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Signs of Financial Elder Abuse and Steps to Prevent It.

Signs of Financial Elder Abuse and Steps to Prevent It.

| June 08, 2016
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Financial Elder Abuse

As more and more baby boomers begin to retire, cases of financial elder abuse are becoming more common. Even more alarming, is that a majority of seniors have a common misconception on where the abuse is likely to come from.

Elder financial abuse or exploitation is the unauthorized or improper use of the resources of the elder person for monetary or personal benefit, profit or gain. This can encompass a broad range of conduct from deception to intimidation and is often made easier by diminished mental capacity in elders.

According to a study conducted by Allianz, 52% of elder abuse cases are by people they trust, such as caregivers, family or friends. The misconception is that the biggest threats come from phone, telemarketing, and internet scams. This, unfortunately, is not true and can make elders even more vulnerable to financial abuse.

In my practice as a financial advisor, I have personally seen many instances of financial elder abuse. One example happened about two to three years ago. A client (we will call “Jane”) who was an elder came in with her daughter (we will call her “Deb”). We opened an account to store some money for a time. I met with them several times to discuss the account and their plans for it. Then, one morning when monitoring accounts, I noticed that Jane’s account was being drained and that Deb’s name had been removed from the account! Come to find out, a daughter from St George (who I had never met), obtained a power or attorney from the court and removed Deb’s name from the account and replaced it with hers! I immediately had Jane’s account frozen and called compliance. Sadly, there was a big fight in court over this and her other assets. Eventually all of Jane’s accounts ended up in the hands of a court appointed third party.

I think it is important for all seniors to understand the typical types of financial elder abuse:. 1) Predatory lending involves seniors being pressured to take out inappropriate reverse mortgages or other loans. 2) Identity theft is mostly commonly used to open fraudulent credit cards or bank accounts in the senior adult’s name. 3) Medicare scams are when individuals pretend to be associated with Medicare to gain personal or financial information. 4) Internet “phishing” is when false emails are sent regarding bank accounts or other financial accounts (usually with a false link to a fake website). 5) Investment/security schemes involve pyramid schemes or unlicensed financial advisors or other professionals. One that encompasses a lot of these is unsuitable sales. This is a financial product is sold that is not suitable for that person’s age, income, or financial objective.

So what is the solution? What steps can you take now to prevent it from happening?

The first step to prevent financial elder abuse is to have all of your estate documents in place. These include a will, power of attorney, health care directive, and trusts. In these documents you will name a trusted person to take care of your affairs in case of diminished capacity or death.

The next step is to make sure your beneficiary documents are updated and in place for your life insurance, annuities, IRAs, retirement plans, and so on. Also making sure this documentation is kept in a safe place that can be easily accessed by your heir.

Other Steps are:

  • Placing transfer on death (or TOD) instructions on checking and savings accounts. This will help prevent the wrong person taking care of your money when you pass.
  • Do direct deposit with everything that allows it. Why? Because then a scammer cannot get a hold of a physical check to cash it for you. Also it will be harder for them to know what your income is and where it is coming from.
  • Shred unneeded documents. This, again, prevents scammers from getting vital information about you.
  • Store all important documents in an organized and secure location and that very few people know about. In my practice as a financial advisor, I offer an estate organizer to help my clients with this part.
  • Have a trusted person check your financial statements regularly and help with the day-to-day bookkeeping while you are at full capacity. It makes it easier to keep an eye on things if you have a diminished capacity.
  • Have a list of web codes and passwords stored in a safe place like an estate organizer.
  • Last but not least, have a trusted third party, such as a financial advisor, “quarterback” your financial life and coordinate with other professionals. Make sure that person is a licensed fiduciary.

If you feel you or anyone you know is involved in elder financial abuse, call the police or adult protective services at 800-371-7897. If you are not sure and you would like more resources, here are some to look into:

Whatever your age or circumstances, I believe that having a conversation about financial elder abuse is important before it is to late. It is better to take the steps to prevent it, then to take the much harder route of trying to fix it once it happens.

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