity to understand the nature and consequences of his remarriage, nor his decision to remove Camille as power of attorney and grant it to Nydia.

The suit alleges that Camille was opposed to the marriage from the start and even suggested they stage a fake ceremony that would not be legally sanctioned.

Cepeda’s lawsuit seeks damages, legal fees and demands that Camille return his memorabilia and all financial records she has allegedly refused to provide to account for how she handed his money. The suit also cites a $62,000 withdrawal to pay Cepeda’s tax bill, which was not actually paid. The filing says she was negotiating with the IRS, but she will not provide the documentation that he needs to settle with the government. Nor did she pay a medical bill for $6,800, although she did cash a check from the insurance company that was sent to pay for it.

Cepeda remains hopeful that the entire matter may be settled, before the case returns to court.

“It’s very painful,” Cepeda told a reporter. “I love my family. I love my kids. But this is life. You have to do what you have to do.”

Reference: San Francisco Chronicle (June 26, 2020) “Giants great Orlando Cepeda denies having dementia, sues daughter-in-law for fraud”