Q. I recently heard the term “Springing” Power of Attorney, but I am not sure what that is. Can you shed any light on this?

A.. Sure. Broadly speaking, there are two general categories of financial Powers of Attorney: (1) those that are immediately effective upon signing by the principal, and (2) those that are only effective upon the happening of a future event, typically the incapacity of the principal.  Attorneys generally call the latter a “Springing” Power Of Attorney, because they do not become effective, or “spring into life,” until the happening of that future event. Which form a client might choose will depend upon the client’s circumstances.

Typically, a client who is healthy and younger would usually prefer a power of attorney that only springs into life in the future, when, and if, he or she is no longer able to manage his or her own financial affairs. Until that event, the client – whom we often call the “principal”— calls his own shots and only he, himself, can enter into transactions that legally bind him.

By contrast, a principal who is up in years and/or sees illness or incapacity on the near horizon, may opt to sign a Power of Attorney (“POA”) that is immediately effective, so as to dispense with the procedural requirement and corresponding delay necessary to establish the requisite incapacity that would make the POA effective, and thereby empower the designated Agent to act for the Principal.

How is incapacity determined?  Many Springing POA’s recite that incapacity is determined when two (2) physicians who have examined the principal write a letter reciting that the principal is incapable of managing his or her own financial affairs, usually due to cognitive decline, dementia or similar maladies.  Note: Notwithstanding that common requirement, I prefer to recite in POA’s that I prepare that only one (1) physician need so opine, and here’s why: Very often the need to establish incapacity in this context arises when the principal is residing in a nursing home.  Typically, in the nursing home setting, only one physician makes the rounds to check on each patient. To secure an evaluation and letter by a second physician in those circumstances can be difficult.

Another option for some clients is to begin with a Springing POA, but as the years pass and they decide they no longer wish to manage their own financial affairs, to sign a simple form reciting that the POA is now immediately effective. That signed form would then be kept together with the POA and handled as a single document, so that it is apparent to all who review it that the principal has opted to make the POA immediately effective. The other alternative, of course, is to rewrite the POA entirely so as to render it immediately effective going forward.

Know that, whichever form you choose initially, you are not forever bound by that decision. So long as you are competent, you can always revoke and revise your POA to make it fit your changing life circumstances.

Q.  I hear that Medicare is proposing a new payment arrangement for doctors that may dramatically impact access to care by seniors and other beneficiaries. Do you know anything about that?

A.  You heard correctly. Medicare is proposing a new flat rate reimbursement system for doctors who treat Medicare patients. Some worry that the plan may reduce payments to specialists and cause fewer doctors to accept Medicare patients.

The Centers for Medicare and Medicaid Services (“CMS”) claims that the proposed changes are designed to reduce paperwork by combining four levels of forms required for reimbursement into one form and one fee paid to doctors. However, under the new system, doctors who see generally healthy patients and doctors who see more complicated patients would receive the same flat fee. According to a report by National Public Radio (“NPR”)”, the flat fee would mean doctors who specialize in complex medical areas would receive a smaller reimbursement than under the current system. Doctors would receive the same amount regardless of whether they spent 15 minutes with a patient complaining of a head cold or an hour with a patient with stage 4 cancer.

As NPR reports, doctors are worried the new payment system will cause more specialists to refuse to see Medicare patients. In addition, doctors who do see Medicare patients may spend less time with them. And the implications extend beyond Medicare because private insurers often follow Medicare’s lead.

Due to the possible implications of the flat fee, advocates are asking CMS to start with a demonstration project rather than changing the entire reimbursement system for all physicians at once.

CMS is accepting public comments until September 10, 2018. The new fee structure would go into effect in January 2019.

References: To learn more about the proposed changes go to to the NPR article,  and the New York Times article of July 22, 2018.  For those who wish to go directly to the source, here is the link to the CMS proposed rule change.




Q.  A few years ago, our mother signed a Joint Tenancy Deed adding our brother to the title on her home. More recently, she signed a Last Will leaving the home equally to all three of her children. She passed away last month and we are now conflicted about who owns her home. Does the Will override the Deed?

