California Elder Financial Abuse

Financial Abuse of Elders is a Crime in California

An elder experiencing financial abuse is one who lacks capacity is a person who does not have the ability to understand and appreciate the rights, duties, responsibilities, and consequences of a decision (Probate Code: 812). To lack capacity, a person’s inability to understand must arise from a demonstrated deficit in cognitive functioning. Undue influence consists of persuasion that exceeds accepted standards and approaches the boundaries of coercion (Civil Code: 1575). Elders who are incapacitated or who are subject to undue influence are particularly vulnerable to exploitation.

Existing law protects elders against financial abuse by allowing them to demand the return of property fraudulently taken, and if the property is not returned, to sue the taker not only for the return of the property, but also for the expense of the lawsuit. Unfortunately, this remedy is not currently available to incapacitated or unduly influenced elders.

Existing law provides that someone who lacks capacity or who is unduly influenced may undo a transaction through rescission. While rescission provides an elder with a legal mechanism for recovering the property, if the defendant refuses to return it, the elder must bear the cost of hiring a lawyer. Not only can this be expensive, but a lawsuit can delay the recovery by a year or more. Under current law, a person who takes an incapacitated or unduly influenced elder’s property is actually rewarded for delaying its return because the worst that can happen is that the court will order its return. In addition, since most lawsuits are resolved by compromise, the taker is typically able to retain some of the property.

SB 1140 corrects this problem by authorizing incapacitated and unduly influenced elders to recover their property and their legal expenses just like financially abused elders. Thus, those who take such property would be encouraged to quickly return it so as to avoid paying the elder’s legal expenses.

Bill Summary

SB 1140 authorizes incapacitated and unduly influenced elders and dependent adults to recover their property and the expense of hiring a lawyer if they must file a lawsuit.

The bill also clears up several other technical ambiguities in the current law by:

• Permitting recovery when the property taken is part of an elder’s trust;
• Permitting recovery when the property is taken through an agreement, gift, or by will;
• Permitting recovery from the employer of a person who takes the elder’s property by means of his employment;
• Permitting an elder to bring such an action within four years of when the loss should have been known.