According to a 2009 MetLife Mature Market Institute study, elder financial abuse costs victims an estimated $2.6 billion annually. The typical victim – a female over 75 who lives alone, is cogitatively impaired, and is trusting of others. Perpetrators often take advantage of a victim’s loneliness or lack of financial knowledge. And with the economy in recession, law enforcement officials say elder financial abuse and identity fraud is on the rise. Here to explain how you may avoid becoming a victim is Doug Keegan of Harris SBSB.
Doug, we often hear about identity theft and scams targeting the elderly, but I’m sure elder financial abuse has a much broader definition. What is elder financial abuse?
Well, according the Older Americans Act of 2006, elder financial abuse is defined as "exploitation", meaning, and I quote, "the fraudulent or otherwise illegal, unauthorized, or improper act of an individual that uses the resources of an older individual for monetary or personal benefit, or that results in depriving an older individual of rightful access to, or use of, benefits, resources, belongings, or assets". Simply put – it’s someone who is trying to separate you from your money.
Can you give us some examples?
Examples include cashing checks without permission, the improper use of a power of attorney, forging a signature, coercing someone into signing a document against their better judgment, or stealing money.
This type of exploitation Lowman is similar to identity theft but it differs in that it’s more about manipulation and control. In fact it can be quite subtle. There have been documented cases for example where home health care agencies have asked seniors to sign paperwork so they could bill for Medicare but not provide the services.
So what is the typical profile of a financial abuser?
Believe it or not, family members are the most likely perpetrators. According to the MetLife Mature Market Institute study you mentioned in your introduction, 60% of substantiated Adult Protective Services cases of elder financial abuse involve an adult child. Sons are 2 ½ times more likely than daughters or other family members to take advantage of their parents. As a result, elder financial abuse often goes unreported as parents are reluctant or simply afraid to turn-in their children.
To give you a better picture of what a financial abuser might look like, let me share with you a couple of cases. One case involves an elderly couple in Louisiana. Their nurse discovered that something was wrong when the husband, who was diabetic, was rushed to the emergency room due to a drop in his blood sugar. When she checked the refrigerator for his insulin, all she found was beer and no insulin. The couple told her that they didn’t have any money for insulin because their unemployed son had recently moved in and they were short of cash because they were "helping" him financially.
Another case involves an elderly woman whose doctor called social services because he was concerned that his patient was suffering from neglect. An investigator discovered that not only was his patient cognitively impaired, but that a new "friend" had recently been making weekly visits. This supposed new friend had financial problems and needed the woman’s help. The investigator referred the case to Adult Protective Services. Upon further investigation, they uncovered that this new friend had taken more than $100,000.
So as you can see, Lowman, these cases clearly highlight that financial abuse takes place within the context of a trusting relationship. If a victim doesn’t have someone looking out for them, they can easily be taken advantage of.
That’s why at my firm we’re alert to behaviors that may indicate a financially abusive relationship. We’re very familiar with our clients and their financial lives so we’ll notice if something is unusual. Generally, this is what we look for: 1) someone who is exerting undo influence and control 2) someone who shows excessive interest in a client’s assets 3) a family member who suddenly buys an expensive luxury item 4) someone who prevents us from accessing a client, and 5) finally someone who becomes defensive during client appointments or who’s reluctant to leave the side of a client during appointments.
These clues provide hints that an abusive financial relationship may exist.
Are there any warning signs that may help family and friends recognize financial exploitation?
There are, but recognizing financial exploitation is far more difficult than identifying physical abuse. You have to be alert to more subtle clues. But there are warning signs. For example, look for sudden changes in bank accounts, including an unexplained withdrawal of a large sum. Look for abrupt changes in a will or other financial documents. Another clue is an unexplained transfer of assets to a family member or someone outside the family or the sudden appearance of an uninvolved relative claiming rights to assets. You should also become suspicious if bills go unpaid. That may mean the person’s too confused too handle their own affairs or it could mean someone is using their money for other things.
So what steps can be taken to avoid elder financial abuse?
First and foremost, stay active and engaged with others. As we age, there’s a tendency to lose friends and relatives. Often times, children live far away. So it’s easy to disconnect. But you’ll want to stay active and engaged with others so they can look out for you and possibly warn law enforcement officials if an abusive situation occurs. But if you truly feel isolated, you may want to hire an attorney and designate them as attorney-in-fact to assist you in the event of your incapacity. Moreover, you may want to put your assets into trust and hire an attorney or private banker to serve as trustee. In that role, they can help you manage your financial affairs and serve as a fiduciary to help guard against financial abuse.
Independently, you’ll also want to monitor your assets and stay organized. Safely secure vital documents like passports, birth certificates and social security cards as well as any medical and legal information. Beyond that, it would be prudent to organize and secure financial and insurance information, real estate documents, vehicle registrations, and so on. The list can get quite extensive.
At the end of the day, though, when it comes to elder financial abuse, the best defense is a good offense. Be proactive.
If someone suspects elder abuse, who do you call?
If someone is in immediate danger call 911 or the local police for immediate help. Otherwise, in Pennsylvania call the statewide elder abuse hotline at 1-800-490-8505. For more information and contact numbers, visit the National Center on Elder Abuse website at www.ncea.aoa.gov