A. Sadly, your situation is all too common. Parents sometimes forget their prior transactions, or mistakenly assume that their Last Will is controlling. Unfortunately for you and your other siblings, the Will generally does not override the Deed. Rather, the general rule is that the Deed controls.

Background:  A key feature of the Joint Tenancy Deed is that, upon death of a joint tenant, it passes full ownership by automatic succession to the survivor without probate and with a minimum of paperwork. Absent a successful court challenge, this means that your brother, as the survivor, became the owner of the home immediately upon your mother’s death.  This result is usually what people intend, and many use the JT Deed as a device to avoid probate and simplify the transfer of ownership after death.

Exceptions:  There are, however, situations where the general rule does not apply.  They include the following:

1) Where the Deed was procured by duress or undue influence.

2) Where the formalities of preparing and signing the Deed were not fully observed.

3) Where your mother later severed the joint tenancy by, for example, signing a new deed conveying all or part of the home to someone else, or by conveying the home into a trust with provisions which conflict with the JT Deed. A severance eliminates the right of survivorship, which means that at least a one-half interest in the home would then be preserved for her to convey by Will or Trust.

4) In other situations, where a homeowner adds his/her caregiver (who is not a family member) to title without observing certain necessary formalities (such as a review of the transaction by an independent attorney).  Here, there is a legal presumption that the deed was the product of undue influence and therefore voidable by a court.

Question:  Are there any facts known to you to suggest that the JT Deed was the result of your brother exercising undue influence over your mother?

Another question:  At the time of creating the later Will, did anyone check the status of title to her home?  If they had, the problem might then have then been discovered and suitably addressed.

In sum, the general rule is that the Joint Tenancy Deed overrides the Last Will. However, there are exceptions to that general rule. Where those exceptions apply, a court, asked to rule upon them, may find the Joint Tenancy deed to be entirely voidable or, alternatively, may deem the survivorship aspect as terminated.  In such cases, the right to ownership would depend upon the directions in your mother’s Last Will or her Trust, at least to the extent of a one-half interest in the property. In your situation, the full facts surrounding the preparation of both the Deed and your mother’s Last Will should be fully explored before you come to a final decision on ownership.


References:  CA Civil Code §683 (creation of joint tenancy); CA Civil Code § 683.2 (severance of joint tenancy); CA Civil Code §1575 (Undue Influence); CA Civil Code § 39 (Rescission of conveyance made by person of unsound mind).

Q.  As a grandparent, I keep hearing about CUTMA accounts, usually in discussions about gifts to grandchildren. What are they, actually?

A. CUTMA is an abbreviation for “California Uniform Transfers to Minors Act” and, as you surmise, it refers to gifts made to minors. Minors cannot own property in their own name, as the law presumes they are incapable of managing it. As a result, the law came up with a solution, and that is to permit gifts to be made to an adult for the benefit of a minor. The gift document must specify the age at which the custodian must release the asset to the minor, which is usually age 18, but may be up to age 25, if a testamentary gift.

This form of gift is usually much simpler and less expensive than creating a formal minor’s trust, which is another option under Internal Revenue Code section 2503(c).  It is also an alternative to creating a “529 Plan”, which is reserved for gifts to fund a child’s college education.

Here are some significant features about CUTMA accounts:

1) The custodian must be named in the gift instrument, and a successor custodian may also be named. It is usually best for the transferor not to name himself, so that any income earned by the gift is taxable to the minor rather than to the transferor.

2) Each gift transfer may be made only for one minor, and only one person may be the custodian.

3) Special language must be used in the transfer, such as the following:

            “ I hereby transfer the sum of $30,000 to Jerry Jones, as Custodian for Barney Smith, a minor, until age 18, under the “California Uniform Transfers to Minors Act”.

If the donor wishes to delay receipt until Barney becomes 21, the following words must be added:

           “…. until age 21 pursuant to California Probate Code section 3909.”

