+ Recognizing and Ethically Responding to Clients with

+ Recognizing and Ethically Responding to Clients with

+ Recognizing and Ethically Responding to Clients with Diminished Capacity. Financial Planning Association of Greater Indiana. September 15, 2017. + The Background to Rising Rates of Financial Exploitation Reviewing the Data. + Data: Underlying Demographics. The United States Census Bureau projects that the population age 85 and over could grow from 5.7 million in 2008 to 19 million by 2050. Some type of disability was reported by 37% of older persons in

2009. Fifty six percent of people over age 80 reported some form of severe disability and 29% reported that they needed assistance. An estimated 5.2 million Americans of all ages have Alzheimer's disease in 2008. The number of people age 65 and over with Alzheimer's disease is estimated to reach 7.7 million in 2030. While likely underreported, elder financial abuse and fraud costs older Americans $36.5 billion per year. + Suttons Law. Sutton's law states that when diagnosing, one should first consider the obvious. It suggests that one should first conduct those tests which could confirm (or rule out) the most likely diagnosis. It is taught in

medical schools to suggest to medical students that they might best order tests in that sequence which is most likely to result in a quick diagnosis, hence treatment, while minimizing unnecessary costs. -Wikipedia. Attributed to Willie Suttons supposed response to a reporters question on why he robbed banks: Because thats where the money is. Lessons from Slick Willie Sutton. + He usually carried a pistol or a Thompson submachine gun. "You can't rob a bank on charm and personality," he once observed. He never carried a loaded gun because somebody might get hurt. He allegedly never robbed a bank when a woman screamed or a baby cried.

Impersonations included a postal telegraph messenger, a police officer, and a maintenance man. + Why do you steal from Banks Elders? Because thats where the money is. Only now money is not kept in banks its kept in the cloud. Source: U.S. Census Bureau, Survey of Income and + Program Participation, 2014 Panel, Wave 1 Internet Release Date: 6/1/2017 +Fifty Shades of Vulnerability From Full Autonomy to Adjudicated Incapacity. + Terminology

Competency (Legal) vs. Capacity (Clinical) Endangered Adult. Incapacitated Adult. Functional Incapacity. Undue Influence. + Capacity to Do What? Medical consent.

Sexual consent. Functional Capacities. Activities of Daily Living. (ADLs) (e.g., grooming, toileting, eating, transferring, dressing) Instrumental ADLs (IADLs) (e.g., abilities to manage finances, health, and functioning in the home and community) Testamentary Capacity.

Donative Capacity. Contractual Capacity. Others. (Capacity to Vote, Mediate, Participate in Research Studies.) + Right to Folly. Is a client making a decision we disagree with, but one we must respect because the person has capacity? Beware of ageism. +

Decisional vs. Executional Capacity. Some use the term decision-making capacity interchangeably with capacity, or to describe capacity domains that are specifically and only decisional in nature. That is, a distinction may be drawn between decisional capacity (the capacity to decide) versus executional capacity (the capacity to implement a decision) (Collopy, 1988). For example, the capacity to make a health care decision may only involve cognitive processes of deciding, whereas the capacity to manage finances may involve making decisions and executing actions in concordance with decisions (e.g., balancing a checkbook). Importantly, the mere presence of physical inability and loss of executional capacity does not constitute incapacity, as the individual who retains decisional capacity may direct another to perform the task. -- Assessment of Older Adults with Diminished Capacity: A Handbook for Psychologists (2008). + Testamentary Capacity

By far the most frequently litigated form of capacity the capacity to make a willis typically found to be present if the person making the willa testatorat the time of executing a will, has the capacity to: (1) know the natural objects of his or her bounty (or ones generosity); (2) to understand the nature and extent of his or her property; and (3) to interrelate these elements sufficiently to make a disposition of property; (4) by means of a testamentary instrument. (Mezzullo & Woolpert, 2004; Parry et al., 2002; Walsh, 1994). + Donative Capacity. Capacity to make a gift has been defined by courts to require an understanding of the nature and purpose of the gift, an understanding of the nature and extent of property to be given, a knowledge of the natural objects of the donors bounty, and an understanding of the nature and effect of the gift. Some states use a higher standard for donative capacity than for testamentary capacity, requiring that the donor know the

