Elder financial abuse is a distressing issue that affects vulnerable seniors, often leading to significant financial losses. In the realm of legal remedies, one powerful tool used to address such cases is the constructive trust. But what exactly is a constructive trust, and how does it work?
At its core, a constructive trust is a legal remedy aimed at correcting unjust enrichment and ensuring that property or assets are returned to their rightful owner. Unlike a traditional trust created by a formal legal agreement, a constructive trust arises by operation of law. It’s a flexible and equitable concept that courts employ when they find that someone has obtained property, assets, or benefits in an unfair or wrongful manner.
Constructive trusts are not exclusive to elder financial abuse cases; they can be applied in various situations where one party has benefited at the expense of another without a proper legal basis. For purposes of our discussion however, we’ll focus on their use in elder financial abuse situations.
Most people should be able to choose a loving and honoring adult child or family member as a financial caregiver. An Indiana case highlights the importance of integrity when making the choice.
In the case of Biggs vs Renner, Terri Renner and Sherry Biggs are siblings locked in a court battle over their mother’s care, with Terri claiming that Sherry abused her position as agent under her mother’s Power of Attorney, and used their mother’s funds for her own benefit. Court records would confirm Terri’s fears.
Sherry admitted to converting her mother’s accounts first to a joint account, and then to accounts only in her name. She offered a promissory note to court as evidence that she intended to pay the money back, but the the note was largely unenforceable due to her mother’s incapacity, and no payments had been made so far. In addition, Sherry allowed her daughter and husband to live rent-free in her mother’s home and paid several thousand dollars of improvements from her mother’s accounts that did not directly benefit her mother.
Terri sought a court’s intervention to remove her sister as attorney-in-fact, and to insert a disinterested third party as guardian of their mother’s estate. The court granted Terri’s petition, but Sherry objected on appeal.
A Power of Attorney is a legal arrangement whereby one person grants authority (let’s call that person the grantor) to another person to act in their behalf as attorney-in-fact, or agent while they (the grantor) are alive but unable to act for themselves. Acting as agent under a power of attorney is a fiduciary responsibility that obligates the financial caregiver to exercise the powers granted solely for the benefit of the grantor. A financial caregiver has to keep accurate records and is prohibited from using the property of the grantor for their own purposes. Being a financial caregiver is an honorable position when conducted honorably.
Why name an adult child as financial caregiver?
It is understandable that an older person would want to name an adult child as financial caregiver on their behalf. We want to believe our own children would act honorably on our behalf, or perhaps we have regrets about our own parenting and feel guilty if we do not atone ourselves by putting them in charge. Sometimes a parent will name an estranged child in hope that the trust shown by the parent will mend a broken relationship. Parents will often do whatever it takes to keep a child close to them. However, the selection of a financial caregiver should place emphasis on the dependability and the integrity of the individual over familial connections. This may require difficult decisions and may even alienate family members, but if early and intentional discussions on the subject can be held with the appropriate family members, perhaps these kinds of conflicts can be avoided.
Note: The information above is for general information only and should not be relied upon to make legal or financial decisions Advice as to the preparation and use of Powers of Attorney should only be provided by a qualified attorney licensed in your state.
Britney Spears has been under a California-ordered conservatorship since 2013, and in recent years has tried unsuccessfully to have her father, Jamie Spears, removed. Attorneys for Jaime Spears have maintained that he “has always acted in the best interests of his daughter.”
Conservatorships are court-ordered arrangements presumably designed to protect those who cannot manage their own affairs due to some physical or mental limitation. Each state has its own rules for conservatorships and courts may appoint anyone it chooses to be in charge of someone’s property.
A spotlight on Britney Spears’ conservatorship has led lawmakers in one state to consider changes, but some say focusing on the pop star could overlook the needs of those with disabilities.
Beverley Schottenstein said two grandsons who managed her money at JPMorgan forged documents, ran up commissions with inappropriate trading and made her miss tens of millions of dollars in gains. So she decided to teach them all a lesson.
The Georgia Supreme Court has suspended a state appeals judge with pay during an ethics investigation.
The court suspended the judge, Christian Coomer, on Wednesday, Law360 reports.Coomer is accused of making himself a beneficiary and his wife the executor when drafting wills for a then-client, according to Law.com, Law360 and the Daily Tribune News.
Coomer is also accused of drafting an irrevocable living trust for the client that designated Coomer as the trustee and beneficiary, with the power to transfer funds to himself while the client was still alive, according to the Dec. 28 charges by the Georgia Judicial Qualifications Commission.