Note: if the gift is to be made by Will or Trust, the donor may extend to age 25. However, a gift which defers ownership until the minor is over age 21 will generally not qualify for the Gift Tax Annual Exclusion Amount (currently, $15,000 per year in 2018). Thus, it is often best to defer possession only to age 21, especially as to gifts made during the donor’s lifetime.

4) Assuming the Custodian is not the minor’s parent, any income earned by the gift is taxed as follows:  for children or students under age 24, income below $1050/year is not taxed, income from $1,050 through $2,100 is taxed at the child’s rate, but income over $2,100 is taxed at the higher rates applicable to trusts and estates (which begin at 24% in 2018).

5) The custodian has a fiduciary duty to manage the gifted asset for the benefit of the minor, but may use the funds for the minor’s benefit without court order and without the need to take into account the parent’s duty to support the minor or the minor’s other available income or property.

6) If the minor dies before the time designated for him to receive the property, it then goes to his estate.  But this may not be what the donor wanted, especially if the minor has other siblings whom the donor would then prefer to receive that gift. In that case, a gift to a trust for the minor, with provisions for successor beneficiaries in the trust instrument, may be preferable, especially in the case of a very significant gift.


Q. My 88 year old father still lives in his own home, alone. We worry about him falling and injuring himself. My husband and I have suggested that we sell both of our homes, and together purchase a larger home for all of us.  He is on Medi-Cal and we wonder whether he could retain his Medi-Cal once he sold his own home.  Any other considerations?

A. Your plan is both commendable and “doable”, but needs to be thought through carefully. Here are some of the considerations:

Medi-Cal Eligibility:  Once he sells his home he will have significant cash proceeds, which would normally make him ineligible for Medi-Cal by reason of the $2,000 resource cap for a single individual. However, Medi-Cal allows a six month grace period between the sale of one home and the purchase of another before the proceeds are counted. There should therefore be very clear documentation that the sale proceeds have been set aside, and are being held, for the purchase of a replacement home. Also, your father must receive an ownership interest in the new home equal to the value of his contribution and this interest must reflect on the deed.

Medi-Cal Estate Recovery: To avoid Medi-Cal “payback” upon his death for benefits received during life, his interest in the home would need to pass to his designated beneficiaries without probate, e.g. via a Living Trust or other non-probate transfer. Make sure that he creates an estate plan which does this.

Plan For Disposition of His Interest Upon His Demise:  If you and your husband are his only estate beneficiaries, then the job is easier. But if he has other children whom he would wish to share in his estate, then the matter becomes tricky. You may need to come up with a plan to value and purchase back his interest in your joint home when he dies, so that his other beneficiaries may thereby receive their fair shares of his estate. Also, there may be property tax implications to you, depending upon how this plan is arranged.

Co-Tenancy Agreement: It might be wise to create an agreement, setting forth your respective responsibilities for home repairs, mortgage payments, utilities, insurance and use of the common premises.

Anticipate Sale or Need to Borrow: You should anticipate future events, such as your desire to sell the home one day, or to borrow against it for major repairs, college expenses for your children, or other needs. If he is then unable to sign transaction documents, you could be in a pickle.  So, make sure that he creates a Durable Power of Attorney (“DPOA”) with comprehensive powers and that both this DPOA and Trust are in sync and allow for such events.

Plan for His Future Care Needs:  What if your father later needs to move to an Assisted Living Facility (“ALF”) or Nursing Home for care that you cannot provide at home?  How will that care be financed? Remember: Medi-Cal generally does not cover the cost of care in an ALF.   Will you commit to buying back his interest in your home in order to create funds for his care?

These are just some of the considerations that would be in play.  Essentially, you will need to think through this joint venture and anticipate change as you go along. To facilitate your good intentions, your father will need a solid estate plan which anticipates his possible incapacity, his need for higher levels of care in the future, and which fairly divides his estate upon his demise.  To assist in this effort, it would be wise to engage an attorney with special skill in working with elders.

References:  The six month Medi-Cal grace period for sale and repurchase of a home is found in 22 Cal. Adm Code 50426

If your father were also receiving Supplemental Security Income (SSI”), the grace period would only be three months. 20 CFR 416.1212(e).

