What is Financial Exploitation?

The National Center on Elder Abuse defines financial exploitation, also known as financial abuse, as the “illegal, unauthorized or improper use of an older person’s resources for monetary or personal benefit, profit or gain, or that results in depriving an older person of rightful access to, or use of, benefits, resources, belongings, or assets.” Exploitation tends to be more prevalent in the aging community, specifically targeting those that are over 65 years old and have some form of mental or physical incapacity.

The effects of financial exploitation go well beyond the loss of money. Victims tend to experience shame, fear, and depression. Their new financial status may also make it difficult to keep up with expenses or pay for services they may require, such as a visit to the dentist or hiring a gardener. As a result, victims may become reliant on others, both financially and emotionally, taking away whatever little independence they had left.

What Makes the Elderly More Susceptible to Financial Exploitation?

While we are all subject to financial exploitation, especially in this high-tech world where scamming has become extremely widespread, a member of the elder community who has spent their life accumulating assets and building up their estate, coupled with a physical and/or mental impairment and the difficulty to understand and appreciate their finances, makes for an ideal victim of financial exploitation.

Financial Abuse Examples

Financial exploitation comes in many forms. It includes, but is not limited to, false or misleading solicitation by hired professionals, such as a financial advisor trying to sell products that are not financially sound; email and telemarketing scams, such as a fake charity requesting a donation; misuse of estate planning documents like a power of attorney; calls and/or texts from someone pretending to be a “known individual” requesting money, or calls/texts from someone pretending to be from a company one uses regularly.

One common and current scam is called the “grandparent scam.” In this scheme, the victim receives a call or email from someone pretending to be their grandchild and asking them to wire transfer money due to some emergency. The scammer is an expert at pulling on the victim’s heart strings, and gaining enough sympathy and trust for the grandparent to act on the request.

Even worse could be abuse perpetrated by close family or friends with access to your accounts. Additionally, those with a physical impairment may be forced to rely on the aide and assistance of others, opening the door for others to take advantage.

How to Protect Yourself From Financial Abuse

As a starting point, know your finances. Keep track of your accounts and the expenses you incur every month. Pay attention to any unusual activity in your accounts, no matter how slight. For example, look for variations to your bank account balance that are out of the norm or changes in ownership that were done without your personal authorization. These are red flags that should be addressed upon discovery.

Additional measures include adding a trusted person as an agent or joint owner on accounts as an additional person monitoring account activity or set up notifications for activity on the accounts. Be sure that all online accounts are password protected and, if possible, require a two-step verification for login.

When it comes to scammers contacting you directly through phone or email, it is important to think before acting. Ask more questions or get a second opinion, seek advice from a known professional or loved one, and withhold personal and financial information unless you are sure it is necessary.

Do not click on links in emails unless you know the sender and also are expecting an attachment or link from them. Finally, do not reply or answer calls from numbers you do not know, even if the number looks legitimate. Scammers have become extremely savvy and know that the more familiar an email, call or text looks, the more likely you will respond.

It is also important to know and understand any estate planning documents you have in place, such as a power of attorney, health care proxy, and last will and testament. Not only should you be able to comprehend the provisions of each document, but you should also know who has the power to act and the extent of the powers being given. For example, your agent under your power of attorney should be someone you trust unequivocally. Under a power of attorney, you are authorizing your agent to act on your behalf with regard to your finances and day-to-day decision making.

Be wary of individuals who are trying to convince you to alter your existing estate planning documents. Unless something in your life has shifted where you feel it is necessary to make changes to your appointed agents or the distribution of assets under your will, do not be quick to change your documents without first consulting an estate planning professional.

And finally, build a team! Identify trusted family and friends with whom you are able to share personal and financial information. But it is also important to have a team of professionals in place to help guide you and your loved ones during your life and after death. The team should include a financial advisor, accountant, and an estate planning and elder law attorney with whom you have had numerous meetings with and who understands your financial and personal goals.

How to Report Elder Financial Abuse

Most incidents of elder financial exploitation go unreported. If you suspect elder financial exploitation has occurred, please contact Adult Protective Services to report the abuse. You may also want to contact an estate planning and elder law attorney to ensure you and your loved ones have the proper estate planning tools in place to help prevent elder financial exploitation in the future.

Author: Michal Lipshitz, Esq. is a Senior Associate attorney at Burner Prudenti Law, P.C. She joined the Manhattan office in 2017, concentrating her practice in Elder Law, Estate Planning and Medicaid.