Free to Leave: Interested Persons Pursuit of Financial Exploitation Claims
By Salim Shleef on August 10th, 2020 in Elder Abuse, Elder Abuse Awareness, Elder Law, FINANCIAL EXPLOITATION, PROBATE LITIGATION
Arizona’s Adult Protective Services Act, “APSA” for short, was adopted to expand the rights and claims to remedy abuse, neglect and financial exploitation of Arizona’s large population of vulnerable adults. Arizona courts are required to construe the statute broadly to protect vulnerable adults. You can find a comprehensive discussion of financial exploitation claims here on our website.
In summary, there are four basic requirements to establish a claim for financial exploitation in Arizona pursuant to A.R.S. § 46-456(A):
- A person who is in a position of trust and confidence;
- To a vulnerable or incapacitated adult;
- Uses the vulnerable adult’s property for purposes other than the adult’s sole benefit; and
- There is no applicable exception that permitted the person in a position of trust and confidence to use the funds or other property other than for the vulnerable adult’s sole benefit.
There are many nuances to pursuing claims for financial exploitation. One is the issue of “standing” – who may pursue a claim for financial exploitation? Read on to learn more!
Free to Leave: Interested Persons Pursuit of Financial Exploitation Claims
The Arizona Court of Appeals recently issued an opinion that clearly defines and provides direction to litigants and Arizona trial courts as to the determination of granting leave to interested persons to pursue a financial exploitation claim on behalf of a vulnerable adult or, if the vulnerable adult is deceased, the vulnerable adult’s estate. As a result of the Arizona Court of Appeals’ decision in In re Stephens Trust, — P.3d — (App. 2020), a trial court must grant a petition for leave when the petitioner demonstrates he/she is an interested person and that no one with a higher priority has or is likely to file a claim for financial exploitation on behalf of the vulnerable adult and/or their estate.
Who May Pursue Financial Exploitation Claims
Under A.R.S. § 46-456(G), the vulnerable adult, their conservator, or the personal representative of the vulnerable adults estate each have priority to pursue claims for financial exploitation. However, if “an action [for financial exploitation] is not filed by the vulnerable adult or the duly appointed conservator or personal representative of the vulnerable adult’s estate, any other interested person, as defined in section 14-1201, may petition the court for leave to file an action on behalf of the vulnerable adult or the vulnerable adult’s estate.”
Leave to Pursue Financial Exploitation Claim
One lingering question remained under subsection G of the statute for those desiring to petition a court for leave to pursue a financial exploitation claim – what must “any other interested person” prove in order for a court to grant permission to pursue a financial exploitation claim? The statute is silent on that issue.
In a matter of first impression, this question was addressed by the Arizona Court of Appeals in the recently published Stephens opinion. The appellant, Ms. Sona Heguy, filed a Petition for Leave to File Complaint of Financial Exploitation of a Vulnerable Adult (the “Petition”). Ms. Heguy filed the Petition to pursue a financial exploitation claim on behalf of her father Keith Stephens’ estate. Ms. Heguy was Mr. Stephens’ adult daughter, heir, and only surviving child from his first marriage.
Ms. Heguy attached a draft of the complaint to the Petition and in it, she alleged, among other things: Mr. Stephens suffered a stroke while vacationing abroad in 2011 and never fully physically recovered; Mr. Stephens was placed in a locked memory care unit at a senior living facility in 2013; several changes were subsequently made to a trust that included leaving his then-wife as sole trustee in 2014; and from 2014 through 2016, Mr. Stephens’ wife used trust funds to buy each of her children a home, fund European and Japanese vacations for her children, and pay off debts and other obligations of Ms. Heguy’s daughter.
The Pima County Superior Court denied the Petition. In doing so, the trial court ruled that Ms. Heguy “could not ultimately prevail on her claims” because the allegedly improper transactions were either authorized by Mr. Stephens’ trust or were for the benefit of his marital community and, thus, not actionable under A.R.S. § 46-456(A)(2) and (A)(4).
The Arizona Court of Appeals reversed the trial court’s decision, finding that the trial court’s denial of the Petition based upon the merits of the potential financial exploitation claim, and not whether Ms. Heguy was entitled to leave to pursue the same, was an abuse of discretion.
The Court of Appeals conclusively established the “trial court’s proper role under § 46-456(G)” as follows:
[W]hen leave of court is sought to file a financial exploitation complaint, the court should determine whether the petitioner is an interested person under §§ 46-456(G) and 14-1201. If not, the court may summarily deny the petition…If the petitioner is an interested person under the statute, the court should determine whether another with priority to file an exploitation complaint—“the vulnerable adult or the duly appointed conservator or personal representative of the vulnerable adult’s estate”—has already filed or is likely to file such a complaint. § 46-456(G). If so, the court may summarily deny the petition. The court should not, as the trial court did here, address the merits of the proposed complaint; it should, solely for purposes of granting or denying leave to file the complaint under § 46-456(G), accept the factual allegations of the proposed complaint as true, and without regard to potential defenses.
(Internal citations omitted and emphasis added.)
So, under the simple standard set forth in Stephens, the Court’s role is limited to merely determining whether the petitioner is an “interested person” and, if so, whether anyone with priority has or will file the claim for exploitation.
A.R.S. § 14-1201(33) broadly provides that “’Interested person’ includes any trustee, heir, devisee, child, spouse, creditor, beneficiary, person holding a power of appointment and other person who has a property right in or claim against a trust estate or the estate of a decedent, ward or protected person. Interested person also includes a person who has priority for appointment as personal representative and other fiduciaries representing interested persons. Interested person, as the term relates to particular persons, may vary from time to time and must be determined according to the particular purposes of, and matter involved in, any proceeding.”
Effect on Litigation of Financial Exploitation Claims
Unfortunately, victims of financial exploitation are often unable to pursue financial exploitation claims on their own behalf as a result of any number of reasons, some which may include their own vulnerable condition, fear of retaliation by the wrongdoer, and/or because they have passed away before they could ever step foot inside of a courthouse. Further, and far too often, the alleged financial exploiter is the person who would otherwise have priority to pursue claims for financial exploitation (e.g., he/she is in a position to be and/or is actually acting as the vulnerable adult’s conservator or estate personal representative). Fortunately, with the Arizona Court of Appeal’s recent opinion in In re Stephenson Trust, vigilant individuals who qualify as “interested persons” now have a clear path to the eventual pursuit of financial exploitation claims on behalf of their loved ones.
If you have any questions about claims for financial exploitation of vulnerable adults in Arizona, please give us a call at 480.607.7900 or contact our office.