This question was answered by Andrea Daly of the McLane Law Firm
Q: I am a financial planner, and I suspect an elderly client may no longer have the capacity to make sound financial decisions. She has shared with me that she does not trust her family with her financial decisions. How can I protect her interests?
A: First, make sure the client has estate planning in place, including a durable power of attorney (DPOA). A DPOA allows the client to designate an individual to handle her financial affairs when she can no longer do so. Even a client who is declining may have the capacity to execute estate planning documents. If she does not have estate planning in place, have her see a doctor to confirm her capacity. If she does have capacity, have her see an estate planning attorney promptly.
Second, a conservatorship may be a way to protect your client's assets if she is vulnerable but still has the ability to understand her circumstances. This is an option to consider when it is questionable whether the client could execute a DPOA. The probate court requires that the individual voluntarily choose her conservator. A petition must be filed, and a hearing will be held in order to make the appointment valid.
Finally, when a client has deteriorated but does not have a DPOA, or when you have concerns about giving the person named in the DPOA the authority to handle the finances, a guardianship may be necessary. Any interested person can petition the probate court to appoint a guardian, and a guardian will be appointed if there is evidence that the proposed ward lacks the capacity to handle her own affairs. The court determines whether an individual lacks capacity by examining her functional, not medical, limitations, such as her ability to prepare meals, take medication, and handle her finances.
Going forward, consider discussing potential incapacity issues with all your clients at the initial stages of your relationship. Most clients would likely appreciate the importance of addressing this issue up front so that you can provide protection if and when the time comes. You may be able to obtain written authorization to release confidential information to a designated family member or close friend should it become necessary later on. If and when the need arises, you can consider cautiously approaching that designated individual to express concerns and encourage further action.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.