Spotting financial elder abuse

Transcript

Intro Speaker:  

Hello, and welcome to Matters Beyond Wealth with your host, Leanne Kaufman, president and CEO of RBC Royal Trust. For most of us, talking about subjects like aging, late life, and estate planning isn’t easy. That’s why we’re going to help get the conversation started on this podcast while benefiting from the insights and expertise of some of the country’s top experts. We want to bring you information today that will help to protect you and your family in the future. Now, here’s your host, Leanne.

Leanne Kaufman:

By now, we’ve likely all heard of the so-called grandparents scams and other ways criminals are trying to take advantage of older Canadians, but sometimes the abuser is closer to home than an anonymous fraudster. The Canadian Securities Administrators found that nearly 29 percent of Canadians say that they know a victim of financial elder abuse, but interestingly, only 47 percent know where to report the cases. Financial abuse of our older citizens is a growing problem in Canada that in addition to being under-reported, often goes undetected. In fact, sometimes the victims do not realize that they’re being taken advantage of until it’s too late.

Hello, I’m Leanne Kaufman, and welcome to RBC Wealth Management Canada’s Matters Beyond Wealth. With me today is the esteemed Marilyn Piccini Roy, a partner and head of the Estates, Wills and Trust group at Robinson Sheppard Shapiro LLP in Montreal, and a great friend to many of us at RBC. She lectures at the faculty of Law of McGill University and is the author of numerous articles, seminars and papers on successions, trusts and elder law. She’s ranked in Chambers High Net Worth, Who’s Who Legal Canada, selected as a thought leader in 2020 and Best Lawyers since 2008. She was also selected as Best Lawyer of the Year Trusts and Estates in Montreal in 2011 and 2020.

Marilyn, thank you for being here with me today to talk about financial abuse of older Canadians and why this matters beyond wealth.

Marilyn Piccini Roy:

Thank you, Leanne, and thank you for the invitation.

Leanne Kaufman:

So, I open by talking about those grandparents scams, which we know are perpetrated by fraudsters, who I hope at least are strangers to their victims. But when we talk about financial abuse, we aren’t usually talking about strangers, are we? How do you describe financial elder abuse?

Marilyn Piccini Roy:

In simple terms, Leanne, I would define it as the illegal or improper use of an elder person’s funds, property or assets. There are essentially three categories: they’re not sharply demarcated and they do coalesce their financial exploitation, caregiver abuse and criminal fraud.

Let me say a few things about financial exploitation. It occurs when misleading or confusing information is provided, often combined with social pressure to obtain consent to the use of an elder’s money. And the definition of exploitation involves profit making, a form of position of authority, and to the detriment of the interests of the vulnerable person. There is this disequilibrium between the exploiter and the exploited. Examples of financial exploitation include cashing of cheques without permission or authorization, forging signatures, misusing or stealing an ATM card, coercing or deceiving an elder person to sign documents, whether they be contracts, leases, Wills, gifts, and it can also arise from improper administration under a POA, a power of attorney.

In the second category of caregiver abuse, money or personal effects are lost due to deceit or theft enabled by a trusting relationship, typically a family member, but sometimes a paid helper, friend, lawyer, accountant, or finance manager, sometimes combined with physical abuse and neglect.  An egregious and unfortunately frequent example is refusal to pay for the proper care of the senior in order to preserve an inheritance. Under our civil code of Quebec, a gift or a legacy, even absent coercion or undue influence by anyone is invalid if it is made to the owner, the director or employee of a health or social services establishment.

So who’s most at risk? I’d just like to expand a bit on that. Seniors who are extremely friendly lose four times as much to elder financial abuse because probably they are more approachable and may give strangers the benefit of the doubt. Financially sophisticated seniors lose more to fraud likely because they’re used to moving around large amounts of money. And thrifty seniors lose, according to studies, five times as much to fraud because they are enticed by bargains.

