Financial abuse of elder Americans is considered by some to be “the crime of the century” since it amounts to as much as $30 billion per year in losses. One study found 37% of seniors are affected by abuse over any five-year period, which can result in them skipping meals or medications to compensate for the shortfall or, worse yet, losing their homes. Given the sheer numbers of baby boomers aging and living longer, not to mention folks over 50 controlling more than 70% of the nation’s wealth, we can only expect this trend to surge—increased dementia rates follow longer lifespans.
In the first part of this series, we discussed risk factors that increase a senior’s likelihood for abuse and the telltale signs something is amiss. In the vast majority of financial elder abuse cases, money pilfered from the victim is unrecoverable. For that reason, it is important to have serious conversations with aging loved ones about how they want their affairs handled before noticing any decline in their cognition and while they can still make financial decisions for themselves. Staying connected and close to loved ones (and, for example, being visible to any hired caretakers) is the best frontline defense against any would-be culprits. In this Part 2, we’ll examine some additional mechanisms and strategies for thwarting such abuse before it occurs.
- Safeguard Information. This advice applies to seniors and the larger public alike, and much of it is common sense. Wrongdoers can’t steal what they can’t reach, so keep your private financial information out of their grasp by making sure to do the following things:
- Keep checkbooks, bank statements, and other sensitive information locked in a safe or desk drawer and away from the prying eyes of visitors;
- Obtain a copy of your credit report on an annual basis. (You are entitled to a free copy of your credit report from each of the three major credit bureaus once every twelve months. To order your free annual reports, go to AnnualCreditReport.com or call toll- free 1-877-322-8228.);
- Whenever possible, pay with a credit card or check rather than cash to create a paper trail. Additionally, most credit card companies have fraud protection services for any unauthorized transactions;
- Shred canceled checks, bank statements, or any other financial documents, prior to throwing them away;
- Never provide social security numbers, bank account numbers, or other personal financial information over the phone unless you initiated the call or already know the other party to the call;
- Check references and perform background checks for any potential caregivers and never let them access financial information;
- Do not sign any documents you don’t understand and solicit second opinions; and
- Contact your bank or other financial institutions after any suspicious account activity.
- Streamline Processes. In addition to paying by credit cards in lieu of cash, automate bill paying by authorizing direct debits from checking accounts to lessen the risk or opportunity for third parties to invite themselves to “help” paying bills. Similarly, establish direct deposits for social security checks, retirement and pension payments, and the like to eliminate the risk of checks falling into the hands of the wrong person as well as the avoidance of losing or misplacing checks.
- Establish Checks and Balances. Consider having multiple people (family members, financial advisors, bankers, trustees, etc.) responsible for monitoring accounts and financial transactions to ensure nothing goes unnoticed. Companies such as EverSafe help guard against scams, fraud, and identity theft by monitoring bank and investment accounts, credit cards, and credit data and offer specialized protection for seniors.
- Designate a Power of Attorney. Appointing someone to have a financial power of attorney must be done while the senior has the capacity to do so and can be structured such that it becomes effective immediately or only after the senior becomes incompetent. Although family members, specifically children, are often designated to fill that role, the selection of the proper person should be done with care and after evaluating (a) who has the senior’s best interests at heart, (b) whether that person is geographically close by and able to quickly assist, (c) is trustworthy, and (d) has the requisite background and/or availability to assist. Since, statistically, family members are the largest pool of perpetrators, it would be wise to consider hiring a fiduciary (such as a lawyer, accountant, etc.) to serve or designating multiple parties who must act in unison for certain transactions. A power of attorney can afford a seamless transition to handling a senior’s affairs when they are no longer able to do so themselves and before someone else can wrest control.
- Create a Trust. By creating a revocable trust, a senior can appoint one or more trustees to oversee and help manage their assets without abandoning total control and access over their funds. An irrevocable trust offers greater protection, since the senior (and any other third parties) will not have direct access to their money, but may be less attractive for that reason. A trust protector can also be appointed to make certain decisions, manage certain assets, and monitor the trustee. This option may alleviate some misgivings about establishing an irrevocable trust, since the trust protector can be authorized to replace an absentee or poorly performing trustee. Appointing a corporate trustee, such as a large financial institution or a bank, is also worth considering—especially for significant or complex financial holdings—due to their extensive expertise in that domain.
- Initiate a Guardianship Proceeding. If all else fails, and the senior finds himself/herself unable to competently manage his/her affairs without the aforementioned protections established or, worse yet, is actively being victimized, the courts can appoint someone to manage their financial affairs. That person is called a Guardian of the Estate and, while it could be a family member, is often a neutral third party, such as a lawyer from the community with experience handling such matters. To learn more about the guardianship process, please refer to the FAQs on our website, or some of our previous blog articles on the subject, which can be found here, here, here, and here.
If you suspect the financial abuse of an elder, please call the Adult Protective Services division of the Department of Social Services in your area or an elder abuse hotline. A link to resources in all fifty states can be found here.
If you need assistance in protecting a loved one from elder abuse, please call us at (704) 457-1010 for help with guardianship proceedings and fiduciary litigation. For more information regarding our firm, attorneys, and practice areas, please visit our website at www.lindleylawoffice.com.