Many of my clients and the adult children of my clients spend a considerable amount of time and energy worrying about their aging parents. As we age, we become more likely to make errors, and that propensity makes us vulnerable to financial exploitation. This risk is one reason that at Clarity Legal Group we encourage our older clients to participate in our Legacy Client Program, which allows clients to meet with their lead attorney once a year to get a plan check-up, making sure that nothing is amiss. To help yourself or your parent stay safe, you need to understand how financial exploitation occurs and what you can do to prevent it.
Elder Financial Exploitation
While there are numerous ways to explain elder financial exploitation, the Older Americans Act of 2006 defines elder financial abuse, or financial exploitation, as “the fraudulent or otherwise illegal, unauthorized, or improper act or process of an individual, including a caregiver or fiduciary, that uses the resources of an older individual for monetary or personal benefit, profit, or gain, or that results in depriving an older individual of rightful access to, or use of, benefits, resources, belongings, or assets.” Although financial exploitation can take a wide variety of forms, some common examples include:
- Family members taking advantage of a person’s diminished capacity to either cajole, or outright steal, money or assets.
- A caregiver using an person’s money without permission or taking property from the individual’s home.
- A family member or caregiver getting an elderly individual to sign documents under false pretenses that transfer assets to the perpetrator, either now or after the elderly person’s death.
- Targeting an elderly individual for financial scams, over the telephone, through the mail, in person, and these days especially on the computer..
- Innocently following the sincerely offered advice of the wrong person, such as allowing a well meaning bank employee to guide estate planning decisions.
How Bad Is the Elder Financial Abuse Problem?
Financial exploitation of the elderly is not a new problem in the United States. As the older population increases at a historic pace, however, I am hearing more about the problem than in years past. My sense is that most of these events are not reported as crimes and that sometimes when reported, and not treated as crimes by the authorities. The result is that statistics on this kind of financial abuse may be incomplete. Nevertheless, conservative estimates regarding financial exploitation of the elderly indicate that:
- Each year there are over 5 million instances of financial exploitation of an elderly victim
- 1 in 10 seniors will be the victim of elder abuse
- 14 instances of elder abuse occur for every one reported
- 90 percent of the perpetrators are family members
- When a family member is the perpetrator, two-thirds of the time it is an adult child or spouse of an adult child.
How to Prevent Financial Exploitation
As an adult child, worrying about your aging parent is both completely normal and potentially exhausting. Fortunately, there are some steps you can take to help prevent your parent from falling victim to elder financial exploitation, including:
- Call a family meeting and talk to your parent. Sit down with your parent and have a very frank discussion about the subject of potential risks. Consider how to make yourself or parent less attractive as victim. Vulnerabilities can be as simple as a trusting disposition or lack of technological know-how. Just understanding that there are potential predators out there can help. For our clients, we are happy to participate in these meetings.
- Explain the dangers inherent in social media. Do you really understand how social media works. A lot of us, and particularly a lot of seniors, are using Facebook, Instagram, or Twitter, without really understanding how they operate. The privacy settings, in particular, are problematic. Predators know this and can gather a wealth of personal information from a potential victim’s social media profile/page. If you are concerned about a vulnerable parent or loved one, take a look at social media privacy settings.
- Warn your parent about disseminating information over the phone. Tell your parent or loved one to be very careful when talking to someone over the phone. There may have been a time when it was safe to give out personal information over the phone; however, if there was, it is long past. Never give out a social security number, bank account information, passwords, or other personal information over the phone unless you are certain of the identity of the person you are speaking with. Explain that if someone calls claiming to have a legitimate need for personal information, the best thing to do is to insist on calling them back using a verified telephone number.
- Be vigilant about who is allowed in your parent’s home. Your vigilance should start with a complete background check on anyone – other than family members and long-time acquaintances—who is allowed in the home. Do not assume that an agency has conducted a proper background check. Take the time to do one yourself to make sure the individual has the proper credentials and does not have a criminal history.
- Encourage your parent to do a periodic review of his or her estate plan. Estate planning is as much about how someone owns his or her assets and how beneficiary designations are set up on retirement accounts or annuities as it is about the legal documents themselves. At Clarity Legal Group, we offer periodic funding audits during which we assess all of the account ownership and beneficiary designations to ensure they are in sync with the legal documents. If something has changed — for example and account being titled jointly with someone else — this will turn up. Furthermore, proper asset ownership is essential to making a plan work. Unintended changes or errors in this ownership are one of the biggest risks to getting the intended outcome. Above all, do not assume or even expect that the most vigilant financial advisors will have assessed this. It is, simply put, not their job or expertise. At Clarity Legal Group, we recommend all of our clients review their plans at least every four years and that our older clients or those with complicated asset profiles see us every year under our Legacy Client Program.
Contact a Chapel Hill Durham Estate Planning and Elder Law Attorney
If you are concerned that an aging parent might be the victim of financial exploitation, or you have other elder law questions or concerns, please contact a Chapel Hill Durham elder law attorney at Clarity Legal Group® by calling us at 919-484-0012 or contact us online.
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