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Financial Elder Abuse In California

When a party accepts the fiduciary duty on behalf of another party, they are required to act in the best interest of the principal, the party whose assets they are managing. This is what is known as a “prudent person standard of care.” The prudent-person rule requires that a person acting as fiduciary is required to act first and foremost with the needs of beneficiaries in mind. Strict care must be taken to ensure no conflict of interest arises between the fiduciary and their principal.

In other words, the fiduciary is expected to manage the assets for the benefit of the other person, rather than for their own profit, and cannot benefit personally from their management of assets.

In addition, your relationship with your mother, and the manner in which you control and dissipate her assets are also governed by the California Probate Code.

Some Probate Code sections have provisions that are punitive in nature and are designed to keep fiduciaries and others dealing with trust property in line. These statutes have sharp teeth.

Take, for example, California Probate Code § 859, which concerns property taken from a trust, an estate, a minor, an elder, or other vulnerable persons through the use of undue influence, in bad faith, or through the commission of financial elder abuse.

If someone steals money or property from a trust or estate,  California Probate Code § 850 allows the complaining party to ask the Superior Court to order the thief to give the money or property back.  To discourage such theft, Probate Code section 859 provides that the wrongdoer “shall be liable for twice the value of the property recovered,” and may be liable for legal expenses incurred to recover the property, if the complaining party can prove the wrongdoer took the asset in bad faith, through undue influence, or through the commission of financial elder abuse.

In California, financial elder abuse laws apply to anyone 65 or older regardless of whether they have any diminished physical or mental capacity.

Financial elder abuse is defined as: when any person or entity “takes, secrets, appropriates, obtains or retains real or personal property of an elder for a wrongful use or with intent to defraud.”

It also includes “assisting” in the taking of any property of someone 65 or older.  The definition of “wrongful use” is: if the person “knew or should have known that this conduct is likely to be harmful to the elder.”

In addition to any actual economic damages, the elder is entitled to attorneys’ fees if he prevails.  If the action is frivolous or the elder does not prevail, he is not required to pay the other side’s attorney’s fees.

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Estate Planning Attorney Eric Ridley