This question was answered by Andrea Daly of the McLane Law
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
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
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
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.
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