Elder Financial Abuse: Ways You Can Protect Your Loved Ones
Written by Gregory Palacorolla, CFP®
Did you know that every month one in 10 older adults experience some form of abuse? Only one in 24 cases of elder abuse are reported! Abuse can come in many forms. One type of abuse gaining attention and affecting the older population in large numbers is elder financial abuse. Elder financial abuse is essentially taking advantage of an older person for financial gain. As our parents, grandparents, or other loved ones age, their cognitive abilities can diminish over time, leaving them susceptible to fraud, scams, and exploitation. Arming yourself with the knowledge needed to protect them is vital.
The Numbers Are Alarming
- The Wall Street Journal reports that U.S. Banks reported a record 24,454 suspected cases of elderly financial abuse to the Treasury Department in 2018.
- According to NAPSA (National Adult Protective Services Association), only one in 44 cases of financial elder abuse is ever reported.
- Elders who experience abuse have a reported 300% higher risk of death.
- Recent reports from the Federal Bureau of Investigation show that almost 50,000 people over 60 lost $342.5 million in 2017 to internet fraud and scams.
- According to the Weinberg Center for Elder Justice, some $2.9 billion dollars is taken from older adults every year nationwide. 51% of perpetrators of financial abuse are strangers; 34% are family, friends, or neighbors.
Source: North American Securities Administrators Association
- Using guardianship authority to transfer property for the guardian’s benefit.
- Receiving personal payments from a protected individual without court permission.
- Authorizing frequent cash withdrawals from the protected individual’s accounts without explanation.
- Using/borrowing property for personal benefit without court authorization.
- Making unexplained decisions not in the protected individual’s best interest.
- Noticing unusual activity in the older person’s bank accounts including withdrawals, transfers, or checks written the older person can’t explain.
- Making Uncharacteristic attempts to wire large sums of money.
- Changing the power of attorney that the older person does not recall.
- Altering wills and trusts the older person does not recall doing.
- Not paying bills.
What You Can Do
- Hold a family meeting to discuss/arrange financial and healthcare powers of attorney. You want to ensure a responsible third party can make decisions for them if they become incapacitated. Consider having more than one power of attorney so decisions are not being made by one person alone.
- Review credit reports with your older loved one annually.
- Help your older loved one get set up on automatic bill pay for their regular recurring expenses.
- Review bank statements with them monthly.
- Review their estate planning documents with them annually.
Questions You Should Ask Often
- Have you been approached by a salesperson lately? What were they selling? What questions did they ask you?
- Are you paying your bills on time? Has anything changed recently with your bills?
- Are your investments the same or have there been any changes made recently?
- Has anyone approached you to manage your money? If you choose to engage these services, make sure it is with a registered investment advisor who doesn’t receive commissions. We can check for any issues or negative reports on brokercheck.finra.org and research them on the internet.
- Are your will, trust, and power of attorney documents in place and updated? Have you reviewed them recently?
Common Scams to Watch Out For
- Seniors pressured into taking out inappropriate reverse mortgages or other loans
- Seniors purchasing an expensive annuity which may not mature until the person is in their 90’s or over 100
- Pyramid schemes and unrealistic returns being promised
- Working with an unlicensed advisor or so-called “professional”
- Medicare scams
- Identity theft
- False emails from the IRS or banking institution
- Charity scams
- Home repair scams
- Lottery and sweepstakes scams
- Grandparent scam where you receive a call saying your grandchild needs money and to send immediately
What Is Being Done
- President Trump signed into law the Senior Safe Act. This act allows trained employees to report potential exploitation of an older adult to a government agency without fear of liability.
- The Elder Abuse Prevention and Prosecution Act that was signed into law, designates that at least one Assistant U.S. Attorney be designated as an elder justice coordinator in each of the nation’s judicial districts and it also designates national elder justice coordinators at the Dept. of Justice and the Federal Trade Commission.
- The Senate Special Committee on Aging has an updated “Fraud Book” showing the top 10 financial scams and a hotline people can call to report fraud.
- Banks are now training employees to detect, stop and report issues without violating a customer’s privacy.
Resources That Can Help
National Adult Protective Services Association – http://www.napsa-now.org/
United States Department of Justice – https://www.justice.gov/fraudtaskforce
AARP’s Fraud Watch Network – https://www.aarp.org/benefits-discounts/all/fraud-watch-network/
National Council on Aging – https://www.ncoa.org/
Administration on Aging (AOA) – https://www.aginginplace.org
Choose Geier Asset Management as Your Trusted Financial Advisor
Unfortunately, there will always be wrong-doers and financial predators roaming the world. Through prevention and protection measures, we can limit the chances of our loved ones becoming victims of fraud and financial exploitation. In recent years we have taken steps to not only bring financial elder abuse to the forefront, but to weaken its hold through legislation, programs, and awareness. As the population of 60 and above continues to increase, more will have to be done to limit the reach of financial elder abuse.
Sources: NAPSA/ Forbes/ Wall Street Journal/ Aging in Place
© Geier Asset Management, Inc. Feb. 2019. Gregory Palacorolla, CFP ® is Director of Wealth Management for Geier Asset Management, Inc., a Registered Investment Advisor. The articles & opinions expressed in this material were gathered from a variety of sources, but are reviewed by Geier Asset Management, Inc. prior to its dissemination. All sources are believed to be reliable but do not constitute specific investment advice. The views expressed are those of the firm as of February 2019 and are subject to change. These opinions are not intended to be a forecast of future events, a guarantee of results, or investment advice. Any advice given is general in nature and investors must consider their own individual circumstances. In all cases, please contact your investment professional before making any investment choices. Geier Asset Management, Inc. is not responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.