Q. My wife and I mistakenly signed up late for Medicare Part B and were assessed late enrollment penalties, which continue for life. Is there any way to request that they be eliminated?

A.  Possibly, if you meet the criteria for forgiveness and apply by the new deadline of September 30, 2018.

Some background may be helpful:  Medicare generally requires that all persons turning age 65 sign up for Medicare Part B during their Initial Enrollment Period which is 3 months before and 3 months after their 65th birthday. If they fail to do so, Medicare assesses a 10% premium penalty for each year of delay, and the penalty continues for life.

By way of example, if you turned 65 in 2010 and delayed signing up for Part B until the year 2017, your monthly premium would be 70% higher. The standard base Part B premium of $134, boosted by this additional penalty, would now be $227.80 per month. That excess premium payment accumulates to over $1,125 per year.  Over the next 30 years it amounts to almost $34,000, and for you and your wife, together, it is double that amount. In a word, the cumulative effect of the late filing penalty is significant. Medicare’s rationale:  to encourage younger and usually healthier seniors to enroll when first eligible and thereby help stabilize the cost of the Part B program.

Medicare has recognized that the reason many persons delayed enrolling was due to a misunderstanding about the enrollment requirement. Specifically, seniors who enrolled in marketplace health insurance plans obtained through Covered California believed that they were in full compliance with the need to enroll, or that enrollment in Part B was unnecessary since they had private insurance coverage.  This was especially true for those who received government subsidies to help with the premium cost, as the subsidies sometimes made their premiums cheaper than the basic Medicare Part B premium.

Medicare also became aware that seniors who inquired about this issue, or asked about the elimination of penalties, were mistakenly given inaccurate information by the staff at the local social security offices.

As a result, the Center for Medicare and Medicaid Services (“CMS”) previously created an opportunity for seniors to seek equitable relief from their inadvertent late enrollment. Applicants seeking relief were originally required to apply by September 30, 2017.  Just recently, that deadline was extended to September 30, 2018. As before, seniors seeking relief must be able to show that they were enrolled in a market place health insurance plan during their Initial Enrollment Period that began after April 1, 2013 (or their Special enrollment Period if they were working or disabled), that they actually enrolled in Part B during the General Enrollment Periods in 2015, 2016, 2017, or 2018, and are entitled to premium-free Part A Medicare Coverage.

The relief will be granted on a case by case basis and the rules are complex.  If you believe you may qualify, you should visit your local Social Security Office and bring with you evidence of your enrollment in a market place health insurance plan during the Open Enrollment Period around your 65th birthday.  To make sure that the folks at the Social Security office properly evaluate your application, it might be wise to bring along a copy of this article, the “Emergency Message from Social Security”  regarding this matter, and the CMS bulletin entitled  “Assistance for Individuals with Medicare Part A and Exchange Coverage Information for SHIPs and Exchange Assisters”.

Other References:  (1) Medicare Late Enrollment Penalty 

(2) Article in Reuters: “U.S. Medicare expands offer to reverse late enrollment penalties”

(3) To assist seniors in avoiding these penalties, legislation has been introduced in Congress to simplify the notification to seniors about their need to timely enroll in Medicare. The bill is known as the BENES Act (S.1909 / H.R. 2575)  which is short for the “Beneficiary Enrollment Notification and Eligibility Simplification Act”.

Q.  My IRA is a significant part of my assets, and I wonder if there are any special considerations when planning my affairs?

A. Yes. Consider the following:

Name Beneficiaries: Remember to name both primary and contingent beneficiaries. If you are married, the primary beneficiary would typically be your spouse, but name back-up beneficiaries as well. If you and your spouse were to die around the same time, or if your spouse predeceased you and you had neglected to name contingent beneficiaries, your IRA would then go to your estate and be subject to probate.

