Financial exploitation: Florida law provides powerful help for seniors

Financial exploitation: Florida law provides powerful help for seniors

We live in one of the most popular retirement states in our nation. The Baby Boomers have reached retirement age and the “great wealth transfer” has begun. According to a study from consulting firm Accenture, when this transfer is complete, some $30 trillion (yes, with a t) will be transferred from one generation to the next.[i]

With aging comes physical and mental impairment. According to the Alzheimer’s Association, there are approximately five million Americans who have some type of dementia. A person with mild dementia may be impaired but not to the degree they would be considered legally incompetent. We all know friends and family that, due to mild physical or mental infirmities, are susceptible to being taken advantage of financially, either through intentional acts of fraud by salespersons, a breach of trust (fiduciary duty) by caregivers or trustees, or acts of undue influence by neighbors, friends or even family members. Even if a senior is competent, they can still be susceptible to exploitation. Fortunately, they have the protection of Florida law.

Florida has enacted an Elder Exploitation statute. Florida Statute section 415.1111 gives “vulnerable adults” a civil cause of action for damages, punitive damages and attorney fees and costs when they have been financially exploited. (There are also criminal penalties that the State can pursue, although these penalties will not be discussed here.) Under the law, a “vulnerable adult” is anyone older than 18 years who, due to mental, emotional or infirmities of aging, cannot provide for his or her own care or protection. “Exploitation” means a person of trust and confidence who knowingly, by “deception or intimidation,” permanently deprives the vulnerable adult of money or property.

The statute covers a broad range of conduct that could result in exploitation. Basically, if an elderly person is dependent upon you, relying upon you for advice or care, or you are serving in any other fiduciary role for a person suffering from the infirmities of aging, and you take money or property from them through “deception or intimidation,” you have committed elder abuse. The statute does not make exceptions for relatives. As a result, a son or daughter who obtains money from mom or dad by lying or acts of undue influence that rises to the level of intimidation, violates the statute.

In order to bring an action under the statute, the vulnerable person, or the vulnerable person’s guardian (or if the vulnerable adult has passed, his or her personal representative) must bring the action. Practically speaking, the requirement that the vulnerable adult or his or her legal representative bring the action against the exploiter can limit the effectiveness of the statute. Often, it is the very person who is exploiting the vulnerable adult who has the person isolated from family and friends. The exploiter is often the vulnerable adult’s power of attorney. If the vulnerable adult is isolated and cut off from family or friends, access to the vulnerable adult away from the suspected exploiter is difficult, if not impossible.

Remember, a “vulnerable adult” is not necessarily a person who is legally incompetent. If the person is incompetent, then any interested person can swear to such facts under oath and file a guardianship action to force the person to be examined. In Florida, a guardianship court appoints a three member panel, including at least one doctor, that examines the alleged incompetent person and reports to the court whether the individual is indeed incapacitated, in whole or in part. If the court determines the alleged incapacitated adult is in fact incapacitated, then a guardian is appointed unless there are other reasons why one is not required.

However, if the vulnerable adult is not known or believed to be incompetent, the options for a concerned family member or friend are limited. Under section 415, the vulnerable adult or his or her guardian may sue the alleged exploiter for elder abuse. “Guardian” is defined as not only a court appointed guardian, but also a health care surrogate, or “pre-need” guardian (an instrument that a person signs to state who he or she wishes to act as their guardian in the event of incapacity). The vulnerable adult’s power of attorney can also bring the action on behalf of the vulnerable adult.

Unfortunately, there is a “flaw” in the statute. Often, the person believed to be the exploiter holds a position of fiduciary authority for the vulnerable adult. For instance, it would not be unusual for the exploiter to be the vulnerable adult’s health care surrogate, or pre-need guardian. In these cases, the fox is guarding the hen house and there is little a concerned family member or friend can do to save the vulnerable adult from the exploiter. Under the statute, only a few persons beside the vulnerable adult have legal “standing” to sue for the vulnerable adult.