Financial abuse reaches across the social and economic spectrum as the fastest growing crime in the 21st century, and it is brought into the news over the past years—people like Hollywood star, Mickey Rooney, L’Oreal heiress Liliane Bettencourt, and the New York philanthropist, Brooke Aster. Also in recent years, a Montrealer, Veronika Piela who was defrauded by relatives, a lawyer, a doctor, and a social worker.

In the third category of criminal fraud, you have your grandparents scams as you mentioned, Leanne, fake lottery or gift tickets or identity theft.

Leanne Kaufman:

Yeah. So many ways in which our older Canadians who are not all categorically vulnerable but become more vulnerable the older they get, I would suggest, can really be impacted. So what are some of the signs of financial abuse that we should be on the lookout for with our older family members and friends?

Marilyn Piccini Roy:

Well, social isolation, and this was probably most accentuated during the COVID period, is ripe as a breeding ground for abuse. And the phenomenon of the elder orphan is on the increase, and elderly women are mostly in this group. Age also exposes vulnerability to exploitation. The family dynamics, we have to be careful, there may be competing interests there. Depression and cognitive difficulties, physical health signs, losing weight, not eating properly, hygiene problems, safety issues, falls, for example, and medication compliance, also real estate deals and contracts. For example, the gifting of a home to a caregiver, whether it be a caregiver child or someone else, without securing a legally enforceable right of occupation. A move to a residence in order to preserve the inheritance because they don’t want to upkeep the home. And of course, POAs and banking issues have really a panoply of signs.

Leanne Kaufman:

The one thing that really stuck out to me there, the elder orphan, we sometimes call them solo seniors too. I think it’s probably the same thing.

Marilyn Piccini Roy:

Yes.

Leanne Kaufman:

That really is one of the bigger categories of our loved ones that we should be looking after. I mean, maybe they’re not solo if they’ve got us to look after them, but in that category of maybe no immediate family that is trustworthy and looking out for them. So, what do you suggest that Canadians do to protect either themselves or their older family members from these kinds of situations?

Marilyn Piccini Roy:

Well, there are several protective measures that could and should be implemented. I would say the first is raising the financial literacy of older clients. There are underlying risk factors because many elders are afraid of numbers, also the probate process where it’s applicable. They’re also afraid of lawyers. They have no formal education on financial topics. For example, courses in budgeting, finance and money management have not been mandatory subjects in school. So many Canadians don’t have a good grounding in these topics. There’s also an increasing reliance or trust on others’ views and input.

So how can we improve financial literacy? Well, through self-education. There are a lot of books, a lot of literature, a lot of online resources. Many seniors may be hampered in accessing online resources because they don’t have computer skills. Also, it can be approved through access to qualified financial advisors with reputable financial institutions and obtaining independent legal and tax advice. It’s important, for example, when we look back at the elder orphan, it may be in many cases that the spouse, the deceased spouse, was handling all the finances. And also for immigrants who lack skills in English or French and they also don’t have a familiarity with the Canadian banking and tax procedures. So raising this financial literacy level is extremely important and also trying to understand financial service providers—both clients and their representatives need to know with whom they are dealing. This is where having a trusted contact person, a TCP may be useful, clients should be advised of the parameters and functions of the TCP. It’s really the client who gives the financial institution the permission to contact the TCP and the TCP does serve as an early warning detector. However, a TCP should not necessarily be the attorney under the POA. Each fulfilled different functions and each has a different legal status.

Seniors should also be aware about predatory marriages and their family should be alert to that, deathbed transactions and giving away assets to avoid paying for long-term care. Seniors should be prompted and instructed or at least advised to work with professionals in a holistic case management and multidisciplinary way. Seniors should be receptive to family meetings, conciliation and mediation.

But of utmost importance, Leanne, is social and family vigilance. It is really a moral and social duty incumbent on family, friends, neighbors, professionals such as lawyers, notaries, accountants, investment advisors, bankers to protect the vulnerable of our society.

Leanne Kaufman:

I think it’s an important point you make about the advisors and I have to believe that if a person is surrounded by advisors who know their clients really well that they have an extra layer of protection, right? Somebody else with a set of eyes.