“Stretch” Your IRA: If you do not need the funds in your IRA for retirement, but would rather preserve them for the younger beneficiaries, consider “stretching” your IRA: defer the start of your own minimum required distributions (“MRD’s”) until age 70.5, your mandatory start date, and then take out only the required minimums each year thereby leaving more in your IRA to grow tax-deferred. When you die, your beneficiary can stretch distributions over his or her lifetime and even designate a second-generation beneficiary to continue the MRD’s. The younger the beneficiary, the smaller each distribution can be under IRS rules, allowing the remaining funds to grow tax-deferred. This is called “stretching” an IRA and can result in several generations enjoying the fruits of your IRA legacy.  However, make sure that your IRA custodian permits your first and second-generation beneficiaries to stretch-out their own distributions and also permits them to name their own beneficiaries.  If yours does not, you might consider moving your IRA to a new custodian who is friendly to the stretch option.

If Beneficiary Is a Spouse: If you are married, let your spouse know that he or she has options:  upon your demise, he or she can either (a) roll your IRA over into his or her own IRA and defer the start of (“MRD’s”) until your spouse’s own age 70.5, or (b) transfer the funds to an inherited IRA and begin MRD’s within a year of when you would have turned age 70.5.  In either case, your spouse can choose to “stretch” the MRD’s over his or her own lifetime, thereby allowing the IRA to grow for the later benefit of downstream beneficiaries, e.g. your children.  Another option:  if your spouse doesn’t need the IRA to live on, he or she can disclaim all or part of it, allowing that portion to pass immediately to your children who can then stretch the MRD’s over their longer lifetimes.

Designate Separate Accounts for Each Beneficiary.  If you designate, say, your three children as your contingent beneficiaries, your Beneficiary Designation form should direct your IRA custodian to create a separate account for each child when distributions begin.  Otherwise, the MRD’s will be based upon the life expectancy of the oldest child, thereby undermining the stretch option for the younger children.

Trust As Beneficiary? : In most cases, a trust would not be named as a primary beneficiary, but might be named as a contingent beneficiary. However, if your IRA is large or if you have special reasons for not wanting your beneficiaries to have unrestricted access to the IRA funds, you might ask your attorney to create a special trust, sometimes called a “conduit trust”, to be the primary beneficiary of your IRA.

An IRA can be a valuable part of your estate plan, but the rules are complicated. Consult with your financial advisor and your attorney to learn your options and encourage your beneficiaries to do likewise down the road.


Q.  My wife and I are struggling with the financial cost of paying our Medicare premiums, deductibles and copayments. I hear there may be some government assistance available for seniors in our shoes. Do you know anything about these programs?

A. Yes. You refer to the Medicare Savings Programs (“MSP’s”) available for low-income seniors to help them with monthly Medicare premiums, and other related costs such as deductibles, coinsurance and copayments. Eligibility is based upon income and resources, and each program has its own criteria. All are designed to help seniors with their health care costs.

Note:  When considering your resources, note that some resources are counted, while some are considered exempt and are not counted.  Resources that count:  Money in the bank, stocks, bonds, and rental property.  Exempts assets that do not count:  your home, one car, household goods, burial funds and certain other assets.

There are four MSPs, each with its own income and resource caps, as follows:

(1) Qualified Medicare Beneficiary (QMB): This MSP pays for Part A and Part B Premiums, and also helps with Medicare Deductibles, Coinsurance and Copayments: Monthly Incomes must be at or below: $1,032/single or $1,392/married. This program offers the most financial assistance.

(2) Specified Low Income Medicare Beneficiary (SLMB): This MSP pays for part B premiums only; Monthly Incomes must be at or below $1,234/single or $1,666/married.

(3) Qualifying Individual (“QI”): This MSP pays for part B premiums only; Monthly Incomes must be at or below $1,386/single or $1,872/married.

(4) Qualified Disabled and Working Individuals (“QDWI”): This MSP pays for Part A premiums only; Monthly Incomes must be at or below $4,132/single or $5,572/married.

Those enrolled in MSP’s numbered (1) – (3), above, also qualify for another program, called “Extra Help” (aka the “Low-Income Subsidy”) for assistance paying for Medicare Part D prescription drug costs. However, if you do not meet the eligibility criterion for one of those MSP Programs, you can still qualify for “Extra Help” with prescription drug costs if your income and resources are under the following, somewhat higher, limits:  monthly income up to $1,517.50/single or up to $2,057.50/married couple, with resources under $14,100/single and $28,150/ married couple. For enrollees, drug costs in the Extra Help program are no more than $3.35 for each generic or $8.35 for each brand-name drug.

