When a suspected gold digger is at work, what can family members do?

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What can a family do if they suspect one of their members has fallen under the influence of a so-called gold digger?

Very little, as annoying and frustrating as that sounds, according to financial and legal experts.

One of the immediate things a family can do is ask their family member to undergo a mental health assessment. It’s all about determining their capacity.

Sherif Rizk, principal lawyer and founder at Rizk Law Office in Ottawa, says, “If they’re making [decisions] without any concern about their health, there’s really no legal mechanism to kind of step in and say, ‘You know, mom, dad, we think you should stop seeing this individual.’”

In a recent blog post, Vancouver lawyer Trevor Todd wrote about “gold-digger syndrome,” saying he’s seen an increase in undue-influence allegations from family members.

“I have to warn [elderly men] sometimes that if they lose their wife, they’re just a sitting duck,” says Todd. “They’re going to be besieged by a lot of well-intentioned women and a whole lot of other women who really are looking for financial gain.”

Todd also has heard accusations of healthcare professionals being given gifts by elderly patients.

The thing is, it’s not ignorant, unprepared people who are being taken advantage of in these situations, says Jason Pereira, senior financial planner and partner at Woodgate Financial Inc. in Toronto. Often, it happens during a vulnerable time.

“I had one spouse take massive offense to my cabana boy/cabana girl joke, and their stance was, ‘I am not going to be taken advantage of by anyone. That’s not the kind of person I am.’”

He apologized and explained to his client that they will be in a delicate situation because they’ve just lost the person they love most in this world.

“You will be psychologically traumatized and other people in this world can take advantage of that,” he says. “And they can seem perfectly fine, and maybe you’re right, but if you’re wrong, it’s your kids who pay the price.”

If family members genuinely fear that capacity is diminished, they can submit a guardianship application, Rizk explains. “This is where you go to the court and say, ‘This person is not capable of making proper decisions on their own and we need the court’s authority to let us make the decision on their behalf.”

For a guardianship application to be approved, evidence should be documented by a neutral third party such as a doctor through an assessment.

However, the need to go to court could be pre-empted with proper planning and having a power of attorney, says Rizk. The person holding the power of attorney could then prevent the transfer of funds to a new romantic partner or healthcare worker.

But what if the family member is perfectly capable and wants to give money to their new partner? Rizk says a promissory note could be an option.

“The note could say, ‘I’m giving you $20,000, and in exchange, you’re going to sign this promissory note saying that you’re going to pay that money back, especially if the relationship fails or breaks down.”

From a planning perspective, Pereira says a trust could also work. The spouse would have access to a property, for instance, and can live in it, but those assets would pass on to the designated heirs.

Plus, while they can’t refuse a request from a client, they can ask questions if the request is out of the ordinary or they suspect their client may be financially exploited, say both Pereira and Elke Rubach, president of Rubach Wealth in Toronto.

If they suspect the latter, they can reach out to their client’s trusted contact person, if they have one, when they are concerned about their client’s well-being.

At the very least, family members could have a conversation with an elderly relative and document it by consulting a lawyer, says Rizk.

He says if somebody in your life is thinking of starting that kind of relationship, and even if it may seem like a burden to talk to a lawyer at the beginning of said relationship, talking to the experts can save a lot of hassle, not just for that individual but for the family.

“It’s just a good idea to have some safety mechanisms in place,” Rizk says, “before going forward with a new relationship.”

More from Canadian Family Offices: 

• Five smart ways to transfer wealth to your children, grandchildren
• Women, formerly sidelined in family business, now more embraced
• ‘Never go against the family’: Truths about family business from ‘The Godfather’
• Paying the absolute lowest in tax no longer top priority for today’s families

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