Marilyn Piccini Roy:

Yes.

Leanne Kaufman:

And we did a whole different podcast on the trusted contact person, so I’m glad you mentioned that. We can point back to that episode for those that are interested in learning more about that. I want to talk about the estate planning side of stuff. But before we get there, you mentioned earlier there’s often this dependency, right? There could be a relationship of dependence between the victim and the abuser, or suspected abuser. So, for example, they could be relying on them for caregiving or for living under the same roof. What do you suggest in those kinds of situations where there is that reliance on the other individual for healthcare or housing?

Marilyn Piccini Roy:

These are tricky and delicate situations with no easy answer. Certainly, the older person wants if there is abuse and they’re aware of it to end and the wrongs to be righted. But this person also wants this to be done in a manner that respects legal rights and family relationships, however dysfunctional.  It’s a tricky course to maneuver. In some situations, one could ask is resort to the courts appropriate, but older persons are often reluctant to remedy grievances through the judicial process. 

But there are other remedies. One, for example, in Quebec as the office of the public curator in other jurisdictions, comparable entities. Also in Quebec, we have the Charter of Human Rights and Freedom as enforced by the Commission of Human Rights and Freedoms and one can make complaints. Either somebody who’s aware of the abuse can make a complaint and it’s anonymous, and then the commission will investigate. And section 48 of the Quebec Charter is a powerful tool that has been used in some judicial decisions to correct elder abuse.

Then there are, as a last resort, there are criminal code three courses, theft by person holding a power of attorney and misappropriation of money held under direction.

Leanne Kaufman:

Yeah, and that’s where it really gets tricky though, isn’t it? Because back to the point of them typically being family friends or someone reliant, then where do they turn to for that?

Marilyn Piccini Roy:

Yes.

Leanne Kaufman:

So you are by profession, and the reason I know you is because you’re an estate planning specialist and I know that there’s planning and the right documentation that can help mitigate some of this risk, not eliminate it, but mitigate it. And I know you practice in Quebec, so some of your information may be specific to there, but tell us a little bit about at a high level how this documentation might help.

Marilyn Piccini Roy:

Well, first of all, the preparation and execution of a power of attorney for the administration of property and personal care is an integral part of later life planning and an essential adjunct to estate planning. And this disability planning should never take a backseat to tax or estate planning. Across Canada, there’s a wide variety of terms used in Quebec as protection mandate and other jurisdictions continuing or enduring power of attorney, advanced directive and so on. The attraction of these legal instruments is the avoidance of traumatic and costly proceedings of state-controlled regimes of protective supervision.

In my experience, the choice of attorney or mandatary—that’s the term used in Quebec for attorney under these documents, mandatary—is foremost in importance in this relationship that’s characterized by trust and dependence. This choice is crucial because the attorney or the mandatary could become the perpetrator of abuse.

There are things to look out for and errors to be avoided in the preparation of these documents. First of all, the question is, who is the client? This is especially an issue with elderly or infirm persons, especially if the party who initiated the beating with the lawyer or the notary is attempting to shape or control the entire process by which the attorney is appointed, and such a situation calls out for a private meeting with the client.

The second point is failing to listen. As a lawyer, I try to avoid the temptation to supply the rationality that many of my elder clients may not possess. I try to focus on inviting the client to speak and I try to elicit his or her wishes before offering suggestions or proposals.

The other point that I want to mention is self appointments. That is appointing oneself as a lawyer or a notary as the attorney. It’s important for professionals to grasp that in accepting such an appointment, the professional relationship becomes inverted. It positions a professional as a decision maker rather than a recipient of instructions. But there are many reasons why professionals should accept such appointments and to rule them out would deprive the community of an important resource for the protection of older people. I also warn, however, that it’s important to not adopt an automatic practice of appointing oneself as an attorney because it’s inconsistent with the provision of independent and helpful professional advice to the client. So, one shouldn’t quickly advance oneself as a potential attorney because this may simply embarrass the client into making a quick and maybe thoughtless decision.

