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Addressing breach of fiduciary concerns

| Dec 11, 2019 | Uncategorized |

A professional may pad billing statements claiming extra hours managing a trust for a disabled client. A son or daughter might claim he or she was just borrowing from mom’s account to explain missing money. What can be done to identify these issues, stop the damage and recover missing/misappropriated funds.

A conservator – possibly a loved one or a professional third party – is a type of fiduciary, meaning they are responsible for overseeing another individual’s financial affairs. That might include paying bills, making investments or buying necessary items. As a fiduciary, the conservator must act in the best interests of this other individual (referred to as the protected person).

Sadly, that doesn’t always happen. Instead, some people take advantage of this power for personal gain.

How it happens

The nature of a conservator’s role is financial. This often allows them unfettered access to bank accounts, and authorizes them to make transactions. Because of this, it can be easy for an abuser to:

  • Take a protected person’s money and use it for themselves
  • Overbill the client for services
  • Borrow money from the client
  • Engage in self-dealing, profiting from the role beyond charging a reasonable fee

Who is most often at fault

Sometimes a family member or loved one serves as conservator, but in other circumstances, the courts may appoint a conservator to watch over a protected person’s finances. While many people often think of professionals siphoning money from a victim, in reality, it is often a family member.

One federal study found financial exploitation committed by someone in a fiduciary role was more common and usually resulted in a greater monetary loss. On average, if a fiduciary was involved, it resulted in a loss of $83,600 for the victim.

In addition, the same was true when the older adult knew the suspect. A family member responsible for the exploitation caused an average loss of $42,700, while a stranger in the role resulted in an average loss of $17,000.

What to do if you have concerns

If you are worried about an aging family member, talk about your concerns and be on on the lookout for potential warning signs. The sooner that issues are identified, the sooner that they can be addressed. A request to remove a conservator is one way to get the conduct to stop. Other legal avenues may allow you to recover funds, but fast action is usually required.

Also consider utilizing other mechanisms (such as power of attorney) to help prevent financial exploitation before it begins. No amount of planning ahead can avoid all subsequent bad actions, however working with an experienced estate planning attorney who knows and has seen what can go wrong may be enough to avoid certain temptations.

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