Question: My friend recently relayed a story about her father being a victim of elder financial exploitation. What is this? How can I protect myself, as well as my family from becoming victims?
Answer: The National Center of Elderly Abuse defines financial exploitation as the “illegal or improper use of an elder’s funds, property, 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.
Many older adults have spent their entire lives accumulating assets and building up their estate. This, coupled with the fact that they have some form of mental impairment making it difficult to fully understand and appreciate their finances, makes members of the elder community ideal victims of financial exploitation. 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 of the situation. Individuals without close family or friends are forced to rely on professionals to take care of them and their assets.
Elder financial exploitation comes in many forms. It includes, but is not limited to, false or misleading solicitation by hired professionals, such as a financial adviser trying to sell products that are not financially beneficial to the client; email and telemarketing scams, such as a fake charity requesting a donation; misuse of estate planning documents like a power of attorney; and abuse by close family or friends with access to your accounts.
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.
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.
How can you be proactive now to avoid financial abuse in the future? As a starting point, know your finances. Keep track of all 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.
When it comes to in-person or online scams, such as requests for money or the sale of goods and services, 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 from potential scammers unless you are sure it is necessary, especially if the seller reached out to you first.
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.
Lastly, 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.
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.