Pennsylvania has enacted a new law to criminalize “financial exploitation” of an older adult or care-dependent person (OA/CDP) by family members or other persons in a position of trust.

Act 48 of 2021 (HB 1429) adds § 3922.1 to the state Crimes Code (Title 18). This new section only applies in situations where the perpetrator is a family member or other person in a position of trust to the OA/CDP victim. It targets individuals who use a position of trust to exploit the OA/CDP and increases the penalties that would otherwise be available. The law also grants jurisdiction for the Attorney General to investigate and prosecute cases involving more than $20,000.

 

What is the Crime of Financial Exploitation of an OA/CDP?

The crime of financial exploitation of an OA/CDP is defined in a long, rambling, confusing definition section of the new law. I have reproduced this section in Appendix 1 below. The definition’s opaque language is subject to interpretation.

Here is my attempt at a simplified translation of the statutory language:

The crime of financial exploitation is committed when a family member or other person in a position of trust wrongfully or without authorization takes or attempts to take money, property or other assets from an OA/CDP. This includes obtaining or attempting to obtain control of an OA/CDP’s asset through deception, intimidation or undue influence or by converting or attempting to convert the asset to deprive the OA/CDP of its ownership, use, benefit or possession.

 

Who is a Person in a position of trust to an OA/CDP?

The statute creates six categories of persons who are included as being in a position of trust, as follows:

“Position of trust.”  A person who meets any of the following criteria:

(1)  The person is the parent, spouse, adult child or other relative by blood or affinity of an older adult or care-dependent person.

(2)  The person is a joint tenant or tenant in common with an older adult or care-dependent person.

(3)  The person has a fiduciary obligation to an older adult or care-dependent person, including through the power of attorney, guardianship, custodianship or conservatorship or as a trustee or personal representative.

(4)  The person receives monetary or other valuable consideration for providing care for an older adult or care-dependent person.

(5)  The person lives with or provides some component of home care services on a continuing basis to an older adult or care-dependent person, including a neighbor or friend who does not provide home care services on a compensated basis but has access to the older adult or care-dependent person based on the relationship.

(6)  The person is a current or former sexual or intimate partner with an older adult or care-dependent person.

My comment: The class of persons included as being in a position of trust is very broad, and not without ambiguity. There is no definition provided for some key terms such as “care” and “home care services.”

Would a cleaning lady or someone who mows the lawn on a regular basis be providing care? Would the financial exploitation statute cover the conduct of a non-related contractor who scams the OA/CDP out of money to repair their roof? How about a neighbor who helps occasionally with home maintenance?

Financial investment advisors who have a fiduciary duty to an OA/CDP are probably included as persons in a position of trust.

 

Penalties

The penalties for violations of the new financial exploitation statute range from up to five years imprisonment if the amount involved was under $2,000 to up to 20 years if the amount was over $500,000 or involved a course of conduct causing loss to two or more older adult or care-dependent victims. For more information on the penalties see Appendix 2 below.

 

Power of Attorney Presumption

Act 48 directly addresses powers of attorney by creating a presumption that A person acting under a power of attorney for an older adult or care-dependent person is presumed to understand the legal obligations under 20 Pa.C.S. Ch. 56 (relating to powers of attorney).

[For information on a power of attorney agent’s obligations under Chapter 56, see my July 2018 article Accounting for your Actions as Power of Attorney. See also, Matt Parker’s April 2017 article Does Your Power of Attorney Have “Hot Powers”?]

Before you begin to act as someone’s power of attorney, get expert professional advice regarding your legal obligations. Protect yourself from potential civil and criminal liability by getting advice before you act.

Note: Chapter 56 also provides a limited immunity for third parties (e.g., banks) that accept the validity of a power of attorney document. See Appendix 3 below.

 

Concurrent Jurisdiction

District attorneys have the right to investigate and institute criminal proceedings for violations of this new section. Act 48 gives the PA Attorney General concurrent jurisdiction if the amount involved exceeds $20,000.

