Posted: November 2, 2018 | Press

Beginning in 2011, the baby boom population began turning 65 years old. As the elder population grows, more business owners have begun to plan for their retirement. Some owners strive to work less hours and minimize their day-to-day management of the company. Concurrently, the owner frequently does not wish to relinquish or transfer his or her ownership interest or formal leadership role in the business until his or her passing. As the owner ages, this scenario may unfortunately be further impacted by an owner suffering from diminishing mental or physical capacity. This circumstance spurs increased risk for financial elder abuse within a business setting.

Notably, most financial abuse against elderly persons is perpetrated by one individual whom is usually a family member or other trusted person with access to financial information. Closely held or family-owned businesses often hire family members or close friends to work within the business. An elderly owner taking a less involved day-to-day role in the company will necessarily have less opportunity to detect financial harm, and may be less vigilant if the abusers are perceived to be trustworthy family members or friends. Once the abuse is known to the owner, he or she might be reluctant to take action against that family-member employee, and his or her ability to mentally or physically withstand against such financial harm will continue to diminish over time. In such a case, who has the ability to protect the owner, and by extension, the business, from this financial elder abuse?

Generally, litigation must be prosecuted by the real party in interest – i.e., the person victimized by the abuse. In regards to elder abuse actions, the California legislature has expanded this scope under the Elder Abuse and Dependent Adult Civil Protection Act (“Act”). During the elder’s lifetime, the Act authorizes the filing of financial elder abuse actions by the elder’s 1) conservator; 2) trustee of his or her trust; 3) an attorney-infact; 4) a guardian ad litem; 5) another person legally authorized to seek the relief; or 6) the county adult protective services agency.

Despite the legislature authorizing elder abuse actions to be brought by third parties, actually bringing an elder abuse lawsuit while an abused elder is alive, but competent, can be very difficult if the elder does not want to bring the suit. This reluctance may stem from shame or embarrassment of being taken advantage of by someone close to them, an inability to bear their family member being held accountable for their actions, an unwillingness to report a relative or trusted confidant in efforts to protect them, or the fear of the ramifications from filing such a suit.

One of the most fundamental rights in our country is the right to make our own choices. The law supports an elder’s free will to make bad choices within the confines of the law, including not taking action against his or her abuser, provided the elder is legally competent to do so. However, the concept of competence is an imprecise one, has several formulations, and its presentation in an elder often fluctuates over time. This makes it quite difficult to find the balance between protecting elders against abuse, whilst concurrently maintaining their personal autonomy to make their own life choices.

If you suspect that an elder is the subject of abuse, the first step is addressing the concerns with the elder, and investigating the extent of the financial abuse. This investigation may reveal that filing an action for elder abuse is necessary to protect against further abuse, and to sustain the future of the company and the elder.

This action can be filed by the elder or one of the third parties noted above. If the elder has capacity and objects to the action filed by a third party (as can occur when the alleged abuser is a family member), another option is to await the elder’s passing before filing
the litigation. However, there are significant risks involved in doing so.

The most obvious risk is that the abuse will continue to be perpetrated, resulting in further and continuing damage to the elder or the company. As to the elder, this damage is typically not just financial, and often includes pain and suffering that may warrant immediate response. As to the company, delay may be untenable if continued abuse would destroy the viability of the business.

Second, waiting poses a risk that the action is time-barred. The statute of limitations for a financial elder abuse action is four years after the plaintiff discovers, or should have discovered, the facts constituting the financial abuse. If the plaintiff is aware of the abuse,
chooses to wait to file, and the elder passes away more than four years later, the action would be time-barred.

Third, the suit might be barred if the plaintiff unreasonably delays bringing the action, and it prejudices the defendant. Any delay in filing may potentially be deemed unreasonable given the delayed filing will not prevent or protect the elder from abuse, but will merely seek to
obtain a remedy, usually monetary damages or a disinheritance of the abuser from the elder’s estate, as reparations for the past abuse. The delay could be deemed prejudicial since the victim would be deceased and unable to serve as a witness in support of the abuser’s
defense. Together, these factors could bar the suit.

While the California legislature attempted to increase the ability of third parties to take up the cause of protecting abused elderly persons, the issue is not easily solved with the stroke of a pen. That is why it is important to have in place a good business succession plan,
and also to nominate trusted advisors within your estate planning documents, so they can protect your rights and interests should you become the target of financial elder abuse.


Written by Timothy J McElfish, Esq. and Shannon C. Papazis, Esq.

Shannon C. Papazis