How to Recognize and Prevent Elder Financial Abuse
By Ric Edelman
No individual or family is immune, so be proactive.
Financial abuse of the elderly is on the rise.
According to the 2011 MetLife Study of Elder Financial Abuse, victims are losing an estimated $2.9 billion a year — up 12% from the $2.6 billion reported three years earlier.
If you’re a senior citizen or you have one in your life, it’s important to know how to prevent abuse and how to recover from it. Financial elder abuse takes many forms. In addition to outright stealing of assets, crimes include forging signatures to obtain loans and lines of credit and fraudulent use of credit cards. While strangers are responsible for 51% of such crimes, at least 34% are committed by family members, friends and neighbors, according to the MetLife study.
Most victims are over 80 years of age, live alone and require some form of home or health care assistance — and women are twice as susceptible as men, the study says. They come from all walks of life. Even one of America’s most famous actors, Mickey Rooney, who testified before Congress in 2011 at the age of 90 that he was a victim of elder financial abuse, saying his daily life became “unbearable” when some of his family members “told me it was none of my business when I asked for information about my finances.”
People among the most vulnerable include:
- Those who have diminished capacity due to illness or injury. At the urging of some caregivers, these people might sign documents they barely understand.
- People who aren’t fluent in English. They might sign a contract or credit agreement when someone they trust advises them to do so.
- Those suffering from Alzheimer’s disease or dementia. Because of their loss of short-term memory, they often don’t remember that they were “mugged” financially by a caregiver.
- People who are isolated. If you’re lonely, you may be at risk from relatives whose relationships you value.
- Elderly parents who have reared financially dependent children. If your kids haven’t worked and have a sense of entitlement, they’ll see nothing wrong about dipping into your savings and using your credit cards.
- Seniors who have become mean and abusive through personality changes. Caregivers might rationalize that their hard work in caring for such people entitles them to take something extra for themselves.
Perpetrators of elder financial abuse can include financially dependent children, unscrupulous caregivers, and children or other relatives who are drug addicts. MetLife’s report described a couple with five children, one of whom supported his drug habit by accessing the equity in his parents’ home by forging their signatures on a home-equity loan.
The National Committee for the Prevention of Elder Abuse offers these warning signs that abuse might be occurring:
- Bills aren’t paid, and notices of eviction or discontinued utility services arrive.
- There are unexplained withdrawals from bank accounts or transfers between accounts.
- Bank statements stop coming.
- Care isn’t commensurate with the size of the estate.
- Personal property goes missing.
- Signatures on checks or other documents look suspicious. (Check the handwriting against a sample from the elderly person.)
- Either the aged person or the caregiver gives strange or implausible explanations about financial transactions.
- An uptick in mail and credit offers may signal that a caregiver or someone else is misusing the address to apply for loans and credit cards.
What can be done to prevent or stop elder abuse? Here are four suggestions:
- If you’re a senior and have made someone else privy to your financial matters, you can hire a neutral third party, such as a member of the American Association of Daily Money Managers, to monitor bank accounts and credit requests. You can also count on a trusted, independent, fee-based financial advisor (who has nothing to gain from you beyond his or her normal fee) to alert you if something seems amiss in your account.
- Other than outside help, family members can hold quick monthly meetings to go over the elderly person’s finances and can send one another quarterly reports as a checks-and-balances measure.
- A financial power of attorney can be useful, allowing you to name a person or people in whom you have complete trust to pay bills and handle other matters when you’re unable to do so.
- If you suspect that elder financial abuse is occurring, contact the Administration on Aging, the federal agency responsible for upholding the rights and safety of the elderly and their caregivers. The agency, which serves every county in the nation, can get a social worker on the scene quickly. Its Web site is aoa.gov.
Originally published in Inside Personal Finance June 2012