gift to be irrevocable and that it would result in a reduction in the donors assets or estate (Mezzullo et al., 2004; Walsh, 1994). The rationale for the higher standard is that the gift takes effect in the present and not after the death of the donor, so its consequences are potentially greater. -- Assessment of Older Adults with Diminished Capacity: A Handbook for Psychologists (2008). + Contractual capacity. In determining an individuals capacity to execute a contract, courts generally assess the partys ability to understand the nature and effect of the act and the business being transacted (Mezzullo et al., 2004; Walsh, 1994). Accordingly, if the act or business being transacted is highly complicated, a higher level of understanding may be needed to understand its nature and effect, in contrast to a very simple contractual arrangement. + Undue Influence.

Little empirical research exists to guide clinicians in their assessment of undue influence. Influence becomes undue when the perpetrator exploits the victims dependency and trust for personal financial gain. It is this trust and dependency that gives the perpetrator the ability to steal the victims assets. Undue influence is unfair persuasion of a party who is under the domination of the person exercising the persuasion or who by virtue of the relation between them is justified in assuming that that person will not act in a manner inconsistent with his welfare (Restatement (Second) of Contracts, 1981). + Undue Influence. IDEAL Model

Isolation Dependency Emotional manipulation and/or Exploitation of a vulnerability Acquiescence Loss - Bennett Blum, M.D. +Signs of Financial Exploitation. What to look for.

+ What the documents might show. Unusual financial activity. Unexplained significant withdrawals. Increased frequency of withdrawals. Frequent transfers among accounts. Newly authorized signers on accounts.

Unpaid bills. Recent and abrupt changes to legal documents. Homegrown POAs. + What the elders behavior might tell you. Confusion or anxiety when discussing finances. Reluctance to answer questions about finances. Wariness of others. Noticeable changes in purchasing or gifting habits.

New best friends. Reclusiveness. Deterioration in appearance. + Ethical Considerations. How Does a CFP Ethically Address a Client With Questionable Capacity? + CFP Boards Standards of Professional Conduct. Current Standards of Professional Conduct.

Revised Standards Under Consideration. Public Comment Period ended August 21, 2017. To be entitled Code of Ethics and Standards of Conduct. Several comments have been posted that could result in changes. Nothing in the Code or Standards Directly Addresses Diminished Capacity. + Specific Rules Fiduciary

Current: Rule 1.4 Acting as a fiduciary. Rule 4.5 In addition to the requirements of Rule 1.4, a certificant shall make and/or implement only recommendations that are suitable for the client. Proposed: Duties Owed to Client / 1. Fiduciary Duty. b. Duty of Care. A CFP professional must act with the care, skill, prudence, and diligence that a prudent professional would exercise in light of the Clients goals, risk tolerance, objectives, and financial and personal circumstances.

c. Duty to Follow Client Instructions. A CFP professional must comply with all objectives, policies, restrictions, and other terms of the Engagement and all reasonable and lawful directions of the Client. + Specific Rules Professionalism Current: Code Of Ethics And Professional Responsibility Principle 6 behaving with dignity and courtesy to clients Proposed: A CFP professional must treat Clients, prospective Clients, fellow professionals, and others with dignity, courtesy, and respect. + Specific Rules Comply with

Law Current: Rule 4.3 - A certificant shall be in compliance with applicable regulatory requirements governing professional services provided to the client. Proposed: 7. COMPLY WITH THE LAW A CFP professional must comply with the laws, rules, and regulations governing professional activities. A CFP professional may not intentionally or recklessly participate or assist in another persons violation of these Standards or the laws, rules, or regulations governing

professional activities. + Specific Rules Confidentiality Current: Rule 3.1 - A certificant shall treat information as confidential except as required in response to proper legal process; as necessitated by obligations to a certificants employer or partners; as required to defend against charges of wrongdoing; in connection with a civil dispute; or as needed to perform the services. Proposed: 8. Confidentiality and Privacy Numerous, specific provisions on dos and donts.

Based in large part on the ability of client to consent to disclosure. May disclose for ordinary business purposes [t]o a person acting in a representative capacity on behalf of the client. (No definition of person acting in a representative capacity.) + Specific Rules Information and Client Agreements. Current: Rule 1.1 - certificant and the prospective client or client shall mutually agree upon the services to be provided by the certificant.

