Your client is in her mid-80s and in relatively good health except for mobility challenges. Her power of attorney (PoA) is her daughter.
Your client tells you she fears that her daughter wants her assets. She says the daughter is creating conflict among family members, leaving your client feeling isolated and anxious. Meanwhile, the daughter phones you to say her mother has been diagnosed with Alzheimer’s, though your client seems capable to you. Further, the daughter is unhappy with recent portfolio performance and asks you to invest her mother’s assets more aggressively. How do you proceed?
Financial planner, Wright Wealth Strategies Inc., Kingston, Ont.
I’m not comfortable taking instructions from someone purporting to be the owner of assets just because they say the power of attorney was invoked. I need proof.
What the client shared about her daughter could be a sign of elder abuse. I want to be the person who believes the client, asks questions, and suggests courses of action.
Covid-19 made clients more open to discussing tough topics. I’m insurance-licensed, so I have conversations about death all the time, and I talk to clients about estate planning and planning for incapacity and disability.
This client has mobility issues, so I want to know where she lives and what support she has. Covid made people more conscious of the elderly who are alone and isolated, so more community support is available, including elder abuse awareness and prevention. Clients also adapted during the pandemic to address isolation — I have 90-year-old clients who love Zoom.
I would ask the client if the daughter lives with her, or has plans for her care or living arrangements, and where other family members live.
I’d also ask how old her will and PoA are, including PoA for personal care. Do the will and PoA reflect changes arising from the pandemic? If the client is concerned about the daughter as PoA for property, would the client like to speak to her lawyer?
When it comes to dementia, I try to alert myself to issues by testing a client’s capacity during every conversation: Is this the same person I talked with at the last meeting? Dementia is a continuum, and the daughter in this case may be preventing that continuum from playing out naturally, with her mother remaining capable for some time during her illness.
Best practices include having clients name trusted contact persons, and I would have already discussed with the client who I can talk to if I notice a problem.
When I raise the issue of a trusted contact, I tell the client that I’m trying to protect them. I outline their personal circumstances and make it all about them. For example, if the client’s children live far away, we discuss who else the client sees regularly and trusts.
I may have had concerns even before the client told me the daughter wants her assets. Chances are I’d have had meetings with both of them, so I’d already know if the daughter coached or pushed her mother before the PoA was in effect. A red flag is when a client’s child calls me before a PoA is triggered and says, “I need to change how my estate is being handled.” With higher interest rates, a lot of people can’t service their debt right now, so elder abuse is only going to get worse.
Another red flag is when the client’s circle of support refers to a different lawyer or doctor than they previously had. Was the power of attorney written in the last month using a new lawyer?
When I identify concerns, I meet my client in person and also arrange a family meeting with an agenda to discuss the client’s wishes and confirm the power of attorney document. If you put the client’s needs first, that allows you to sleep at night and know you’ve done the right thing.
Principal lawyer, Lisa Feldstein Law Office Professional Corp., Markham, Ont.
The advisor needs to figure out who they’re taking instructions from: Is my client capable or not? Is a power of attorney in effect or not?
Just because a client is well groomed and articulate doesn’t mean they’re fine. And if a client has dementia, they don’t necessarily lack capacity; it’s a progressive illness.
For the financial advisor to be satisfied that the client is capable, a brief conversation isn’t enough. A meaningful conversation is required to probe the client’s logic, decision-making and memory. For example, are you having the exact same conversations with the client repeatedly?
If the client seems capable currently and there is in fact a diagnosis of Alzheimer’s, the advisor should be vigilant about identifying any out-of-character behaviour in future, such as bad judgment and poor decisions. This may mean having in-person meetings.
It would also be prudent to ask the client for the PoA document. Just because someone says the document exists does not mean it does. Or maybe the document exists but the daughter wasn’t appointed attorney, or more than one family member was appointed. If the client doesn’t have the document, the advisor may want to ask the daughter about it, informing the client before doing so. The advisor could also ask the client if she’s comfortable having a family meeting.
When issues with dementia arise, a client’s family members may worry about a lack of due diligence. An advisor can reassure them by saying, “I’ve heard you, and I’m making a note on the file. Thank you for bringing these issues to my attention so we can figure out next steps.”
A PoA document may include details about a triggering event (depending on the jurisdiction) and limitations to authority. When a triggering event is specified, the language is usually related to a capacity assessment by a doctor, not a specific diagnosis.
If no PoA is in effect, then the advisor doesn’t take instructions from the daughter. If the advisor confirms that the daughter is the PoA, the advisor may want to suggest she speak with a lawyer to understand her duties and to avoid exposing herself to liability (for example, she could mismanage funds and then be sued by beneficiaries). There are laws that guide how to make decisions as an appointed attorney under a PoA. Ontario, for example, has the Substitute Decisions Act.
The advisor can also help educate the daughter about finances; maybe she’s not financially savvy and is open to advice.
If, however, she doesn’t accept advice and the advisor is uncomfortable with her instructions, the advisor should document the situation. The advisor can also consider getting the daughter to acknowledge, in writing, that she wants to proceed without advice. This waiver would include specifics about the advice, rationale behind it, and the consequences of not following it. This would help her understand the significance of the circumstances, as well as reduce the advisor’s risk.
If the relationship can’t be remedied and breaks down, the advisor can consider a transition to another advisor, making that transition easier by providing a referral (in some circumstances, another professional may be a better fit) or documents. The advisor should also document the relationship breakdown.
It’s helpful for financial advisors to talk with clients about potential incapacity before it happens — whether from Alzheimer’s or an accident. Discuss PoA, who the client trusts, and what their wishes are so you can honour those wishes and respect the client’s autonomy. Planning ahead changes the context: the advisor avoids an ethical scenario and instead follows an action plan.