Prevent Elder Financial Abuse

Often we will read or hear about an elderly person or couple unwittingly defrauded by a contractor, service provider or a family member, causing them to lose substantial money from their retirement savings. This kind of crime is known in general as financial abuse.

Seniors are particularly at risk for being financially abused. Sometimes this susceptibility is the result of diminished financial capacity, when aging conditions like Alzheimer’s or dementia impairs someone’s ability to make sound financial decisions. But older adults are often targeted also because they control the majority of the nation’s wealth. They frequently have homes which have appreciated over time, and they don’t realize the value of these assets.

 

There are other reasons why seniors are financially victimized, too. Sometimes seniors have people who can access their information or have influence over them, like home healthcare aides or family members who go in and out of their homes. They are also less likely to take action against someone financially abusing them because of embarrassment about any impairment that may have enabled the abuse. Don’t become a victim or allow a loved one to be victimized. Here are some ways you can protect against elder financial abuse:

  • Keep an eye out. The National Council on Elder Abuse says that about 90 percent of perpetrators of financial abuse are family members. Of these abusers, many are mentally ill, have substance abuse issues or feel overly burdened by their elderly family members. Many times, elderly people have their assets stolen by their own children or spouses. Professional caregivers also make up about 12 percent of financial abusers.
  • Have a caregiving agreement. If family members are going to care for an older loved one, have a family conversation and have an attorney draft a personal care agreement which outlines the terms of the care and how much (if any) monetary compensation is involved. It’s unfortunately common for a dishonest family member caring for an elderly relative to take money without permission as “pay” for caregiving services. Be clear about any compensation up front.
  • Run background checks. If someone is going to be caring for your loved one, make sure this person has no criminal history. To do this, you need to run state level and national-level background checks.
  • Keep valuables safe. Catalog your loved one’s valuables and take accompanying photographs. Keep valuables locked up. If something is stolen, you will have a record and a photograph to prove who owns it.
  • Look out for warning signs of abuse. Consumer Reports says that warning signs of elder financial abuse include: bank statements no longer coming to your loved one’s address; changes in attorneys or banks; changes in power of attorney or will; changes in beneficiaries; large or unexplained bank transfers or withdrawals; missing property; lack of personal amenities; new, authorized signers on your loved one’s accounts; unfamiliar signatures on important documents.
  • Accompany your loved one to meetings with financial advisors. Meet with your loved one and the financial advisor to make sure your loved one understands what is being said or done.
  • Check in with your loved one. If your loved one is local, visit and make sure everything is going well. Checking in regularly is a good way to prevent problems or spot them quickly to intervene. If your loved one lives far away and no family can check in, local police can perform a well check and report their findings to you.

Remember, elder financial abuse is a crime that can be considered civil and/or criminal. If you suspect your family member has been a victim of financial abuse, contact your local Adult Protective Services office. To find your state APS office, visit the National Center on Elder Abuse's website at www.ncea.aoa.gov (click on "Find State Resources"). Then consult an attorney right away and talk to your financial advisor.

Wood Smith Advisors, a Registered Investment Advisor (RIA), is a fee-only financial services firm that partners with its clients to simplify their financial lives. We focus on women, entrepreneurs and individuals with complex financial situations, providing objective and competent advice, education and services to help them develop and build their businesses and reach their financial goals. We can be reached by clicking here.

“Finance Made Simple” blog posts are intended for educational purposes and not for specific advice.  Each person’s situation is different.  Consult your financial advisor for advice relating to topics discussed.

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