Protecting the Elderly from Financial Exploitation and the Newly Revised Exploitation Statute

R. Craig Harrison
Lyons, Beaudry & Harrison, P.A.
1605 Main Street, Ste. 1111
Sarasota, Florida
Florida Board Certified:
Wills, Trusts and Estates

Copyright ©2015 by R. Craig Harrison, Lyons, Beaudry & Harrison, P.A.

Prepared for Guardianship Intensive Program, March 27, 2015

Protecting the Elderly from Financial Exploitation
And The Newly Revised Exploitation Statute

I. Protecting the Elderly from Financial Exploitation: The Dilemma and Solution, Part I and Part II

My articles, Protecting the Elderly from Financial Exploitation: The Dilemma and Solution, Part I and Part II, were published by the Florida Bar Journal in June and July/August of 2014. These articles discuss the policy of the Florida Courts not to protect persons with diminished capacity from exploitation by undue influence, but a person can protect himself or herself from financial exploitation with the use of trusts or other instruments.

The topics addressed include:

1. The risk and common perpetrators of exploitation
2. Courts do not protect persons with diminished capacity from exploitation by undue influence
3. Capacity versus diminished capacity
4. Role of the Department of Children and Family Services
5. Limited prosecutions for financial exploitation
6. Limited civil remedies for financial exploitation
7. Role of the attorney in protecting the client from exploitation

II. The Newly Revised Exploitation Statute.

A. The expansion of Acts constituting Financial Exploitation.

Criminal prosecutions for financial exploitation are governed by F.S. 825.103(1). Section 825.103(1) established separate crimes for financial exploitation. The revised Section 825.103(1) expands the matters subject to criminal prosecution and decreases certain burdens of proof. The revised exploitation statute expands the criminal liability of fiduciaries, adds joint account holders as potential offenders and includes those who negligently manage needed assets of the elderly as perpetrators.

Exploitation of the Incapacitated

Section 825.103(1)(b) requires the State to prove that the asset of the elderly person was obtained when the perpetrator knew or should have known that the elderly person lacked capacity. This provision was not changed.

Note: 825. – Includes: “conspiring with another” to obtain

415 – Not have conspiracy language.

1. Exploitation without Deception or Intimidation

Section 825.103(1)(a) did not require the finding of capacity, but required the State to prove that the perpetrator obtained the assets of the elderly person by “deception or intimidation”. This element set the evidentiary bar high and limited successful prosecutions.

The revised statute deletes the “deception or intimidation” requirement. Now, all that is required to show exploitation is that a person, who is in a position of trust or confidence with the elderly person or has a business relationship with the elderly person, knowingly obtains the elderly person’s property with the intent to temporarily or permanently deprive the elderly person of that property.

Not require proof of “Deception or Intimidation”
825.Requires proof of “Deception or Intimidation”

1. Position of trust or confidence or business relationship.
2. Position of trust or confidence

1. Exploitation by Fiduciaries

The revised exploitation statute expands Section 825.103(1)(c) to include individual trustees. Now, exploitation of an elderly adult includes the breach of a fiduciary duty to the elderly person by a guardian, trustee or attorney-in-fact which results in an “unauthorized appropriation, sale or transfer” of the elderly person’s property.

The revised exploitation statute defines “unauthorized appropriation” to mean when the elderly person does not receive reasonably equivalent financial value in goods or services, or when a fiduciary violates the statutory duties described below.

For attorney-in-facts (appointed under chapter 709), the exploitation occurs if the agent violates his or her duties by committing fraud in their appointment, abusing their powers, wasting, embezzling, or intentionally mismanaging assets of the principal (or beneficiary), or simply “acting contrary to the principal’s sole benefit or best interest”. Although the revised exploitation statute limits the criminal liability to individual trustees, there is no such limitation under a power of attorney.

As to guardians and individual trustees (appointed under chapter 736 or chapter 744), exploitation occurs if the guardian or trustee, violates his or her duties by committing fraud in obtaining their appointments, abusing their powers, wasting, embezzling or intentionally mismanaging the assets of the ward or trust beneficiary. The statute does not make it a crime for a guardian or trustee to act “contrary to the principal’s sole benefit or best interest.”

