Safeguarding Our Most Vulnerable From Financial Abuse
One in five adults over 65 report financial abuse. The seven forms it takes, and why misuse of power of attorney is the most overlooked.
By Ned Small · Protection
Financial abuse of our Senior Population is a serious issue that affects millions of older adults each year. It can take many forms, such as theft, fraud, or exploitation. It can occur with strangers, family members or caregivers and can happen at home, remotely, or in a long-term or short-term care facility. (One in five people aged 65 or older report being a victim of financial abuse) and that's just counting the ones that report it! To protect ourselves and our aging loved ones from financial abuse, it is important to be aware of the warning signs and take action to prevent it in the first place. Let's go over the seven most common types of financial abuse incurred by our senior population, then we will delve into how to avoid them.
Exploitation of Assets. Taking advantage of a senior's assets without their knowledge or consent, such as using their money or property for personal gain. Put simply, stealing. Sometimes the senior is made aware of the exploitation and they encounter our next form of abuse.
Forced or Coerced Financial Transactions. Making a senior feel pressured or coerced into making financial transactions they do not want to make. Threats, blackmail, extortion and guilt are all often used by the abuser to get what they want. I have, unfortunately, witnessed many good-hearted individuals fall prey to exploitative caregivers and family members. Often times the exploiter asks for a loan/gift and will generally use a sob story to foster the emotions of the exploited. The exploited naturally feels for the person, who is supposed to be their trusted caretaker or relative and obliges to their request. I have witnessed cash, cars, cosigns, education, etc. given to these exploiters who seem to quickly vanish, without-a-trace, soon after they've received what they wanted.
Scams and Fraud. Seniors are often targeted by scammers and fraudsters who use various tactics to steal their money or personal information. There are a few subtypes which we will discuss below. The scammers will use a variety of mediums, via phone, email, websites, chip/strip readers, snail mail, etc. and their plots only get more clever every day. Many times the exploiter will pose as a trusted institution like Social Security or your bank, so always best to pay close attention.
Identity Theft. A subtype of scam/fraud which uses a senior's personal information for financial gain, such as opening credit card accounts or taking out loans in their name. This is most commonly achieved by a phishing scam, which uses fraudulent websites, text messages and emails that appear to be official or familiar, in an attempt to garner personal and or financial information.
Denial of Access to Funds. Restricting a senior's access to their own money or assets, making it difficult for them to pay bills or purchase necessities. This and all of these are blatant elder abuse and should always be reported if witnessed. Occasionally, family members or legal guardians will do this an attempt to preserve the estate, often making their loved one's suffer in the process. Whatever the reason, it is despicable, but doesn't stop abusers from trying.
Pressure to Change a Will or Trust. Attempting to influence a senior to change their will or trust in favor of the abuser. Often times abusers will use threats of violence, threats of obtaining poor-quality, long term care for the abused ("I'll put you in a home") or simply taking advantage of someone facing advancing cognitive decline or someone with an easy-going nature.
Misuse of Power of Attorney. Abusing the authority granted through a power of attorney to make decisions on a senior's behalf for personal gain. One of the most overlooked and difficult to recognize forms of financial exploitation. No one can oversee the agent's activities besides the principle, so, if the principle is not vigilant or doesn't have the power to be, they will often not catch the abuse until it's too late.
So, how do we protect ourselves and our aging, loved one's from financial abuse?
Educate. One of the most important things we can do is educate ourselves and our aging loved ones about the potential risks of financial abuse. Many older adults may not be aware of the tactics that scammers use, how prevalent abuse is and how to protect themselves. By providing ourselves and our loved ones with the most current information and resources, we can make more informed decisions and be vigilant against potential threats. Be proactive with setting up a Living Will, POA and get your wishes in writing to your lawyer. People don't like to think of this and often don't do it soon enough. Consider the assistance of an advocate, ombudsman, your trusted CPA or an Elder-care /Estate Attorney, as they can save you a lot of headaches down the road.
Encourage. Another important step is to encourage your aging loved ones to speak openly about their finances with trusted family members, guardians or attorneys. This can help identify any potential issues early on, with the ability to take action to prevent them. Sometimes it might be easier for some to speak to an entrusted third party, especially if they fear retribution for reporting their abuse/suspected abuse. It is important to stress the need for staying on top of things, yet we don't want to cause increased fear or a sense of unnecessary anxiety.
Advocate. It is important for family members and caregivers to be aware of any changes in their aging loved one's financial situation and to report any suspicious activity to other trusted family members, their attorney, the police or adult protective services. Sometimes legal action must be sought to protect the senior's assets. Another tip is to make sure that you or your loved one's legal and financial documents are in order and up to date, including the will, power of attorney, and health care proxy. Organize all banking and investment accounts and view statements together monthly. Empower by teaching them vigilance and early planning so they don't fall far behind. This will ensure that everyone's wishes are respected, all tasks are handled on time and that any financial decisions are made in their best interest.
To recap, financial abuse of our senior population is a serious issue that affects millions of older adults each year. Be aware of the seven most common types of financial abuse, how to spot them and how to avoid them early on. We must educate ourselves and our aging loved ones, by keeping on top of any new scams currently going around as well as any new resources/technology that may help protect us. Encourage open communication, keeping legal and financial documents in order, and taking action when financial abuse is suspected. This is how we safeguard ourselves and our most vulnerable from financial abuse. I hope you feel a bit more prepared after reading this and I wish you best of luck. Stay vigilant out there!