The Silent Epidemic of Financial Elder Abuse and How to Stop it
Did you know that a person who receives just one telemarketing phone call per day is likely to experience three times as much financial loss as someone who receives few to no telemarketing calls? Or that people with more education are more likely to be defrauded and tend to lose more money than those with less education?
Welcome to the world of financial elder abuse, where nothing is as it seems. The perpetrators of the abuse are often those closest to the victim – family members (especially grown children), unscrupulous caregivers and even professionals such as lawyers, accountants and financial advisors. As the baby boomers are graying and living longer, they are increasingly becoming victims of this silent epidemic. According to studies, 1 in 20 older adults have suffered recently from some form of financial mistreatment and financial elder abuse is vastly under documented, with only 1 in 44 cases reported. Why? Older adults often feel shame, guilt, anger, self-doubt, remorse, worthlessness and fear because they were too trusting of those they felt close to. Financial elder abuse can cause financial destitution to the most vulnerable of our populations. Many lose their homes, become unable to provide for their long-term care needs or become reliant on government programs. Those who have diminished capacity due to dementia, non-fluent English speakers and elderly parents who have reared financially dependent children are at particular risk.
Here’s what to watch out for:
- Termination of vital utilities (gas, electric, water, garbage, etc.)
- Bills that go unpaid despite adequate income
- Oversight of finances surrendered to others without explanation or consent
- Transferring assets to new “friends” who may claim to be assisting with finances
- Checks written to “Cash”
- Lack of understanding of current finances with an inability to provide probable explanations for unusual spending and activity
- Unexplained disappearance of cash, valuable objects, financial statements
- Unexplained or unauthorized changes to wills or other estate documents
- Giving away money or extravagant spending
- Appearance of property lines or foreclosure notices
Some common “stranger scams” include:
- Lottery and sweepstakes scams: “You’ve already won! Just send $2,500 to cover your taxes.”
- Home repair/traveling con men: “We’re in your area and can repair your driveway/roof or do yard work really cheaply.”
- Grandparent scam: You’re called by someone claiming to be a grandchild who says he/she’s in jail and needs you to send them money immediately
- Charity scams: falsely soliciting funds for good causes – very common after disasters
- Utility scam: “I’m from the utility company. I need you to come outside with me for a minute (while accomplice steals valuables).”
- Telemarketing scams and accompanying threats
More sophisticated scams include:
- Predatory lending – seniors pressured into taking out inappropriate reverse mortgages or other loans
- Annuity sales – the senior may be pressured into using the equity realized from a reverse mortgage (or other liquid assets) to buy an expensive annuity which may not mature until the person is well into their 90s or older
- Investment/securities schemes – pyramid schemes, unrealistic returns promised, dealer is not licensed
- Internet phishing – false emails about bank accounts
- Identity theft – credit cards opened fraudulently
Protecting vulnerable seniors from financial elder abuse sometimes takes “a village.” The end result is extremely worthwhile – both from the “right thing to do” standpoint and from a national economic perspective – protecting older Americans from financial abuse saves tax dollars down the road by saving money spent on “safety net” care for an abused elder.
Here are some tips to stop financial elder abuse:
- Have a series of family conversations over time to prevent abuse from occurring in the first place. This should include discussing an overall financial plan, including retirement income and transferring assets.
- Make sure all estate planning documents are in order such as an advanced health care directive and/or a durable power of attorney for financial affairs.
- Distribute financial responsibilities among several children, if possible. For example, have one child do the day-to-day bill paying and have another child receive account statements in order to monitor cash flows.
- Get to know the elderly person’s team of financial advisors.
- Take care of your loved ones’ caregivers and show your appreciation – whether a family member or professional – and give them support and time off.
- Make unannounced visits and keep communication open.
- If the elderly person has someone taking care of his/her finances, hire a neutral third party to monitor bank accounts, investment statements and credit requests, such as a financial advisor.
- Family members can hold quick monthly meetings to go over the elderly person’s finances and can send one another quarterly reports as a checks-and-balances measure.
- A financial power of attorney may be useful to name a person with whom the elderly person has complete trust to handle bills and other matters when the elder person is no longer able to do so.
- If you suspect financial elder abuse, reach out and notify your local Adult Protective Services agency (visit New York City’s site).