However, the statute may contain the preverbal Achilles’ heel for an exploiter. A very common but powerful instrument in estate planning is the durable power of attorney and this instrument can be irresistible for an exploiter. Florida recently overhauled the laws governing powers of attorney that makes the attorney in fact (also known as an agent) more accountable. Under Florida’s new Power of Attorney Act, section 709.2116(1), a court may review any act of a power of attorney, and may remove the agent or grant any other appropriate relief if the court finds that the agent breached his or her fiduciary duty. Furthermore, the statute provides for a wide range of persons who may petition the court to review the acts of an agent, including the guardian, trustee, and in some cases the health care surrogate, and most importantly “any other interested person if the person demonstrates to the court’s satisfaction that the person is interested in the welfare of the principal and has a good faith belief that the court’s intervention is necessary.”

If the exploiter has a power of attorney for the vulnerable adult, the power of attorney statute gives standing to others for the purpose of taking action against the exploiter. If you are a close friend or family member, you likely could go to court and show “standing” inasmuch as you are interested in the welfare of the principal and that you have a good faith belief that court intervention is needed. However, a “good faith” belief needs to be more than just a guess. It is likely going to require you swear under oath to certain facts that show the actions of the principal are not consistent with his or her normal actions, or the exploiter has taken actions to isolate the vulnerable adult from family and friends, to the point the vulnerable adult’s true status cannot be determined.

If you believe someone is being exploited, take action immediately. If you are not a close family member or friend, contact someone who is. Under Florida law, there is a legal obligation to report anyone who is exploiting a vulnerable adult to the Department of Children and Families. The hot line number is 1-800-962-2873. If you are a family member and believe your loved one is being exploited, take action immediately with competent legal counsel to review your options. Sometimes, family members wait too long and the exploiter is able to drain the vulnerable adult’s bank accounts and waste other resources. This is most often true when the exploiter is another family member. If the exploiter is not quickly stopped, the result can be devastating. The money is gone forever, and/or the cost of recovering the money is economically unfeasible.

If action is taken as soon as exploitation is discovered, there are many remedies a court can impose to recover the money or property taken. If the money taken from the elder can be traced to property bought with such funds, such as real estate, a “constructive trust” can be imposed. A constructive trust is a legal remedy the law imposes on property that is bought with funds from the victim whereby the property is essentially being held “in trust” by the wrongdoer for the victim. Other remedies include filing a lis pendens, which is essentially placing a lien on real property taken from the vulnerable adult, as well as the remedy of rescission or the unwinding of a transaction where fraud was involved in causing the transaction to take place. Ultimately, a judgment will be rendered against the wrongful person which will allow collection efforts to begin. Common collection remedies include garnishment of bank accounts, foreclosure of real property to pay a judgment, and writs of execution on personal property.

Florida is a wonderful place for retirement. Fun, sun and waves, this state has it all. Unfortunately, there are those in society that will prey on unsuspecting vulnerable adults. Sadly, such persons are not limited to strangers. Often, and more likely, the exploiter will be a friend, caregiver, fiduciary or family members. If you suspect a loved one is being exploited, take action immediately by contacting an attorney to determine the best course of action.

For more information:
Contact Alexander Douglas, Esquire
Shuffield Lowman
adouglas@ShuffieldLowman.com
Phone: (407) 581-9800

[i] http://www.cnbc.com/2014/07/22/great-wealth-transfer-will-be-30-trillionyes-thats-trillion-with-a-t.html by Cam Marston

Financial exploitation: Florida law provides powerful help for seniors

Financial exploitation: Florida law provides powerful help for seniors

We live in one of the most popular retirement states in our nation. The Baby Boomers have reached retirement age and the “great wealth transfer” has begun. According to a study from consulting firm Accenture, when this transfer is complete, some $30 trillion (yes, with a t) will be transferred from one generation to the next.[i]

With aging comes physical and mental impairment. According to the Alzheimer’s Association, there are approximately five million Americans who have some type of dementia.  A person with mild dementia may be impaired but not to the degree they would be considered legally incompetent.  We all know friends and family that, due to mild physical or mental infirmities, are susceptible to being taken advantage of financially, either through intentional acts of fraud by salespersons, a breach of trust (fiduciary duty) by caregivers or trustees, or acts of undue influence by neighbors, friends or even family members. Even if a senior is competent, they can still be susceptible to exploitation. Fortunately, they have the protection of Florida law.