Rule 1.2 provide written information or discuss with the prospective client Rule 1.3 shall enter into a written agreement governing the financial planning services Rule 2.2 A certificant shall disclose to a prospective client or client the following information: An accurate and understandable description of the compensation arrangements being offered. Proposed: 10. Provide Information to a Prospective Client. Lots more detail, but

No guidance or instructions respecting a prospective client with diminished capacity. + Specific Rules Communication. Current: Nothing on point. Proposed: 13. Duties When Communicating With A Client A CFP professional must provide a Client with accurate information, in accordance with the Engagement, and in response to reasonable Client requests, in a manner and format that a Client reasonably may be expected to understand. +

Specific Rules Financial Planning. Current: Terminology: Personal financial planning process or financial planning process denotes the process which typically includes, but is not limited to, some or all of these six steps Developing and presenting recommendations and/or alternatives, Implementing the recommendations Proposed: Application of Practice Standards. The Practice Standards set forth the financial planning process. A CFP professional must comply with the Practice Standards when:

The CFP professional agrees to provide or provides (i) Financial Planning; or (ii) Financial Advice that requires integration of relevant elements of the Clients personal and/or financial circumstances in order to act in the Clients best interest. Relevant elements of personal and financial circumstances vary from Client to Client, and may include the Clients need for or desire to: develop goals, manage a budget, identify and manage risk, address health considerations + Specific Rules Client Goals. Current: Practice Standard 200-1: Determining a Clients Personal and Financial Goals, Needs, and Priorities.

[t]he financial planning practitioner and the client shall mutually define the clients personal and financial goals, needs and priorities. When appropriate, the practitioner shall try to assist clients in recognizing the implications of unrealistic goals and objectives. Proposed: 2. Identifying and Selecting Goals. In helping the Client identify goals, the CFP professional must discuss with the Client, and apply, reasonable assumptions and estimates. These may include life expectancy, inflation rates, tax rates, investment returns and other Material assumptions and estimates + Compare to Legal Profession.

Similar considerations. Can the client contract? Does the client need a guardian? Will the Last Will & Testament be challenged? Is the client being financially exploited? Different considerations. Duty to follow clients direction.

Advocate for a position vs. advocate for best interests. + Attorneys Rules of Professional Conduct. Rule 1.14. Client with Diminished Capacity (a) When a client's capacity to make adequately considered decisions in connection with a representation is diminished, whether because of minority, mental impairment or for some other reason, the lawyer shall, as far as reasonably possible, maintain a normal client-lawyer relationship with the client. (b) When the lawyer reasonably believes that the client has diminished capacity, is at risk of substantial physical, financial or other harm unless action is taken and cannot adequately act in the client's own interest, the lawyer may take reasonably necessary protective action, including consulting with individuals or entities that have the ability to take action to protect the client and, in appropriate cases, seeking

the appointment of a guardian ad litem, conservator or guardian. (c) Information relating to the representation of a client with diminished capacity is protected by Rule 1.6. When taking protective action pursuant to paragraph (b), the lawyer is impliedly authorized under Rule 1.6(a) to reveal information about the client, but only to the extent reasonably necessary to protect the client's interests. (d) This Rule is not violated if the lawyer acts in good faith to comply with the Rule. +Obligations and Options for Action. Legal Obligations and Ethical Options. + Reporting to Adult Protective Services (APS). IC 12-10-3-9 - Duty to report endangered

adult Sec. 9. (a) An individual who believes or has reason to believe that another individual is an endangered adult shall make a report under this chapter. (b) If an individual is required to make a report under this chapter in the individual's capacity as a member of the staff of a medical or other public or private institution, school, hospital, facility, or agency, the individual shall immediately notify the individual in charge of the institution, school, hospital, facility, or agency, or the individual's designated agent, who also becomes responsible to report or cause a report to be made. (c) This section does not relieve an individual of the obligation to report on the individual's

own behalf, unless a report has already been made to the best of the individual's belief. + Reporting to Adult Protective Services (APS). IC 12-10-3-11 - Immunity from civil and criminal liability; privileged information; whistleblower retaliation Sec. 11. (a) A person, other than a person against whom a complaint concerning an endangered adult has been made, who in good faith: (1) makes or causes to be made a report required to be made under this chapter; (2) testifies or participates in any investigation or administrative or judicial

proceeding on matters arising from the report; (3) makes or causes to be made photographs or x-rays of an endangered adult; or (4) discusses a report required to be made under this chapter with the division, the adult protective services unit, a law enforcement agency, or other appropriate agency; is immune from both civil and criminal liability arising from those actions. + Reporting to Adult Protective Services (APS). IC 12-10-3-2 - "Endangered adult

