Financial Abuse of Senior Citizens
June 12, 2018 | by the National Care Planning Council
Roughly 35% of the 25 million persons in the U.S. at age 71 or above have mild cognitive impairment or dementia, according to a Duke University study. These people with impaired decision-making capabilities are highly susceptible to financial abuse.
Financial abuse of elderly persons who are impaired in their decision-making can take several paths. First of all, because of confusion or uncertainty about handling their own financial affairs, elderly people are often preyed upon by unscrupulous individuals trying to take away their money. Researchers at the University of Iowa have found that changes to the aging brain may make many older people less risk averse, thereby making them more susceptible to risky schemes. Because of this deficiency in thinking and in an effort to act on something that sounds too good to be true, many seniors are too trusting with their money with strangers.
It is not uncommon to hear on the news, almost weekly, about some sort of phone scam, mail scam or email scam that has taken advantage of some elderly person. The nonprofit Investor Protection Trust finds that 20% of Americans over age 65, or 7.3 million people, have been victims of financial swindles. States are eager to pass laws to prevent abuse and to prosecute wrongdoers, but it is impossible to control the sheer volume of bad actors who are taking advantage of the elderly.
Financial abuse also occurs between seniors and those people whom the seniors either rely on for their support or whom the seniors trust.
Financial abuse from family members is one of the dirty little secrets of eldercare. By some estimates, approximately 20% of all seniors are suffering abuse either in the form of physical abuse, self-neglect or financial abuse. The bulk of this abuse occurs at the hands of family caregivers -- those family members who are entrusted with the care of their loved ones. Much of this family abuse has to do with stealing income or manipulating funds from the loved one being cared for.
This can occur through outright fraud or theft or it can occur by using legal arrangements such as a power of attorney or even a guardianship even though it should be supervised by the court. We have heard of numerous cases where a son or daughter has a power of attorney or a guardianship and has literally stripped their parents or parent of all assets and income. Some very egregious cases have come to light nationally where people being cared for are totally neglected and literally starved and eventually died from malnutrition and disease. In return, the caregivers were enjoying the income and cleaning out the assets of those they were supposed to be caring for.
Individuals receiving care from members of the family or from trusted friends or other relatives, are often extremely reluctant to report financial abuse. Essentially, they rely on their caregivers for their day-to-day needs. If they report the abuse, they may lose the caregiver. In addition, caregivers often threaten those persons they are watching over. The typical threat is one where the person receiving care will be thrown out into the street or put into a nursing home if the person being cared for reports the abuse to authorities.
Financial advisers are also guilty of taking advantage of their clients. Unscrupulous financial advisors will build a relationship of trust with their elderly clients and then talk them into investments that are not suitable for those clients. These unethical financial advisors are primarily focused on generating the highest commission possible regardless of the outcome for their clients.
Practitioners assisting seniors with their finances should not be guilty of such actions. On the contrary, these practitioners should be on the lookout for any signs of elder financial abuse that might be evident. Here are some telltale signs.
- the caregiver is reluctant to share any financial information
- the person receiving care seems confused or frightened
- the existence of a durable power of attorney or guardianship might raise a red flag
Family members, as well, need to check on the financial health of their aging loved ones from time to time to see if financial abuse is present. Oftentimes these aging loved ones will try and hide credit card debt or lack of income from their family because they are embarrassed that they have not been prudent or they are being threatened by other members of the family who are taking the money.