 

Some Concerns

Act 48 is a criminal statute. My expertise is in elder law and estate planning not criminal law. I will be very interested in seeing how the district attorneys, Attorney General and judges in our Commonwealth who enforce our criminal laws will interpret its provisions.  Certainly, there are many instances involving the theft of assets of older and care-dependent individuals. Family members are often the perpetrators. I hope Act 48 has the effect of deterring at least some of that type of criminal conduct. And if the new law makes it easier to successfully prosecute those cases, that is good.

But from my elder law and estate planning perspective, this new law raises some concerns.

  1. No Exception for Good Faith Transfers. Sometimes an asset owned by an OA/CDP is transferred by a person in a position of trust who is acting in good faith but without actual legal authorization. This situation typically arises when an older adult is no longer competent to consent at the time of an asset transfer. Transfers of assets are often appropriate and sometimes necessary to help achieve an OA/CDP’s planning needs. There are many situations where transfers are required in order to qualify for governmental benefits, preserve assets for special needs, reduce taxes, support a spouse or other family member or for other legitimate purposes. Such transfers may be wholly in line with an older adult’s pre-incapacity planning goals. A family member, often acting as agent under power of attorney, is doing what they believe Dad or Mom would have wanted. But a good faith transfer may violate Act 48 because of the complicated requirements of the power of attorney statute (Chapter 56). Chapter 56 limits the authority of agents to engage in certain transactions unless the power of attorney expressly grants the agent the authority. (See 20 Pa.C.S. § 5601.4.) It is easy for an otherwise well-meaning agent to unwittingly violate this limitation. The trusted agent may be unaware of this technical lack of authority, but Act 48 establishes a presumption that they understand the relevant law (Chapter 56). In my experience, many older adults want their agents to have the authority to act in a manner that will facilitate eligibility for public benefits programs. Act 48 puts well-intentioned family members in criminal jeopardy for following the older adult’s otherwise legal intentions. [Note that Chapter 56 does recognize eligibility for public benefits and minimization of taxes as factors an agent should consider in meeting the agent’s duty to preserve the principal’s estate plan. See, 20 Pa.C.S. 5601.3(b)(6).] Shouldn’t the actions of a trusted person who is trying in good faith to honestly implement the older adult’s intentions be excluded from criminality?
  2. A disincentive for potential caregivers. The safest course of action for a potential caregiver is to avoid getting involved. Will the threat posed by this broad new criminal law deter some well-intentioned people from serving as agent or caregiver for an OA/CDP who needs their help? Some may decide it is just too risky to get involved. Is this good public policy? I realize that it is difficult to balance the policy objective of encouraging more people to be caregivers while discouraging them from exploiting the people for whom they are caring. Act 48 is all about deterrence and punishment. It targets family members (the most likely caregivers) for enhanced punishment. It is likely to discourage at least some potential agents and other caregivers.
  3. Encouraging Unwarranted Allegations. Family discord can generate unwarranted allegations of exploitation. I’ve seen this happen many times in my career as an elder law attorney. Does Act 48 give disgruntled family members another weapon with which to wage emotional war on each other? My fear is that some good people, acting with benevolent intent, could face criminal investigation and possible prosecution under Act 48 due to poor family relationships.  Or they may just decline to get involved if there is a history of family discord.
  4. Increase in Resort to Court. One additional consequence of Act 48 may be the filing of more guardianship proceedings. More agents who are contemplating the transfer of a principal’s asset for public benefit or other appropriate purpose may seek to protect themselves from any criminal liability by seeking advance court authorization through the establishment of a limited guardianship. Unfortunately, court proceedings can be de-humanizing, costly and slow-moving.
  5. Unfounded Presumption. Act 48 establishes a presumption that a person acting under power of attorney understands the legal obligations set out in Chapter 56 of the Probate, Estates and Fiduciaries Code. In reality, an understanding of Chapter 56 is unlikely unless the individual is an elder law or estate planning lawyer who has spent many hours studying this area of the law. Establishing a presumption that is so out of touch with reality is troublesome especially given the criminal context and severe penalties of the Financial Exploitation law.
  6. Lack of Clarity. The section is broad and full of ambiguity, undefined terms and gray areas.

Act 48 creates pitfalls and peril for anyone providing care involving financial or property matters for an older adult or care-dependent person. If you find yourself in that situation, be very careful to follow all legal obligations, and get expert guidance before you act.

