Scams, theft and fraud with seniors’ money is a growing problem. Now the Wall Street Journal reports that banks in our country calculated a 12% increase in financial elder abuse just in the last year. Why do the thieves pick on grandma or grandpa so much? It looks so ugly to take advantage of an elder.
Our aging parents are easy targets for scammers for lots of reasons. Elders in this country hold a disproportionately high level of wealth compared to younger people. Some have accumulated significant assets and they may not see themselves as vulnerable at all.
Clearly, diminishing cognition makes it easy for thieves and manipulators. Cognitive decline affects at least a third of people over age 85. They may not have the awareness any longer to spot a fishy sounding line from anyone. Many elders live alone and are isolated, ready to engage with that friendly sounding, cheerful voice on the phone from the clever scammer. The older person is hungry for attention and the thief is ready to offer it, weaving a trap over time. Many aging folks are dependent on others for care, for help at home and for social contact. Unscrupulous family members lead the pack of those who seize on that vulnerability and trust to rip off their elders. It’s all too easy to influence an aging person to give a “loan”, access to an account, or power of attorney to a person with ulterior motives, which essentially creates a license to steal.
U.S. banks reported a record 24,454 suspected cases of elder financial abuse to the Treasury Department in 2018. That’s more than double the cases reported just five years ago. According to the National Adult Protection Protective Services Agency, elder abuse is vastly under-reported; only one in 44 cases of financial abuse is ever reported.
The article describes a typical scenario:
One example of this involved a client of ours at AgingParents.com where we consult with families and elders. She was the daughter of an 87 year old dad who had some memory problems and was frail, losing independence. Her father was a wealthy man, in a long term relationship with a younger woman. She had manipulated him into giving her access to his family’s trust account into which his significant income was deposited each month. The man’s daughter found out after a suspicious withdrawal from the account and she contacted the bank immediately. She traveled to her father’s state, went to the bank in person and showed them the trust, which did not have the girlfriend’s name on it anywhere. She asked them to stop the access by the girlfriend. The bank then put the funds into an account to which the girlfriend did not have access. After the man’s daughter left the state, the girlfriend took the elder back to the bank and told him to say that he wanted her on the account. Presto! The bank complied and the girlfriend then had access once again, only one day later. The bank aided the girlfriend in financial abuse of their own elderly customer, despite a specific request to stop it and evidence of manipulation. The matter ended up in litigation and the substantial funds in the account were held by the bank for many months, depriving the elder and his daughter of using the funds for her aging father’s benefit. Lawsuits can take a very long time to get finished.
A power of attorney is a mighty powerful document and one which I have frequently recommended everyone to have. (See here) However, a Power of Attorney would not remedy the problem in this story. A Power of Attorney does not take the power to act from the person; it merely empowers someone to act on their behalf.
Two remedies exist in Alabama, a guardianship and conservatorship and/or a Petition for Adult in Need of Adult Protective Services. Neither of these options are pleasant. In this story, the daughter would be required to “sue” her father in order to remove the legal capacity to contract (and change bank accounts) from him. This often proves emotionally terrifying for the daughter. Who wants to take their father to court to prove he is incapacitated or unable to protect himself from exploitation.
The Senior Safe Act is a federal law passed in May and it allows bank employees to report suspected cases of elder financial abuse to police and adult protective services.
The article recommends the following:
Here are the takeaways to keep in mind for protecting your aging parents as much as you can.
- Make no assumptions that it could never happen to your aging parents. Elder abuse costs seniors more than $36B a year in the U.S. alone. The problem is growing according to the WSJ articlementioned here.
- Aging parents with cognitive decline, memory loss or confusion are especially desirable targets for scammers and manipulators. Do not allow them to be in complete charge of their own money–too risky!
- Family members are the most frequent abusers of aging loved ones. Keep an eye out on that relative with no income, a drug habit or gambling problems. They can be dangerous to older relatives.
- Even if your aging parents do not bank online, you can, with their permission, get online access to their bank and brokerage accounts. Check them at least weekly for any strange withdrawals.
- Banks are trying to stop fraud and abuse, but don’t count on them alone to protect your loved ones. The problem is far too widespread. Every family needs to keep watch over aging parents’ money.