Florida has enacted an Elder Exploitation statute.  Florida Statute section 415.1111 gives “vulnerable adults” a civil cause of action for damages, punitive damages and attorney fees and costs when they have been financially exploited. (There are also criminal penalties that the State can pursue, although these penalties will not be discussed here.) Under the law, a “vulnerable adult” is anyone older than 18 years who, due to mental, emotional or infirmities of aging, cannot provide for his or her own care or protection. “Exploitation” means a person of trust and confidence who knowingly, by “deception or intimidation,” permanently deprives the vulnerable adult of money or property.

The statute covers a broad range of conduct that could result in exploitation. Basically, if an elderly person is dependent upon you, relying upon you for advice or care, or you are serving in any other fiduciary role for a person suffering from the infirmities of aging, and you take money or property from them through “deception or intimidation,” you have committed elder abuse. The statute does not make exceptions for relatives. As a result, a son or daughter who obtains money from mom or dad by lying or acts of undue influence that rises to the level of intimidation, violates the statute.

In order to bring an action under the statute, the vulnerable person, or the vulnerable person’s guardian (or if the vulnerable adult has passed, his or her personal representative) must bring the action. Practically speaking, the requirement that the vulnerable adult or his or her legal representative bring the action against the exploiter can limit the effectiveness of the statute. Often, it is the very person who is exploiting the vulnerable adult who has the person isolated from family and friends. The exploiter is often the vulnerable adult’s power of attorney. If the vulnerable adult is isolated and cut off from family or friends, access to the vulnerable adult away from the suspected exploiter is difficult, if not impossible.

Remember, a “vulnerable adult” is not necessarily a person who is legally incompetent. If the person is incompetent, then any interested person can swear to such facts under oath and file a guardianship action to force the person to be examined. In Florida, a guardianship court appoints a three member panel, including at least one doctor, that examines the alleged incompetent person and reports to the court whether the individual is indeed incapacitated, in whole or in part.  If the court determines the alleged incapacitated adult is in fact incapacitated, then a guardian is appointed unless there are other reasons why one is not required.

However, if the vulnerable adult is not known or believed to be incompetent, the options for a concerned family member or friend are limited. Under section 415, the vulnerable adult or his or her guardian may sue the alleged exploiter for elder abuse. “Guardian” is defined as not only a court appointed guardian, but also a health care surrogate, or “pre-need” guardian (an instrument that a person signs to state who he or she wishes to act as their guardian in the event of incapacity). The vulnerable adult’s power of attorney can also bring the action on behalf of the vulnerable adult.

Unfortunately, there is a “flaw” in the statute. Often, the person believed to be the exploiter holds a position of fiduciary authority for the vulnerable adult.  For instance, it would not be unusual for the exploiter to be the vulnerable adult’s health care surrogate, or pre-need guardian.  In these cases, the fox is guarding the hen house and there is little a concerned family member or friend can do to save the vulnerable adult from the exploiter. Under the statute, only a few persons beside the vulnerable adult have legal “standing” to sue for the vulnerable adult.

However, the statute may contain the preverbal Achilles’ heel for an exploiter. A very common but powerful instrument in estate planning is the durable power of attorney and this instrument can be irresistible for an exploiter.  Florida recently overhauled the laws governing powers of attorney that makes the attorney in fact (also known as an agent) more accountable. Under Florida’s new Power of Attorney Act, section 709.2116(1), a court may review any act of a power of attorney, and may remove the agent or grant any other appropriate relief if the court finds that the agent breached his or her fiduciary duty. Furthermore, the statute provides for a wide range of persons who may petition the court to review the acts of an agent, including the guardian, trustee, and in some cases the health care surrogate, and most importantly “any other interested person if the person demonstrates to the court’s satisfaction that the person is interested in the welfare of the principal and has a good faith belief that the court’s intervention is necessary.”