If you are considering granting someone the authority to act under power of attorney on your behalf, be sure to have the document prepared by a lawyer who is an expert on powers of attorney. It is best to seek the assistance of an experienced elder law and estate planning attorney early so no one will need a criminal lawyer later.

 

Appendix 1 Definition of Financial Exploitation

“Financial Exploitation.” The wrongful or unauthorized taking or attempt to take by withholding, appropriating, concealing or using the money, assets or property of an older adult or care-dependent person, including any act or omission taken by a person, including through the use of a power of attorney, guardian, custodian, trustee, personal representative or conservator of an older adult or care-dependent person or by an individual who stands in a position of trust and confidence with an older adult or care-dependent person, including business transactions to:

(1)  obtain or attempt to obtain control, through deception, intimidation or undue influence, over the older adult’s or care-dependent person’s money, assets or property to deprive the older adult or care-dependent person of the ownership, use, benefit or possession of the older adult’s or care-dependent person’s money, assets or property; or

(2)  convert or attempt to convert money, assets or property of the older adult or care-dependent person to deprive the older adult or care-dependent person of the ownership, use, benefit or possession of the older adult’s or care-dependent person’s money, assets or property.

Appendix 2 Penalties

The offense of financial exploitation of an older adult or care-dependent person is graded as follows:

  • If the amount involved is at least $500,000 or the perpetrator participated in a course of conduct resulting in the loss of property of two or more older adults or care-dependent persons, it is a felony of the first degree, punishable by a fine of up to $25,000 and a prison term of not more than 20 years.
  • If the amount involved is at least $100,000 but less than $500,000, it is a felony of the second degree, punishable by a fine of up to $25,000 and a prison term of not more than 10 years.
  • If the amount involved exceeds $2,000 but is less than $100,000, it is a felony of the third degree, punishable by a fine of up to $15,000 and a prison term of not more than 7 years.
  • In all other cases, it is a misdemeanor of the first degree, punishable by a fine of up to $10,000 and a prison term of up to 5 years.

 

Appendix 3 Third Party Acceptance of a Power of Attorney

Pennsylvania law on powers of attorney contains a limited immunity for third parties who accept the validity of the document. Section 5608 of Chapter 56, Title 20 provides in part:

(c) Genuineness.–A person who in good faith accepts a power of attorney without actual knowledge that a signature or mark of any of the following are not genuine may, without liability, rely upon the genuineness of the signature or mark of:

(1) The principal.

(2) A person who signed the power of attorney on behalf of the principal and at the direction of the principal.

(3) A witness.

(4) A notary public or other person authorized by law to take acknowledgments.

(d) Immunity.–A person who in good faith accepts a power of attorney without actual knowledge of any of the following may, without liability, rely upon the power of attorney as if the power of attorney and agent’s authority were genuine, valid and still in effect and the agent had not exceeded and had properly exercised the authority that:

(1) The power of attorney is void, invalid or terminated.

(2) The purported agent’s authority is void, invalid or terminated.

(3) The agent is exceeding or improperly exercising the agent’s authority.

 

Related Resources

Pennsylvania’s Older Adults Protective Services Act (non-criminal) contains a different definition of “exploitation.” See, Section 10225.103 – Definitions, 35 Pa. Stat. § 10225.103.

Financial Exploitation of Older Adults Study Report, Pennsylvania Department of Aging, September 2020

Many states have laws which specifically address the financial exploitation of older adults. For example,  Illinois has a statute that is similar to the new law in Pennsylvania. See, Financial Exploitation of an Elderly Person or Person with a Disability,  720 ILCS 5 17-56.

Christopher W. Morgan, Elder Financial Exploitation: How Jurisdictional Uniformity will Aid in the Prevention and Punishment of Abuse. ACTEC Foundation (last accessed August 11, 2021

In addition to Act 48, on June 30th the Governor signed House Bill 1431 (Act 49) – which adds a new section to the Crimes Code that defines as abuse and establishes as a misdemeanor the use of audio or video images of a care-dependent persons by a caretaker with intent to ridicule or demean.

Marshall, Parker & Weber is open and available to help you assess what documents you may need or whether your current plan is in good shape. Call us at 800-401-4552 to schedule an appointment. You can also check out our portal for complimentary blog articles, videos and webinars.
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