Sec. 2. (a) Except as provided in subsection (b), as used in this chapter, "endangered adult" means an individual who is: (1) at least eighteen (18) years of age; (2) incapable by reason of mental illness, intellectual disability, dementia, habitual drunkenness, excessive use of drugs, or other physical or mental incapacity of managing or directing the management of the individual's property or providing or directing the provision of self-care; and (3) harmed or threatened with harm as a result of: (A) neglect;

(B) a battery offense included in IC 35-422; or (C) exploitation of the individual's personal services or property. + Reporting to Adult Protective Services (APS). IC 35-46-1-13 - failure to report; unlawful disclosure; referrals; retaliation Sec. 13. (a) A person who: (1) believes or has reason to believe that an endangered adult or person of any age who has a mental or physical disability is the victim of battery,

neglect, or exploitation as prohibited by this chapter or IC 35-42-2-1; and (2) knowingly fails to report the facts supporting that belief to the division of disability and rehabilitative services, the division of aging, the adult protective services unit designated under IC 12-10-3, or a law enforcement agency having jurisdiction over battery, neglect, or exploitation of an endangered adult; commits a Class B misdemeanor. + Responding to Concerns Over a Clients Declining Cognition. Voluntary Approach Persuasion. Encourage the Client to build a response team.

Legal Tools: Trusts. Powers of Attorney. Health Care Declaration. Be a part of the team. + Responding to Concerns Over a Clients Declining Cognition.

Voluntary Approach Expand Scope of Services? Protective advice. No joint accounts. Direct deposits and automatic bill payments. Cancel ATM cards if seldom used. Direct financial management. Bill pay services. Cash account monitoring services.

Transaction alerts. Copies of statements to CFP. Assist client in registering for the National Do Not Call Registry and/or state no-call lists and credit marketing lists. Screening service for vendors and salespeople. + Responding to Concerns Over a Clients Declining Cognition. Involuntary Approach Become the Change Agent. Contact APS or the police.

Contact clients attorney. Contact the Indiana Attorney Generals Office. Contact family, pastor, or others known to be close to client. Contact your legislator! Petition for guardianship or protective proceeding. + Things You Can Do Now.

Consider changing you client agreements to address your contractual rights to act if you believe in good faith that the client is being exploited. Emergency Contact - Have client identify the person they would want you to contact with concerns over exploitation, and authorize disclosure to that person. Broaden your client data gathering to include social data on lifestyle, family issues, estate planning documents, and other professional contacts CPAs, attorneys. Establish your own Concern Response Protocols. Identify in advance steps you and your office will take if anyone sees signs of exploitation. Empower staff to trigger Concern Response Protocols.

+Big Holes in the Safety Net. Inconvenient Truths. + You dont want to hear this, but about APS APS has its problems. Still grossly underfunded and understaffed. Recent improvements. Battlefield Triage is necessary. Really theres no Services available for endangered adults from Adult Protective Services.

Indianas unique APS structure. Focused on criminal prosecutions. + You dont want to hear this, but about families and POAs Families are the chief source of financial exploitation of elders. The sense of entitlement. Economic stresses within families.

Is it always exploitation? Powers of Attorney. Theres no POA Police. No registration of POAs. No accounting requirements. + You dont want to hear this, but about guardians Deficits in Indianas Guardianship System.

Lack of Access. No Public Guardianship Program. VASIA Programs and attempted response. No widespread availability of pro bono programs for families wanting to pursue guardianship. Lack of professional guardians. Irregular Quality of Guardianship Services. No required training for family guardians.

No license requirements for professional guardians. Poor Oversight of Guardians by Courts. + About Us Bennett & McClammer, LLP Guidance and Advocacy Services for Guardians and Other Family Fiduciaries. www.bennettmcclammer.com Scout Guardianship Services, Inc. Pathfinder Guardianship Services Cavalry Advocacy Services www.scoutguardianship.com

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