ethical and practical issues dealing with elderly donors and clients laura hansen dean, j.d.pamela...
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ETHICAL AND PRACTICAL ISSUES
DEALING WITH ELDERLY DONORS AND CLIENTS
Laura Hansen Dean, J.D. Pamela Jones Davidson, J.D.The University of Texas at Austin Davidson Gift Design
Planned Giving Council of HoustonApril 24, 2014
Definitions and Standards
Legal Capacity: The mental ability to understand the nature and effects of one’s acts
Testamentary Capacity: The mental condition a person must have when preparing a will in order for the will to be considered valid; this capacity is often described as the ability to recognize the natural objects of one’s bounty and the nature and extent of one’s estate.
Lack of Capacity
May include:Mental illness
Physical illness
Disability (although many disabilities do NOT cause lack of capacity
Drug and alcohol issues
Incapacity may or may not be permanent.
Even if a donor does not legally lack capacity, development officers still need to exercise care to avoid exercising undue influence or taking advantage of a vulnerable donor.
Definitions and Standards
Undue Influence:
1) The unfair or improper persuasion of one person by another who has attained a position of domination or power; consent to a contract, transaction, relationship or conduct is voidable if the consent is obtained through undue influence.
2) In the context of wills, coercion that destroys the testator’s free will and substitutes another’s objectives in its place; when a beneficiary actively procures the execution of a will, a presumption of undue influence is raised, based on the confidential relationship between the influencer and the testator.
Undue Influence
Generally involves some sort of coercion or control over an individual
Removes a person’s free will or causes them to fail to understand the consequences of their actions
Legal transactions executed using undue influence are voidable.
Signs a Donor May Lack Capacity
Memory lapses Forgetting past meetings, conversations or
correspondence Confusion about unrelated things, like forgetting
other meetings or appointments Changes in appearance, especially lapses in
hygiene Lack of attention to cleanliness in person or
environment Changes in basic personality Mood swings or inappropriate behavior
Signs of Aging that do NOT Indicate Lack of Capacity
Vision and hearing loss Physical infirmities such as trouble writing or
diminished fine motor skills Taking more time to process thoughts or ideas Speaking more slowly Delayed reflexes Thoughts may wander more or not be as linear,
may spend more time reflecting, repeating thoughts or concepts in conversation
The Donor Relationship
The charity/development officer’s ongoing relationship with a donor is the single best strategy for assessing a donor’s mental state and avoiding undue influence when a donor is considering making a charitable gift.
Multiple visits provide baseline of “normal behavior”
Active listening Let the donor do most of the talking Engage the donor in discussion of specifics of the
gift Careful scheduling of appointments to avoid
taxing energy of older donors How far does donor have to travel? Public venues can make hearing difficult
Strategies for Donor Meetings
When You Suspect Issues of Capacity
Immediately suspend all charitable gift discussions!
Involve family or professional advisor where appropriate
Recognize that some issues of capacity may be temporary Medical conditions such as stroke or illness Interactions from medication Even fatigue can impair an elderly person’s judgment
temporarily
The Role of Donor Stewardship
Maintaining reasonable contact with a donor after a gift is made can provide proof of the relationship and evidence that a donor’s gift was reasonable.
This does not have to be entirely though personal visits: Letters E-mails Communications and events with planned giving
recognition society
Too much contact can be as suspicious as too little.
The Role of Professional Advisors
If a development officer suspects a donor may lack capacity, contacting the donor’s advisor may be the best course of action. Advisor may be able to confirm or deny that there
is a problem. Confidentiality may prevent advisor from
providing information about donor’s condition. Involving a donor’s advisor in gift planning
discussions before a gift is made can provide protection for a charity later.
Strategies and Techniques to Avoid Allegations of Undue Influence
Carefully document all contact with donors Contact reports of visits and phone calls Copies of e-mails and letters
Disclosure statements for charitable gift annuities are required by law
Affidavits of recognition of disclosures for gifts made during donor’s lifetime Retained life estates Remainder interests in homes or farms
Involvement of professional advisor in gift discussions and documentation of gift
Case Study #1 – Martha, Age 86
Loyal annual donor who has already made significant bequest to your charity
Widowed last year, currently in assisted living Children do not live nearby Interested in life income vehicles First visit with Dev. Officer goes well At follow-up appointment, donor is pleasant
and chatty, but with no reference to previous visit, no mention of potential gift or life income plans, conversation wanders
Case Study #2 – Alex, Age 43
Alumni of your university (B.A. and J.D.), divorced with no children
Successful professional, consistent annual giving at leadership level, served on young alumni council
First gift planning visit in restaurant is enjoyable and Alex wants to know more about possible beneficiary designations, but he has several cocktails during lunch
Follow up visit at donor’s home, donor continues to drink throughout visit and shows signs of intoxication
Nothing in records, but colleague tells you that Alex has history of alcoholism and has been sober for many years
Case Study #3 – Carl, Age 80
Carl is an alumnus of your university, married (although you have never met his wife), and a longtime supporter of the music school. A decade ago he gave a very expensive organ to the school and has stayed in close touch with faculty and staff.
Carl has called you several times over a period of months to discuss giving another organ to the music school.
Last week Carl called university administration to complain that you have been harassing him with phone calls and letters. Based on that call, you decide to stop put gift discussions with Carl on hold.
Today Carl calls you again to talk about this potential gift. He makes no reference to his call to the university administration and acts as if everything is fine.
Case Study #4 – Edith (Deceased, Age 90)
One of first women graduates of university, husband deceased 10 years ago they both donated home with retained life estate, worked
closely with estate planning atty. Edith has just passed away, has two grown sons Son #1 manages successful business, but spotty employment record
and significant gambling debts Son #2 in and out of trouble, alcoholic and drug addict, unemployed
and living at home Edith’s will creates special needs trust for #2, but just enough for basic
living expenses Sons want to sell the house, find out about gift to university, contact a
lawyer Allege they did not know of gift, accuse university of using undue
influence and threaten to sue
THANK YOUMarcia Inger Navrátil
The University of Texas at Austin
Planned Giving Council of HoustonDecember 6, 2012