Capacity & Elder Financial Abuse | Estate Litigation

Californians have increasing concern over the frequency of elder financial abuse. The concerns are reasonable and prudent. California’s 65 and over population is 14% of the state’s overall population – that’s over 5 million people.

The American Bar Association (ABA) and the American Psychological Association (APA) published a handbook in 2005 titled “Assessment of Older Adults with Diminished Capacity: A Handbook for Lawyers.” The Handbook is still in wide use today. The Handbook’s breadth could give rise to dozens of videos as well as multiple articles. This short commentary is not broad based – it only focuses on what the Handbook has to say about an elder’s functional abilities related to Financial Capacity.

While there are various models for determining legal capacity clinicians often use a model that looks in part at the relationship of an elder’s cognitive functioning (“attention, memory, understanding or expressing information, reasoning, organizing, planning …”) together with the elder’s functional behavior (individual abilities for the capacity in question). The Handbook describes a common standard for addressing functional abilities important for financial capacity in this way:

“An often-used model of the functional abilities important for financial capacity examines knowledge, skills and judgment.

Knowledge for finances involves the ability to describe facts, concepts, and events related to financial activities such as knowledge of currency, bank statements, investments, and other personal financial data.

Skills involve the ability to demonstrate practical procedures and routines important for financial management such as making change and writing checks.

Judgment involves the ability to make reasonable sound financial decisions in novel or ambiguous social situations, such as being sensitive to fraud, invulnerability to coercion, and prudent in making investments.”

We litigate in trust, estate and elder financial abuse cases. Our cases traverse a broad factual spectrum of seniors’ financial capacity. I’ve seen cases where seniors sold assets for a small fraction of their value while thinking that they were making a smart deal. I remember helping to stop a transaction where a senior was going to sell his home to a neighbor for $2,000 even though the senior thought it was only worth $1,000. Of course, the home was worth several hundred times the neighbor’s proposed purchase price. There are many cases where the amounts at issue run into millions of dollars.

Every case is different – and we have a lot of different cases. We litigate trust and estate cases in California’s major urban counties, including Sacramento, Los Angeles and the Bay Area. If you have a case of substantial elder financial abuse and want to talk about it, call us at Hackard Law: 916-313-3030.