Trusts protect vulnerable elderly

Two years ago, Barry Nelson, a trusts and estates attorney in North Miami Beach, received a frantic call from a trust officer at a local bank. The officer said that Janet Hoffman, a 75-year-old client of Nelson's was waiting in another room for approval to withdraw $150,000 from her account. Sitting beside her was her caretaker and companion, Alice. (Nelson spoke to Worth under the condition that pseudonyms be used for his client and her caregiver.)

"I immediately asked to speak to my client," Nelson recalls. Hoffman, whose deceased husband had left her a revocable trust account valued at some $5 million, said she needed the money to purchase a condo near her home so that Alice could live in it. Nelson managed to convince Hoffman to delay her plan while he examined the contract.

Affluence does little to shield people from the fear of becoming dependent on others; in fact, it can exacerbate that anxiety for senior citizens and their families. Alice came into Hoffman's life because Hoffman's two children, Eliza, who lives in Brazil, and Jason, who lives in Southern California, were worried that their mother was growing absentminded living alone in Florida. They hired Alice to stay with Hoffman five days a week, 24 hours a day, bathing and feeding her, taking her to the bathroom and driving her everywhere she went.

It did not take long for Nelson to realize that the contract to purchase the condo was in Alice's name. He was not surprised. Three years earlier, Alice had also talked her employer into buying her a $15,000 car. "She was often late coming to work, and Janet would be worried. Alice's excuse was that her car was so old that it always broke down," Nelson says.

"Because of physical and emotional dependence, the aging client finds it very difficult to be suspicious of the caregiver's actions," Nelson adds. It took weeks before Hoffman took the advice of her lawyer and her children to fire Alice for taking advantage of her.

To reduce the likelihood of what he calls "endgame manipulation" by future caregivers or nurses, Nelson provided a limitation in Hoffman's ability to revoke or amend the trust. She must give notice to the trustees or her children 30 days before the amendment becomes effective; that way her primary beneficiaries, her children, can determine whether they believe she has the capacity or desire to make such a change. If Hoffman still wants to pursue the change and the children do not accept it, they may seek court intervention.

Nelson conducts lectures for wealthy families and organizes seminars for other practitioners to warn them about end-game manipulation. "The safest way to handle such a matter is to plan for it," Nelson says. "While the client is competent but aging, the beneficiaries should consider a plan that provides safeguards against end-life document changes that would not have been contemplated by the client."

The scenario gets much more complicated-often requiring months in court-if a caregiver talks an elderly individual into rewriting an estate plan to make the caregiver a primary beneficiary. Even if the employer is no longer of sound mind, it rests upon the family to prove that this person with no bloodlines used undue influence. "There was even a case in which my client's caregiver manipulated him into firing me as a financial advisor," Nelson recalls. That caregiver became the elderly person's personal wealth advisor and beneficiary.

Whatever rancor a trust and estate attorney might raise in a client's mind, Nelson points out at LEAST one reason to trust his ilk: "It's against the code of professional ethics for a lawyer to draft a will inserting himself as beneficiary.

--Marilen Cawad