C.A. 1st;
A147236

The First Appellate District reversed a judgment. The court held that plaintiffs' allegations of a complicated scheme to undermine an elderly couple's estate plan, for the sole purpose of obtaining a sizeable commission on the couple's purchase of new life insurance policies, adequately stated a claim for elder abuse.

Frederick Mahan and his wife Martha purchased two insurance policies, naming their adult children as beneficiaries. Together, the policies provided death benefits of approximately $1,000,000, at an annual premium cost of $14,000. As part of the couple's estate plan, the policies were held by a revocable living trust and their daughter Maureen Grainger was named trustee. The Mahans made enough money available to the trust, in advance, so that it would be self-sustaining, with no need for additional cash infusions from them for ongoing premium costs. More than two decades later, in 2013, insurance agent Charles Chan and related persons and entities undertook to sell the Mahans a different life insurance plan. Aware that Martha was suffering from Alzheimer's and that Frederick, who now had control of the couple's assets was also suffering from confusion and cognitive decline, Chan persuaded Frederick to cash out his existing policies and purchase a new policy with only limited coverage and a massively increased cost. The premiums for the new coverage, spread over the term it was to be in force, amounted to some $800,000, forcing the Mahans to feed cash into the trust to sustain it and, in effect, consuming most of their intended $1,000,000 gift in transaction costs, including $100,000 in commissions to Chan and his associates. Chan accomplished this by misrepresenting to the insurance companies that Frederick, and not the trust, owned the policies, by keeping Maureen unaware of what was transpiring, and by repeatedly presenting Frederick with blank signatures pages to execute.