Even though the MSP programs are in place to help with Medicare costs, the programs are administered by the state Medi-Cal program. Enrollment is therefore handled by the county Medi-Cal agency. To apply, persons in Alameda County should call the local Medi-Cal office at 510-577-1900 (Hayward) or 510-777-2300 (Oakland). To get a jump on enrollment, you may access the 3 page application by going on line to www.dhcs.ca.gov and searching for form MC 14 A.

Studies indicate that there is a very significant under-enrollment in these programs, which means that many eligible low-income seniors are missing out on available financial assistance. To encourage eligible seniors to apply, the Social Security Administration and the Center for Medicare and Medicaid Services is in the process of sending a joint letter to over 2 million persons who appear eligible based upon their income, urging them to apply through their local Medi-Cal office.  Even if you do not receive that letter, if you feel you might qualify you should apply by contacting your local Medi-Cal office.

References:  Article on Medicare Savings Programs by Justice in Aging;  Article on Medicare Savings Programs by National Center on Law and Elder Rights; Letter from CMS and SSA to seniors who may be eligible for MSP’s and Extra Help; ACWDL 18-03 setting forth the Federal Poverty Level Incomes for 2018.

Chart by CMS showing MSP Income Limits for 2018; Medi-Cal Application Form MC 14A for the MSP Programs; Medicare’s short summary of the 4 MSP Programs; Article on the MSP Program eligibility requirements.

Medicare article on the Extra Help Prescription Drug Program; ; Application for Extra Help through the Medicare.Gov website;

Senior Resource Guide for Central Alameda County” (Castro Valley, Hayward, San Leandro, San Lorenzo), showing contact agencies and phone numbers.

Article by National Center on Law & Elder Rights highlighting 5 Facts You Should Know About the Medicare Low Income Subsidy.

Q. My wife and I have a Reverse Mortgage on our home. We have already pulled out about $100K on our loan and have another $150K available. If one of us needs nursing home care, will our Reverse Mortgage prevent us from seeking a Medi-Cal subsidy to help with the cost of that care?

A.  Not necessarily, but it all depends upon how you handle the loan proceeds from your Reverse Mortgage (“RM”). If you only draw what you need and fully spend those funds during the same month of that draw, then the RM would not prevent Medi-Cal qualification. The key is to avoid rolling over unspent funds into the next month.

If you still have unspent draws from your RM as of the 1st day of the following month, then these unspent funds will be treated as property and added to your other non-exempt resources for purposes of determining eligibility.  If they put you over the Medi-Cal resource ceilings, then they could make you ineligible, at least until they are spent.  The best plan: draw down only what you need and fully spend it in the same month as received.  Note:  Your remaining unused line of credit would not count as an available resource, so you are OK there.

HECM For Purchase:  There is a newer RM product designed to help seniors sell their existing home and purchase a replacement home.  It is called a “HECM For Purchase” or “H4P”.  Typically, seniors purchase a replacement home by putting roughly 50% down and use an H4P to pay the balance of the purchase price.  As with the traditional RM, the homeowners under the H4P program own their new home without any obligation to make mortgage payments.  Likewise, the H4P loan would be due when the seniors sell their home, move out or die. Since the H4P loan would help finance the purchase of an exempt residence, it would not adversely affect Medi-Cal eligibility.

Problem: Loan Due When Home Vacated: When the homeowner vacates the home to move into a care facility, and has been absent from the home for at least 12 months, the RM is due and payable.  This can force a sale of the home.  If the sale proceeds are more than the amount needed to fully pay the RM loan, the excess is then counted as a resource and could render the homeowner ineligible for Medi-Cal, at least until they are spent down on care. Alternatively, he or she might seek guidance from an Elder Law attorney to implement a transfer or conversion strategy to preserve or restore Medi-Cal eligibility.

