A Fiduciary Relationship

By Elder Law Attorney Rick Law.  Rick is the founder and managing partner of the Estate Planning Center at Law Elder Law,  a multi-generational law firm in Aurora, IL.

In certain relationships, a fiduciary relationship may exist.  According to Charles Golbert, Deputy Cook County (Illinois) Public Guardian in charge of the Adult Guardianship Division, a fiduciary relationship can also be found as a matter of fact. Courts consider such factors as

  • the degree of kinship between the parties;
  • disparity in age;
  • disparity in health;
  • disparity in mental conditions;
  • disparity in education and/or business sophistication;
  • the degree of trust placed in the dominant party; and
  • the degree of dependence or reliance placed in the dominant party.

The idea that someone can create a fiduciary responsibility by disparity of knowledge and a whole host of other things, even though the person may not be in what would be considered the traditional law of fiduciary, is very important. If your lawyer can show, based on the facts and circumstances, that a fiduciary duty existed, the burden shifts to the other side—to the fiduciary.

So now, from an evidentiary standpoint and from a trial strategy standpoint, the lawyer does not have as big a problem as they thought they had; they now have to spend substantial amounts of time convincing the court of differences between individuals that should create a fiduciary obligation, even though it’s not a traditional fiduciary obligation like lawyer-client accounts or client trust officer accounts.

Mr. Golbert has proved fiduciary obligations, not just in the difference between sophistication and education, but even in caregiver situations. He has also successfully argued that this person bathes this person every day. This person has access to all of the stuff in the house. This person had a fiduciary obligation because of the high level of trust and care between the two and the vulnerability of the individual who was cared for.

Once your lawyer has a fiduciary duty by fact patterns, they can argue undue influence. For example, if the client is not incapacitated but is vulnerable and is taken in by a con man and tricked into signing away the house, that could be undue influence. The courts look at the disparity in needs, health, and education and business sophistication, the degree of trust placed on the dominant party and dependents or reliance, etc.

There’s a story I often recount involving a war hero from church who tricked an elderly couple out of $220,000 by using non-recourse promissory notes. If your lawyer were to apply a fiduciary duty by fact pattern, suddenly the defense of the elderly couple may be more promising.

A lawyer might have thought that if the couple duped out of their life savings are found to have been competent at the time they signed the notes, there is no recourse. However, once again, Golbert suggests that a fiduciary relationship can be found in this case based on a disparity in education and/or business sophistication.

There is often a fiduciary relationship between home-care workers and the person they take care of because of the degree of dominance and reliance and trust for somebody who is bathing a person, taking the person to the bathroom, and feeding the person. So lawyers can establish a

fiduciary relationship for home-care workers.

Once a fiduciary relationship is established, either by law or by fact, the defendant now bears the burden of proving that the transaction was objectively fair and reasonable and of benefit to the ward. Now, the transaction will be presumed invalid.

Creating a nontraditional fiduciary relationship is a great way to protect the client and to aggressively go after the perpetrator of the financial scam. It can be a lifesaver when the elderly victim is in the early stages of dementia and is vulnerable, but not yet incapacitated.

However, getting the victim to report the exploitation or go along with the prosecution of the exploiter is often a battle itself.

If you’re ready to start getting your estate in order and secure your assets for the “worst-case” scenario, please give our office a call at 800-310-3100. Your first consultation is absolutely free.  We’ll let you know what steps you need to take, right now, to protect yourself and your family.  Call now.

Sincerely,

Rick L. Law, Attorney, Estate Planner for Retirees.

Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future.  Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care.  Call 800-310-3100 for your free consultation now!

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