ETHICAL AND PRACTICAL
ISSUES DEALING WITH
ELDERLY DONORS AND
CLIENTS
Planned Giving Council of Houston
April 24, 2014
Laura Hansen Dean, J.D.
The University of Texas at Austin
Pamela Jones Davidson, J.D.
Davidson Gift Design
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
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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
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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.
Strategies for Donor Meetings
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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
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Careful scheduling of appointments to avoid
taxing energy of older donors
 How
far does donor have to travel?
 Public venues can make hearing difficult
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
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 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
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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
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Carefully document all contact with donors
 Contact
reports of visits and phone calls
 Copies of e-mails and letters
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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
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Involvement of professional advisor in gift
discussions and documentation of gift
Case Study #1 – Martha, Age 86
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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
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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
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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.
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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.
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Case Study #4 –
Edith (Deceased, Age 90)
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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
QUESTIONS?
For additional questions please contact:
Laura Hansen Dean
lhdean@austin.utexas.edu
Pamela Jones Davidson
pjdavidson@giftplanners.com
THANK YOU
Marcia Inger Navrátil
The University of Texas at Austin
Planned Giving Council of Houston
December 6, 2012