Sometimes, protection goes too far. That is what is happening in Wisconsin right now. Two bills were introduced in the Wisconsin Legislature yesterday. These bills purport to protect seniors from financial abuse. They are SB 428 (AB 482) and SB 429 (AB 481). However, the way they are currently written, in the guise of protecting seniors from financial abuse, these bills throw a competent person’s right to control their own finances under the bus.
SB 428/AB 482 (text here) relates to securities industries professionals. These are your financial advisors and investment brokers. Your Edward Jones, Thrivent, Morgan Stanley officers to name a few, as well as the smaller private brokers that you have trusted with your investments. These are the people that hold your really big funds.
SB 429 / AB 481 (text here) related to financial institutions. This is your bank, big and small, local or national, your mortgage lender, or your credit union.
Both of these bills allow your financial provider to be a voluntary reporter of elder abuse. In other words, your banker can make a report to your local adult protective services agency if he or she suspects that something in your account may be financial abuse. I don’t really have a problem with that part (with the caveat, of course, that you should be able to opt out of this and prevent your financial information from being disclosed at all.) But there’s more. Some of the concerns are below, but these are just a few. If you would like a detailed explanation of the concerns about each of these bills, click here.
If you are 60, you are vulnerable. First, let’s start with how the bills define a “vulnerable adult.” This is the person to whom these new procedures could be applied. A “vulnerable adult” in both bills is defined as anyone who is 60 or older! Now, I work with a lot of people who are in their 60s, on issues like estate planning, guardianship of a special needs child, or elder law concerns regarding their older parents. My husband is 62. I can tell you, he is anything but vulnerable. Bill Gates is 64. Hmmm. Is he vulnerable?
How about Oprah? She is 65. She must be really vulnerable at that age (just kidding, Oprah.) She isn’t. Bill Gates isn’t, and my husband isn’t. Neither are the people I work with who are in their 60s, barring a diagnosis of early onset dementia or some type of illness affecting their cognition. But all of them could have their account transactions frozen under these two bills.
Having a standard age, especially one as young as this, without some objective evidence that the person is actually unable to care for their own financial matters, or is truly vulnerable to exploitation or influence, is a real insult to the autonomy of most individuals. It is ageist. Even if the standard age were 90, it’s time to recognize that age alone is not a sign of vulnerability. I have 90+ year old clients who are “sharp as a tack.”
It would be far better to use the definition in Wisconsin’s protective services law, which is not tied to age: “any adult who has a physical or mental condition that substantially impairs his or her ability to care for his or her needs and who has experienced, is currently experiencing, or is at risk of experiencing abuse, neglect, self-neglect, or financial exploitation.”
Account transactions can be frozen for long periods of time: Both bills allow the financial institution or investment professional to freeze a transaction on your account if the institution or advisor has “reasonable cause” to believe that financial exploitation is occurring, has occurred or may occur. This means, without your consent, a transaction could be dishonored or stopped for a period of time. In SB 428, the “initial” period of the freeze is 15 days and can extend to 25 days. In SB 429, it is 5 days, but can be extended indefinitely. While these freezes are in place, you are potentially incurring bounced check fees, late fees or other penalties, none of which are required to be waived or paid by the institution.
Reasonable cause is not defined: These bills allow a transaction to be frozen if the provider has “reasonable cause” to believe that financial exploitation has occurred, is occurring or is about to occur. However, there is no definition for “reasonable cause.” It is whatever the banker or financial advisor says it is.
The bills could be improved by adding clear definitions of “reasonable cause” and requiring that the facts be documented in writing.
What is even worse, is that neither bill requires the financial services provider to receive any training regarding financial abuse or elder abuse. So now, untrained individuals are making judgment calls on an undefined standard, and exercising control over your money.
You can’t get out of it: There is no provision in either bill for you, as a customer, to knowingly “opt out” of this “protection” or better yet, to knowingly “opt-in.” In a free country, a person should be able to decline the “protections” that the government wants to impose, particularly on the person’s hard earned finances.
Your power of attorney can be disregarded: SB 429 eliminates protections that were put into Wisconsin’s financial power of attorney law. The bill allows a financial institution to disregard your durable power of attorney (DPOA) if they believe your agent is perpetrating financial abuse. The ability of banks to refuse DPOAs is exactly what Wis. Stat. § 244.20 — the statutory prohibition on refusing a power of attorney — was intended to remedy after a long history of financial institutions refusing to accept powers of attorney for inappropriate reasons, such as the fact that the documents was not on the bank’s preferred form or was more than 6 months old. § 244.20 was the product of hard work by elder law attorneys in Wisconsin and protects individuals against arbitrary refusal of a properly drafted power of attorney. Proposed § 224.46(4) does an end run around the protections of this section.
No Liability for Mistakes: Both bills relieve the financial institutions of any liability if they act in good faith and with reasonable care under these provisions. You may suffer considerable financial damage if the institution acts in error, but you have no recourse. Also, it is not clear who will be stuck with all the bounced check charges, later fees and other consequences that would come from an error in delaying a transaction. Worse yet, if the customer (or his or her agent) is in the middle of applying for Medicaid, the application could be denied if funds are not distributed (“spent down” in a timely fashion, costing tens of thousands of dollars.
I’m not blind to the issue of financial exploitation of vulnerable adults. In fact, I am very well acquainted with issues relating to elder abuse. Years ago, as the director of a non-profit program serving elders, I obtained one of the first grants from the State of Wisconsin to provide legal services to victims of elder abuse. I have trained professionals on Wisconsin’s Elder Abuse laws, and have trained attorneys on how to represent victims of elder abuse. My firm represents victims of financial exploitation. These are terrible cases. However, two wrongs don’t make a right. Curtailing the rights of individuals to handle their own finances, making their carefully drafted powers of attorney worthless, and relieving financial institutions from all liability create problems that could be even worse.
Call to action: You have the power to let your Wisconsin legislator know that these bills cannot be passed the way they are currently written. With some improvements, they could provide a real benefit. As currently written, the potential to harm individuals who are competently going about their own business with their finances is too high. You need to act quickly, so call or write today. Contact information to find your legislator is here: https://legis.wisconsin.gov/ simply write your address in the space on the right side of the page underneath the heading “WHO ARE MY LEGISLATORS?”