Another Problem: Putting Home Into Trust: Under recent legislation, placing a home into a “Living Trust” will usually protect it from Medi-Cal “payback” after the death of the borrower. However, RM lenders may impose special requirements as a condition to allowing the RM loan to remain in effect after the home is placed into trust. So, make sure that you satisfy your lender’s requirements when you originate the RM loan and/or create your trust, so your lawyer can draft the trust in accord and secure the lender’s consent.

In short, if the RM draws are either fully spent in the month of draw or are used to purchase an exempt personal residence, you should be OK.  But, plan ahead to deal with anticipated excess sales proceeds when the home is eventually sold to repay the loan.

References:  All County Welfare Directors’ Letter No: 08-17 (4/25/2008); Medi-Cal eligibility Procedures Manual § 9D;  20 CCR § 50483.

Q.  My 91year old father has a substantial brokerage account and likes to manage it himself. Yet I worry that he could easily fall victim to financial scams. Is there anything I can do to protect him?

A. Yes, there may be. The Financial Industry Regulatory Authority (“FINRA”), which regulates firms and professionals selling securities in the United States,  recently received permission from the SEC to activate two new rules to protect senior investors:  One rule now requires member brokers to make reasonable efforts to ask investor clients, age 65 years and older, to designate a Trusted Contact Person” (“TCP”) whom the broker may contact if the broker reasonably believes that financial exploitation has occurred or may be attempted, or where the investor shows signs of dementia or diminished capacity.  Where exploitation is suspected, a companion rule authorizes the broker to place a temporary hold on disbursements of funds or securities from the customer’s accounts, pending further investigation.

These two rules are the result of a growing realization that financial exploitation of seniors is a very real problem, not only for the senior investors, but also for the brokerage firms when financial abuse is suspected. Previously, there were issues of privacy which prevented the broker from contacting family members when suspicious activity was detected, and prior FINRA rules prevented brokerage firms from halting suspected transactions without risking liability.  The scope of the problem became apparent to FINRA after it placed into service its Securities Helpline for Seniors in April 2015: during its first two years of its operation, it fielded more than 8,600 calls seeking help and recovered more than $4.3 million for seniors. For Senior Helpline, call 1-844-574-3577.

For now, the new rules only apply to new accounts or to accounts that are updated, but not yet to existing accounts. That said, it is anticipated that the rule will soon apply, as well, to existing accounts even without an update.

The new rules protect not only seniors, but also younger persons aged 18 and older, whom the broker reasonably believes has a mental or physical impairment which renders such individual unable to protect his/her own interest.

I sense from your question that your father might take offense if you asked permission to monitor his accounts. The nice thing about the new FINRA rules is that the request will come from the broker, rather than from you, and to that extent may be more palatable to your father and other senior investors. Unfortunately, in your situation and until the new rules are extended to existing accounts, your father may need to submit some kind of update to his brokerage account in order to trigger application of the new rules. Alternatively, he might just ask his broker to add you as a ‘Trusted Contact Person’.

Where the brokerage firm suspects financial exploitation, and initiates a hold on disbursements, it must immediately begin an investigation to determine whether the hold may be extended. The initial hold is limited to 15 days, but may be extended an additional 10 days if there is sufficient cause. In the interim, a hold can be extended further by court order where the facts so warrant.

Another option is to consider elder protection monitoring through services such as EverSafe. Monitoring would send suspicious activity alerts where accounts show unusual withdrawals, deposits, changes in spending patterns, changes in passwords, and identity theft. EverSafe also enables subscribers to designate trusted advocates to receive these alerts, and can assist with creating a recovery plan. For more:  www.EverSafe.com or call 1-888-575-3837.  Monitoring is on a paid subscription basis, and customers of some brokerage firms can qualify for a discount, e.g. Fidelity customers.

References:  FINRA Rule: Regulatory Notice 17-11 announced on February 5, 2018 and effective that date; Text of Rule Change

“Frequently Asked Questions Regarding FINRA Rules Relating To Financial Exploitation of Seniors”