When an Elderly Parent is Being Taken Advantage Of
Kathy Longo, CFP®, CAP®, CDFA Friday, 09 August 2019
A note from Kathy:
This is a hard topic. No one wants to think that a family member could take advantage--perhaps even steal from or willfully mislead--their parents. This article will help you wade through this challenging time. Rest assured, you aren’t alone. I was motivated to focus on elder financial abuse because so many of my clients have dealt with it.
Talking to a sibling or relative about the abuse will no doubt be very hard. But, in some cases, open communication and transparency may be enough to fix it. It may be as simple as putting limits in place and creating boundaries. Even in the simplest situations, people will get defensive and people will choose sides. You may need to take legal action, or even involve the police. This won’t be easy, but it’s the right thing to do. Follow the important public safety slogan: If you see something, say something.
An Aging Population
Two things are happening at once: people are living longer and more of that population suffers from a mental impairment. In fact, 1 in 3 seniors dies with Alzheimer’s or another dementia and between 2000 and 2017 Alzheimer’s deaths increased 145%. Over 5.8 million Americans are living with Alzheimer’s in America and by 2033 it’s estimated that an additional 3 million will be diagnosed. What that means is we have a large pool of Americans who are impaired and need help to manage themselves. Unfortunately, like all vulnerable populations, that opens them up to abuse.
Elder abuse, especially to those with a mental impairment, can be hard to police because this is often an isolated population. Even more challenging is that 60% of elder abuse is committed by a loved one or caregiver. Elder financial abuse and fraud loss can range from $2.9 billion to $36.5 billion annually, and considering that it tends to be self-reported, the numbers are most likely higher.
- Definition of Elder Abuse (per the CDC): “Elder abuse is an intentional act or failure to act, by a caregiver or another person in a relationship involving an expectation of trust that causes or creates a risk of harm to an older adult.”
- Definition of Financial Abuse or Exploitation (per the CDC): “The illegal, unauthorized, or improper use of an older individual’s resources by a caregiver or other person in a trusting relationship, for the benefit of someone other than the older individual.”
How to Prevent Elder Abuse
Like most things in life, a little foresight and communication can go a long way. Advanced planning for an aging parent should involve creating a will and establishing a Durable Power of Attorney for both health and finances. Due to the complexities of family dynamics, it may make more sense to divide up jobs across multiple siblings. For example, one sibling lives in the area so they may be better suited to organizing day-to-day appointments and handling medical choices. Another sibling may be more financially savvy but live far away so they may be better suited to managing finances remotely. When designating a durable power of attorney, it’s important to discuss if they should have gifting power.
Having a durable power of attorney alleviates the stress of having to initiate public proceedings if a parent starts showing a mental impairment. The more open the communication between caretakers, the less opportunity there is for financial abuse. Some basics to prevent fraud or identity theft involve shredding receipts, old bank, and credit card statements, and unused credit card offers. Keep sensitive information like social security cards, checkbooks, and insurance policies locked up in a safe space. Encourage all purchases to be done through check or credit card so as to be traceable. Get a yearly credit report to track history. Do an inventory of valuables periodically. The more you and your siblings can be on the same team, the less opportunity there is to steal.
Sings of Elder Financial Abuse
When dealing with an impairment, you may not be able to straight-up ask your parent if something is wrong. Instead, you may need to look for signs that something may be amiss. First off, missing checks, missing property, failing to make payments on time for household or medicine, missing credit cards or insufficient funds in bank accounts could point to elder abuse. There are many types of financial abuse including a joint account with a child or spouse that suddenly empties. A sudden alteration to their will or trust. If their credit cards have become more active. If you notice your parent is being more generous or giving more gifts of money to friends and relatives, that may be a flag. If a family member is encouraging investment schemes or business deals.
Financial scammers may also encourage the elder to sign over their property or have them named as a beneficiary on a life insurance policy. If the elder’s quality of life has drastically decreased. If you suspect the person who has a durable power of attorney of taking advantage, investigate first if it grants them gifting power as that would allow them more access to funds. If you notice the caretaker has made a large uncharacteristic purchase or taken a trip, you may want to follow your instincts. Unfortunately, there are many ways to take advantage, which is why you should do some investigating if you have a sense something is amiss with your parent.
What to Do When There is Abuse
Once you have found abuse, the next step is action. Before accusing anyone, you will need evidence. It may also be worth trying to talk to the parent about it. If you suspect identity theft, create an FTC Identity Theft report. Once you do that, file a police report. Once that is done, contact credit card companies and credit reporting bureaus. If you suspect fraud through their accounts, contact the bank and financial institutions directly with your suspicions.
If the situation is extreme enough you may want to call your local Adult Protective Services and make a report. You can also visit https://eldercare.acl.gov/Public/Index.aspx, a public service of the U.S. Administration on Aging connecting you to services for older adults and their families. You can also call them at 1-800-677-1116. This is a hard thing to go through, but you will feel better on the other side of it knowing that your loved one is safe and secure.
About the Author
Kathy Longo, CFP®, CAP®, CDFA
Kathy Longo brings over 25 years of expertise and experience to Flourish Wealth Management. Kathy is wholly dedicated to improving the life of each client and finds joy in making complex matters simple and easy to understand. She excels at asking the right questions, uncovering new possibilities and implementing the most advantageous strategies for success. Playing such a pivotal role in her clients’ lives remains an honor and a privilege. After earning a degree in Financial Planning and Counseling from Purdue University, she began her career at a small firm in Palatine, Illinois where she worked directly with clients while learning to build a viable, client-centric business. Over the years, she gained extensive knowledge and wisdom working as a wealth manager, financial planner, firm manager and business owner at notable, various sized companies in both Chicago and Minneapolis.