Guardianship: Protecting Vulnerable Elders from Financial Exploitation

By Zoey Lee
February 22nd, 2021

As individuals age, they may become vulnerable to financial exploitation, including theft and fraud.  According to the National Adult Protective Services Association, one in twenty older adults report that they were the victim of some form of perceived financial mistreatment.  Further, ninety-percent of abusers are family members or trusted others.  According to the National Council on Aging, elder financial abuse and fraud costs older Americans over $2.9 billion annually.

Those most vulnerable to financial exploitation include “incapacitated” persons.  Pennsylvania defines an incapacitated person as “an adult whose ability to receive and evaluate information effectively and communicate decisions in any way is impaired to such a significant extent that he [or she] is partially or totally unable to manage his [or her] financial resources or to meet essential requirements for his [or her] physical health and safety” (PA Statue). An older adult may become incapacitated as the result of dementia or other memory and cognitive related conditions, the most common of which is Alzheimer’s disease.

“Those most vulnerable to financial exploitation include “incapacitated” persons. ”

In Pennsylvania, if an individual believes that a family member or friend is unable to manage his or her own financial, health or safety needs, they can file a petition with the Orphans’ Court Division of the Court of Common Pleas to have that person declared “incapacitated” and for the appointment of a guardian.

Guardianship gives one party (the “guardian”) certain limited legal rights to make decisions on behalf of another person (the “incapacitated person”).  The purpose of a guardianship is to promote a person’s general welfare by allowing the incapacitated person to participate as fully as possible in all decisions that affect him or her (PA Statue). Additionally, a guardianship assists an incapacitated person in meeting the essential requirements for his or her physical health and safety, protecting his or her rights, and managing his or her financial resources.

Once a petition is filed, the Court will hear evidence of the alleged incapacity and need for a guardianship at a hearing.  The law presumes that adults can make their own decisions about their health and finances and, therefore, courts view guardianships as a last resort.  As a result, , courts will not appoint guardians if a “less restrictive alternative” to a guardianship is available.  Validly executed financial and health care powers of attorney may be considered less restrictive alternatives in some cases, but the existence of such powers of attorneys do not always prevent the need for a guardian, particularly if the agent under the power of attorney is not doing his or her job, or even worse, is abusing their position of trust.

If the Court determines that an individual is incapacitated and that there is no less restrictive alternative to a guardianship, the Court will appoint one or more guardians.  There are two types of guardians:

• Guardians of the person

• Guardians of the estate.  

Guardians of the person are responsible for the health and safety of the incapacitated individual, and have the authority to determine where the incapacitated person resides, among other things.  Guardians of the estate are responsible for the property owned by the incapacitated individual, and are responsible for paying the incapacitated person’s bills and safeguarding his or her assets.  A guardian can be an individual, agency or entity. 

Once appointed, guardians serve under the supervision of the court and must file annual reports.  Further, guardians of the estate must obtain court permission before spending principal or savings, before selling real property, and before certain other actions. 

The guardianship continues for the remainder of the incapacitated person’s life or for the remainder of the incapacity, and an incapacitated person has the right to petition to end the guardianship if the conditions that initially warranted the appointment of a guardian no longer exist.