In this episode of the case files, I discuss the Texas case of Ramirez vs. Rodriguez, et. al., a case that involves four sibling co-trustees and the attempt by three of them to remove their trouble-making brother because of his hostile actions. Is being a royal pain in the derriere enough to remove a trustee from office.
This case reminds me of a scene from an episode of The Marvelous Mrs. Maisel, an Amazon original series that I have featured in the video.
Both this case and the scene from the series drive home the point that sometimes mixing family and money can be an explosive combination.
If you manage your parents’ investment accounts because they are not capable, you may have watched helplessly the past several weeks as their stocks fell by thirty percent or more from the S&P 500 index highs in mid-February to its low point so far on March 23rd.
They say blood is thicker than water, but money is thicker than blood in my experience, so if you are managing your parents’ accounts, you may have concerns that either they or some extended family members may feel you should have done something to prevent the declines in your parents’ accounts.
In this video, I offer three tips to lessen your exposure to liability.
You may find that you have been named as executor (executrix if you are female) of your parents’ will. After reading the duties below, you may not want the job. It is a tiring, time-consuming, and frequently a thankless responsibility that you may want to resign from– and certainly have the right to do so.
Some of the more important duties and responsibilities of being an executor include:
Find the latest will and read it.
File a petition with the court to probate the will.
Assemble all the decedent’s assets.
Take possession of safe deposit box contents.
Consult with banks and savings and loans in the area to find all accounts of the deceased. Also check for cash and other valuables hidden around the home.
Transfer all securities to your name (as executor) and continue to collect dividends and interest on behalf of the heirs of the deceased.
Find, inventory and protect household and personal effects and other personal property.
Collect all life insurance proceeds payable to the estate.
Find and inventory all real estate deeds, mortgages, leases and tax information. Provide immediate management for rental properties.
Arrange ancillary administration for out-of-state property.
Collect monies owed the deceased and check interests in estates of other deceased persons.
Find and safeguard business interests, valuables, personal property, important papers, the residence, etc.
Inventory all assets and arrange for appraisal of those for which it is appropriate.
Pay valid claims against the estate. Reject improper claims and defend the estate, if necessary.
Pay state and federal taxes due.
File income tax returns for the decedent and the estate.
Determine whether the estate qualifies for special use valuation under IRC Sec. 2032A, the qualified family-owned business interest deduction under IRC Sec. 2057 or deferral of estate taxes under IRC Sees. 6161 or 6166.
If the surviving spouse is not a U.S. citizen, consider a qualified domestic trust to defer the payment of federal estate taxes.
File federal estate tax return and state death and/or inheritance tax return.
Prepare statement of all receipts and disbursements. Pay attorney’s fees and executor’s commissions. Assist the attorney in defending the estate, if necessary.
Distribute specific bequests and the residue; obtain tax releases and receipts as directed by the court.
Establish a testamentary trust (or pour over into a living trust), where appropriate.
If you find the task to be too over-whelming, talk to your parents about it if you can. Examine their wills to see if anyone is named as an alternate and discuss these duties with that person. You may even find that the person(s) named as executor are no longer living; or they may have named a bank trust department with which they no longer do business. If you feel it is a duty that you can and want to do, be sure to contact a qualified lawyer in your parents’ state of residence to help you in the process.
In this episode of The Case Files, I profile a 2010 Texas case involving a daughter’s misappropriation of her deceased father’s trust funds as well as her aging mother’s personal assets. The characters from the 1960s sitcom Green Acres provide a little humor to an otherwise serious situation. Enjoy and learn!
In yet another case of family member trustees gone wrong, Former St George Illawarra Dragons star Mark Gasnier has accused his brother of taking funds from a family trust as part of a long-running dispute.
Mark Gasnier and his brother Dean, are co-trustees of a family trust apparently established by their parents. According to the complaint, Dean, without the knowledge of Mark, made a number of withdrawals from the family trust and even went as far as faking the signatures of his parents John Gasnier and Janene Gasnier on financial documents including tax returns. The case is headed to the New South Wales Supreme Court.
Appointing an institutional corporate trustee might have prevented the dispute since corporate trustees typically include layers of checks and balances designed to prevent unauthorized withdrawals from occurring. If families still want someone within or close to the family involved, then appointing them as co-trustee with limited authority is a possible solution.
Perhaps this sibling rivalry should have been left on the Rugby pitch!