If the exploiter has a power of attorney for the vulnerable adult, the power of attorney statute gives standing to others for the purpose of taking action against the exploiter. If you are a close friend or family member, you likely could go to court and show “standing” inasmuch as you are interested in the welfare of the principal and that you have a good faith belief that court intervention is needed. However, a “good faith” belief needs to be more than just a guess. It is likely going to require you swear under oath to certain facts that show the actions of the principal are not consistent with his or her normal actions, or the exploiter has taken actions to isolate the vulnerable adult from family and friends, to the point the vulnerable adult’s true status cannot be determined.

If you believe someone is being exploited, take action immediately. If you are not a close family member or friend, contact someone who is. Under Florida law, there is a legal obligation to report anyone who is exploiting a vulnerable adult to the Department of Children and Families. The hot line number is 1-800-962-2873. If you are a family member and believe your loved one is being exploited, take action immediately with competent legal counsel to review your options. Sometimes, family members wait too long and the exploiter is able to drain the vulnerable adult’s bank accounts and waste other resources. This is most often true when the exploiter is another family member. If the exploiter is not quickly stopped, the result can be devastating. The money is gone forever, and/or the cost of recovering the money is economically unfeasible.

If action is taken as soon as exploitation is discovered, there are many remedies a court can impose to recover the money or property taken. If the money taken from the elder can be traced to property bought with such funds, such as real estate, a “constructive trust” can be imposed. A constructive trust is a legal remedy the law imposes on property that is bought with funds from the victim whereby the property is essentially being held “in trust” by the wrongdoer for the victim. Other remedies include filing a lis pendens, which is essentially placing a lien on real property taken from the vulnerable adult, as well as the remedy of rescission or the unwinding of a transaction where fraud was involved in causing the transaction to take place.  Ultimately, a judgment will be rendered against the wrongful person which will allow collection efforts to begin. Common collection remedies include garnishment of bank accounts, foreclosure of real property to pay a judgment, and writs of execution on personal property.

Florida is a wonderful place for retirement. Fun, sun and waves, this state has it all. Unfortunately, there are those in society that will prey on unsuspecting vulnerable adults. Sadly, such persons are not limited to strangers. Often, and more likely, the exploiter will be a friend, caregiver, fiduciary or family members. If you suspect a loved one is being exploited, take action immediately by contacting an attorney to determine the best course of action.

For more information:
Contact Alexander Douglas, Esquire
Shuffield Lowman
adouglas@ShuffieldLowman.com
Phone: (407) 581-9800

[i] http://www.cnbc.com/2014/07/22/great-wealth-transfer-will-be-30-trillionyes-thats-trillion-with-a-t.html by Cam Marston

The OVDP – An Alternative to Criminal Prosecution and/or Financial Ruin for U.S. Taxpayers with Undisclosed Offshore Bank Accounts

The OVDP – An Alternative to Criminal Prosecution and/or Financial Ruin for U.S. Taxpayers with Undisclosed Offshore Bank Accounts

A 2008 Senate report revealed an annual revenue loss of $100 billion attributable to the use of undisclosed offshore bank accounts by U.S. taxpayers for purposes of evading U.S. taxes. That same year, the Tax Division of the U.S. Department of Justice (“DOJ”) launched an aggressive enforcement campaign to combat the use of foreign accounts to evade U.S. taxes and reporting requirements. Since 2008, the DOJ has prosecuted numerous holders of undisclosed foreign bank accounts, as well as foreign persons who encouraged and assisted such U.S. account holders in establishing and maintaining such accounts for purposes of evading their U.S. tax obligations.