The other point I want to mention is what I call technical narrowness. Technical competence in the choice of an attorney is useful and it’s important, but is far from the most important. What is most important is honesty, tolerance and diplomacy. Also, people often think that choosing a mandatary is either simply a matter of identifying someone with the right technical skills or simply bestowing an honor widely by choosing all of one’s children. They’re both kind of dangerous as choices.

Attorneys are inevitably subject to tensions. It follows that if an attorney takes a narrow technical approach to discharging his or her responsibilities may likely make bad decision and invite unnecessary antagonism even if she is a beloved daughter or granddaughter. The same is true of attorneys appointed because they are beloved despite being selfish, dishonest, or reliable. So, a good attorney must possess both technical competence or at least have the awareness to know where to seek out advice and professional technical competence and also have a humane disposition to adjudicate fairly and tolerantly.

The other important point that I want to make is that mandataries or attorneys should start off on the right foot, so they should know what their job entails. Unfortunately, many mandataries don’t get initial legal, financial or tax advice at the outset of fulfilling their roles. They don’t keep adequate records. They don’t invest the funds under their administration properly. They make unauthorized gifts to themselves or family members. They file income tax returns late. They don’t make complete investigation of all of the assets and liabilities.

I am of the view that part of my advisory role as a lawyer is to invite my clients who are the constituents or the mandators to consider including their designated attorney in an information session so that basic duties and responsibilities of attorneys and mandataries can be explained. And if that’s not possible, maybe a reporting letter with the client’s permission should be sent. At least that idea should be put on the table.

Finally, I wanted to mention that I have seen powers of attorney and mandates where there are problems with the replacement of an attorney or mandatary, either the total absence or an illegal replacement mechanism, so that has to be looked at with care.

And finally, a big point is accountability, certainly. In Quebec in November of 2022, we had an amendment to our civil code, which corrected two glaring omissions in our law regarding the protection of persons by providing two safeguards, one annual accounting, and an inventory obligation.

Leanne Kaufman:

Well, Marilyn, you’ve given us a lot to think about around the appointment of the right attorney or mandatary. And I liked your comment, there’s many reasons why people should consider professionals, and I would add [RBC] Royal Trust to that list of professionals because certainly for property that’s a function that we perform as an independent third party.

Marilyn Piccini Roy:

Yes. I mean trust companies have an important role. Absolutely, because so many people don’t have a circle of friends—think of your elder orphan. Absolutely.

Leanne Kaufman:

Yeah, and I really liked your points about the information session or some form of education for an attorney. Particularly before they start to act so that they can say, “No, thank you, find someone else”…

Marilyn Piccini Roy:

Exactly.

Leanne Kaufman:

… If the case may be that they decide they don’t want to do that.

Marilyn, just one last thing before I let you go. You’ve given us so much information here, but if we just have one thing that you want our listeners to remember today, what would that one thing be?

Marilyn Piccini Roy:

Actually, I have two takeaways—

Leanne Kaufman:

Okay.

Marilyn Piccini Roy:

—and they’re bound together. One, be vigilant about isolation, be aware that abuse and neglect could happen anywhere and by anyone. And two, encourage and facilitate financial literacy.

Leanne Kaufman:

Those are both great, so I’m glad you had two.

Marilyn, thanks again for joining us today to talk about ways we can spot financial elder abuse, the ways to mitigate it or maybe plan to prevent it, and why all of this matters beyond wealth.

Marilyn Piccini Roy:

Thank you, Leanne.

Leanne Kaufman:

You can find out more about Marilyn at rsslex.com. If you enjoyed this episode and you’d like to help support the podcast, please share it with others, post about it on social media, or leave a rating and review. Until next time, I’m Leanne Kaufman. Thank you for joining us.

Outro speaker:

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Thank you for joining us on this episode of Matters Beyond Wealth. If you would like more information about RBC Royal Trust, please visit our website at rbc.com/royaltrust.