415 – More expansive definition of fiduciaries and includes all trustees.

825. Defines “unauthorized appropriation, sale or transfer”

1. Joint and other Accounts

The revised exploitation statute added a fourth area of exploitation which includes the misappropriating, misusing or transferring of money from an account belonging to the elderly person without authorization in which the elderly person placed funds, owned funds or who was the sole contributor to the account. See Section 825.103(1)(d). These accounts include personal accounts, joint accounts established for the sole benefit of the elderly person as well as convenience accounts.

1. The Negligent Use of Needed Funds

The revised exploitation statue also adds a fifth area of exploitation. The intentional or negligent failure to effectively use the elderly person’s income and assets for the necessities required for that elderly person’s support and maintenance by “a caregiver or a person who stands in a position of trust and confidence” with the elderly person is now defined as exploitation. Section 825.013(1)(e).

B. The Presumption of Exploitation.

Section 825.103(2) creates a presumption of exploitation if the cumulative funds transferred exceed $10,000, the victim was age 65 or older, the transfer is made to a non-relative who the victim knew for fewer than two (2) years before the first transfer occurred and the victim did not receive reasonably equivalent financial value in goods and services.

It makes no difference if the parties to the transaction denoted the transaction as a gift or a loan (unless the persons are in the business of making loans). Valid loans, which are in writing and include definite repayment dates, are excluded. However, if a payment of the loan is in default in whole or in part for more than 65 days, the presumption still applies. Bona fide charitable donations are excluded from the presumption.

C. Civil Liability for Exploitation

Chapter 825 does not by itself create a civil remedy for exploitation. However, Section 772.11, Florida Statutes (Civil Theft and Exploitation Statute) specifically creates a civil cause of action for a violation of Section 825.103(1). In fact, the revised exploitation bill expressly reenacted Section 772.11 for the “purpose of incorporating” Section 825.103 revisions therein. (The above articles address the cause of action “by a vulnerable adult” against the perpetrator under
Section 415.1111, Florida Statutes.)

The Civil Theft and Exploitation Statute provides that any person who proves by clear and convincing evidence that he or she has been injured in any fashion by a violation of Section 825.103(1) has a cause of action for threefold the actual damages sustained, plus costs and reasonable attorney’s fees. (A defendant is entitled to attorney fees only if the claimant “raised a claim that was without substantial fact or legal support.”) Although the statutory revisions seem to have been focused on the criminal aspects of exploitation, the revised statute may have created serious financial consequences to an individual trustee, guardian, attorney-in-fact, joint account holder, caregiver or simply a “person who stands in a position of trust and confidence” with the elderly person.

A potential action by the elderly adult under Section 772.11 may have the same issues as an action brought under Section 415.1111. If the elderly person has capacity, he or she may not wish to bring an action under Section 772.11 and may object to anyone else bringing such an action on his or her behalf.

However, Section 772.11 is not limited to injuries suffered by the elderly adult. Although Chapter 825 relates solely to the exploitation of the elderly adult, Section 772.11 creates a cause of action in any person who has been injured by a violation of Section 825.103(1). Who may be injured “in any fashion” by the gifting, transfer or negligent use of needed funds, or actions taken “contrary to the principal’s sole benefit or best interest”, or by the breach of fiduciary duties?

This could mean that if a trustee, guardian or attorney-in-fact violates their fiduciary duties in making a gift or other disposition of an asset, a beneficiary of the trust, estate or account may have a cause of action against the fiduciary under Section 772.11 with respect to such transfers. The same can be said about any financial transaction which diminishes the elderly adult’s estate, which was not made in exchange for reasonably equivalent financial value.

Will the expansion of exploitation under Chapter 825 provide another tool for estate and trust beneficiaries? The revised exploitation statute became effective on October 1, 2014 and its civil ramifications are just being examined.