By Peter J. Strauss, Esq.

My mother named her financial adviser and his children as beneficiaries in her will. Is it legal for her attorney to allow this?

ANSWER: 

I have seen many cases where a client wants to leave money to a professional adviser –  lawyer, accountant, financial adviser, physician – and in many cases there may have been overreaching, or perhaps more.   

A person can leave her or his property to anyone under the terms of a will, trust or “beneficiary designation.” You can do whatever you want with your money: give it to a family member, a neighbor, friend, lover, your church, your lawyer, accountant or financial adviser, or the society for the protection of beetles. You can do this during your lifetime or have it take effect after your death. 

Gifts or bequests to your professional advisers, however, raise concerns about whether the gift was truly your wish or was the result of undue influence or fraud. In the final analysis, the initial test will be: is the gift or bequest natural and consistent with the person’s family situation and life history?  

If you lack capacityto understand what you are doing, it is clearly improper. And even if you are not “incapacitated,” evidence shows that loneliness or depression can create vulnerability.   

Giving money to a financial planner and his or her children – or some other professional adviser – raises serious questions. Such a person is not what is often called the “natural object of one’s bounty.” Unlike gifts to family members of friends, the law states that because there isa confidential relationship, there is a higher duty towards the recipient; the financial adviser or other professional must overcome a presumption that the gift may be suspect.  

This means that the financial adviser would have the burden of proof to show that your mother had capacity and the adviser did not unduly influence her. Several questions become important: 

• Is there a spouse or children who are being adversely affected by the gift?  
• What part of mother’s total estate is gifted to this person? 
• Did mother ever discuss her plan with you or any other family member or another trusted adviser?  
• Was there a relationship that truly existed beyond the professional one?  
• Did the financial adviser’s employer have rules prohibiting such gifts? Such a “presumption” doesn’t apply in the case of friends and neighbors, but the same concerns exist.  

Statistics show that between 60% and 70% of financial abuse is performed by family members. Steps need to be taken to monitor the financial affairs of vulnerable persons without interfering with their rights, and they do exist.

Consulting with an elder law attorney about these matters can avert financial wrongdoing and clarify the true wishes of a loved one. Call our office to make an appointment.