In 2009, and as amended in 2011, 2012, and 2014, an Offshore Voluntary Disclosure Program (“OVDP”) was implemented by the IRS to encourage U.S. taxpayers to disclose the existence of their offshore accounts in exchange for a substantially diminished likelihood of criminal prosecution – NOT unequivocal immunity – and the application of a relatively ‘taxpayer-friendly’ penalty regime when compared to the penalty regime applicable to taxpayers who are detected on IRS audit or otherwise ‘outside’ the OVDP.

Impetus to participate in the OVDP increased in August of 2013 when the DOJ announced the Swiss Bank Program (“SBP”), pursuant to which Swiss banks, in exchange for non-prosecution agreements, came forward and admitted to helping U.S. taxpayers conceal foreign bank accounts, and disclosed the names of thousands of U.S. account holders to the DOJ. In October of 2015, the IRS revealed there had been more than 54,000 voluntary disclosure under the OVDP, which resulted in the collection of greater than $8 billion in taxes, penalties, and interest. The DOJ has since expanded its offshore enforcement initiative well beyond Switzerland, moving into many different jurisdictions including, but not limited to, Belize, the British Virgin Islands, the Cayman Islands, the Cook Islands, India, Israel, Liechtenstein, Luxembourg, the Marshall Islands and Panama.

Taxpayers desiring to participate in the OVDP are first required to complete preliminary forms disclosing information pertaining to their undisclosed offshore bank accounts. Based on that information, the IRS Crimi9nal Investigation Division (“CID”) determines whether the taxpayers is already under IRS audit or being investigated by the DOJ in connection with one or more undisclosed offshore accounts. If the answer is yes, then the taxpayer is not allowed to participate d in the OVDP. If the answer is no, then the taxpayers is preliminarily cleared into the OVDP pending the provision of additional and more detailed account information. After CID receives the second submission of required information from the taxpayer and formally clears the taxpayer to participate in the OVDP, the bulk of the account and other required financial information is submitted to the IRS and forwarded to a central location where it is processed and analyzed by a special IRS OVDP division. All required payments under the OVDP are made contemporaneously with this final “bulk” submission.

In addition to back taxes, civil penalties, and interest, participating taxpayers are subjected to an “Offshore Penalty” for failing to file a “Report of Foreign Bank and Financial Accounts” (“FBAR”) with the U.S. Government. The Offshore Penalty under the current version of the OVDP is generally 27.5% of the highest aggregate account balance of the undisclosed offshore bank account during the eight-year OVDP ‘covered period.’ In situations where one or more of the OVDP participant’s undisclosed offshore bank accounts are held by a financial intuition on the Treasury’s “BlackList”, i.e., a list of institutions whose personnel were found to have actively aided and abetted U.S. taxpayers in establishing such accounts, the Offshore Penalty is increased to 50% of the highest aggregate account balance.

If a taxpayer’s non-compliance were discovered by the IRS ‘outside’ the OVDP, several additional penalties could apply such as the civil fraud penalty (75% of the unpaid tax), the FBAR penalty (can be as high as the greater of $100,000 or fifty percent (50%) of the total balance of the foreign bank account per violation), and penalties for failure to file certain information returns, e.g., Form 5471, Form 8938, Form 3520, Form 3520-A, etc. (generally $10,000 per year each). A willful failure to file an FBAR can also result in criminal prosecution; that is, a person who willfully fails to file an FBAR is subject to up to five years in prison and/or a maximum fine of $250,000. In all cases, each failure to file for a particular tax year is a separate violation.

In addition to the DOJ’s offshore enforcement initiatives, the U.S. Treasury has recently entered into a series of bi-lateral ‘intergovernmental agreements’ (“IGAs”)with a legion of countries under which the party countries have agreed to share information concerning holders of bank accounts on their respective soil that are citizens or tax residents of the other party. The rollout of the information exchanges under many of these IGAs is imminent. Last year the DOJ hired more than 80 new attorneys, and has developed and implemented an international enforcement training series to ensure their attorneys are conversant with offshore enforcement practices and procedures.

The takeaway from all of this for U.S. taxpayers holding undisclosed offshore bank accounts is that there is simply nowhere to hide anymore. You will eventually get caught! The failure to take advantage of the relative safe harbor of the OVDP prior to detection by the IRS and/or the DOJ is likely to result in criminal prosecution and/or financial ruin.

