Mentally Unstable Client

[Terry D EA]

Need a little help and advice. I have a client whom I have been serving for a number of years. The client's husband is terminal and has been moved out of the home to the daughter's home for her to care for him. The client (husband's wife) each year has retained me to prepare their taxes. Now, she seems mentally unstable. She is confused, doesn't know what she has done with the documents/tax forms (these folks are retired so 1099R, SSA and other similar forms) and now calls me four to five times a day upset cause she is not sure she has gotten everything to me. She constantly claims she doesn't know what to do but wants to be sure I will not file her late. I do not feel comfortable preparing this return. The daughter is my client as well and I thought she said she had POA for her mother (the client). If she doesn't understand items about her taxes my I question her competence with signing the return. What are our responsibilities here? Where am I bound by Circ 230 in a situation like this. Any advice is appreciated.

[JohnH]

One approach might be to call the daughter and say something to the effect that you're going through your records and can't find your copy of the POA she previously told you she has.  Chances are the daughter knows about mom's mental state and will immediately provide you one.  If she doesn't, and if she begins asking questions, that might get touchy.  But I'm betting she will get the message and get a copy over to you, or perhaps accompany mom to an appointment.  

You could also check with the local register of deeds - some attorneys will record POA's or suggest that the client do so.

[Catherine]

I will second @JohnH's excellent idea.  This whole area of concern is a Circ230 weak spot and minefield, and we get caught.  On the one hand, you cannot let this client sign a return in her increasingly confused state.  On the other, technically you cannot reach out to the daughter.  If you do have any recollection of mention of a POA, then JohnH's suggestion is an "out" for you.  I have had similar instances.  One recent case, the son-in-law contacted me after laboriously convincing f-i-l he needed "just a little help" with his (many years of back) taxes.  I had not yet accepted him as a client; we just had our initial meeting.  Using that "out" (non-clients on all sides) I told s-i-l it was high time for the man's daughter to get a POA while he was still competent to grant it.  He's *fine* is you're just talking to him about the weather and the garden - but oh dear heavens the papers.  I've seen it too many times.  The multiple xerox copies of the same things, the notes running in seven different directions on one piece of paper (also copied), the important pieces intermingled with junk intermingled with charity solicitations, all jumbled with multiple years.  Dementia.  Just saw early signs again this morning with an existing client - who fortunately told me of her own volition about her grown child who now has a POA.  (And I have an address in my files from something or other some time ago...)  I will be reaching out for a copy of that POA.  

[JohnH]

I double-checked before adding this comment.  In NC, it is customary for the POA to be recorded if the agent deems that the individual has become unstable or otherwise believes there has a "triggering event".  Recording the POA simplifies the agent's life considerably, and the recording info enables most institutions to rely upon it.  So it MAY be that the daughter has recorded the POA already if she senses that Mom is becoming unstable. And if mom is calling you 5 or 6 times a day about the same issue, chances are she's doing the same thing with the daughter about other issues. Anyhow, if you are reluctant to initiate the conversation with the daughter at the ourtset, you could go to the trouble to check with the Register of Deeds just to see if a POA is on file.  

[Yardley CPA]

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Would there be anything wrong with mentioning to the client's daughter that you have some personal concerns about her Mom's condition/health?  You've been dealing with her and noted that she doesn't seem well.  Is everything okay with her??  Something along those lines?  You wouldn't be sharing any financial info, but as a human being, not a tax preparer, you're concerned about her.  It may be a slippery slope but based on your post it does sound like you genuinely have concerns about her state of mind.  

[jklcpa]

The client is already concerned about missing documents, so use that and ask her to have the daughter's help. You could ask her to have the daughter call you, or you could set up a conference call where you can ask the client's permission to find out about the POA, or you could set up an appointment to meet with both of them and discuss in person.  ETA- if conference call won't work, ask the client to call you from the daughter's house next time she is there visiting her husband. She and daugher could talk to you on a speaker phone and get permission to ask daughter about the POA.

[Terry D EA]

Thank you for all of the great suggestions. I am planning on speaking with the daughter soon and hopefully make some head way. I agree that as long as no mention of anything financial is discussed or implied, then it should be okay to speak with the daughter about her mother's condition. Thanks again.

[Terry D EA]

Update, spoke with the daughter, she does indeed have POA for both parents. I asked for a copy of it to maintain in my files. Also, required the daughter to be present when we review the return. Daughter really didn't think this was any big deal and I reinforced that with this was the only way I would prepare the return, no other exceptions. 

[JohnH]

Smart move.  Daughter may be in some sort of denial about mom's cognitive abilities.  Facing reality now might just help her save mom from some catastrophic financial decision or third-party scam somewhere down the road.  Some con artists have a unique ability to sniff out vulnerable people.

[Lion EA]

Make sure the POA specifically give power over tax matters, signing returns when necessary, planning, anything tax related.