ShuffieldLowman’s Janet Martinez Named  To the List of 25 Influential Hispanics in Central Florida

ShuffieldLowman’s Janet Martinez Named To the List of 25 Influential Hispanics in Central Florida

ORLANDO, Florida — Janet E. Martinez, firm partner of Shuffield, Lowman & Wilson, P.A. , was recently selected by the Hispanic Chamber of Commerce of Metro Orlando (HCCMO) as one of their 25 Influential Hispanics in Central Florida, as published in the HCCMO’s Visión Magazine.

In 2012 the HCCMO began recognizing 25 individuals that have excelled through their leadership and involvement within the community in an annual magazine edition that has become very popular and acclaimed by the HCCMO members and business community. The list of honorees are chosen by the Visión Magazine Editorial Committee.

Janet E. Martinez, law firm partner of ShuffieldLowman, was recently selected by the Hispanic Chamber of Commerce of Metro Orlando (HCCMO) as one of their 25 Influential Hispanics in Central Florida. Celebrating with Janet are firm partners (L to R) Lynne Wilson and Greg Meier, (Janet Martinez), Janet’s husband Gene Huskey, and firm partner Alex Douglas.

Janet E. Martinez, law firm partner of ShuffieldLowman, was recently selected by the Hispanic Chamber
of Commerce of Metro Orlando (HCCMO) as one of their 25 Influential Hispanics in Central Florida.
Celebrating with Janet are firm partners (L to R) Lynne Wilson and Greg Meier, (Janet Martinez), Janet’s
husband Gene Huskey, and firm partner Alex Douglas.

Martinez, head of the firm’s DeLand office, earned her law degree (J.D., 1978) from Yale Law School and her undergraduate degree from Vanderbilt University (B.A., 1975, summa cum laude.) She brings clients more than 30 years of experience in estate planning, with emphasis on complex tax issues, business succession planning, estate and trust administration, charitable giving, international tax and estate planning, non-profits, and business law.  Martinez speaks several foreign languages, but focuses on a bilingual practice including Spanish to best serve the growing Spanish-speaking clientele in the area.  She has been published both nationally and internationally.

Especially noted for her leadership in the Volusia and Flagler communities, including serving as the treasurer of the Volusia United Way Women’s Initiative, the president of the Volusia County Women’s Network, and as a member of the Latino Advisory Committee to the Volusia County School Board, her contributions also extend to serving as Legal Advisor to the Hispanic Chamber of Commerce of Metro Orlando. In addition, she is known for her pro bono work with Alianza de Mujeres Activas, Inc. a Northwest Volusia County group focused on generating food and funding for women and families in need. The Volusia County Bar honored her with the 2007 Volusia County Bar’s Above and Beyond award. Martinez also brings pro bono leadership to the Alliance for International Reforestation, Inc., an international organization dedicated to reforestation in poverty stricken areas of Guatemala and Nicaragua.  She has been recognized multiple times for her leadership throughout the region.

ShuffieldLowman’s four downtown offices are located in Orlando, Tavares, DeLand and Daytona Beach.  The firm is a 37 attorney, full service, business law firm, practicing in the areas of corporate law, estate planning, real estate and litigation.  Specific areas include, tax law, securities, mergers and acquisitions, intellectual property, estate planning and probate, planning for families with closely held businesses, guardianship and elder law, tax controversy – Federal and State, non-profit organization law, banking and finance, land use and government law, commercial and civil litigation, fiduciary litigation, construction law, association law, bankruptcy and creditors’ rights, labor and employment, environmental law and mediation.

The Hispanic Chamber of Commerce of Metro Orlando (HCCMO) is a nonprofit organization whose mission is to provide leadership and support the economic development of the Hispanic business community of Metro Orlando. Since 1993, HCCMO has strengthened the Central Florida Business Community by providing quality programs through our business model of networking, business development, exposure and recognition.