Financial Elder Abuse

Do you have a family member who needs help and you have hired someone who comes into the home periodically or who may even stay in the home full time? 

If the answer is yes, where are financial documents kept?  Who gets the mail?  If the aide or caregiver or helper – whatever title you give them – has access to the mail or if financial documents are accessible, BEWARE. 

But, why? 

I am not saying that people aren’t trustworthy.  However, you want to avoid any temptations for someone to take advantage of your loved one.  And, unfortunately, the reduction of temptation is not limited only to people you hire.  It can be a family member who is tempted to financially abuse the elderly.  We have seen it too many times with clients.

Elder abuse is on the rise and perhaps because the elderly can be very vulnerable.  Recent studies reveal that the number of boomers in their 60s with living parents has risen since 1998 to about 10 million.  Also, there is an estimated 5.7 million people living in America with Alzheimer’s.

Imagine these scenarios:

  • A home helper sees a financial statement showing a significant balance in the account.  They might be tempted to take the account information to see if they could tap into the account.  Or, perhaps they know where checks are kept and just happen to take a blank check.  Or because the older person might not remember, the home helper gets the older person to “lend” some extra cash that is in the home.  The possibilities are endless. 
  • A family member “needs” some financial assistance and they go to the elderly family member and tells their sob story and the elderly person gives money or property to the younger family member.
  • Either a family member or a home helper engages the elderly person in a conversation that leads to a change in the estate planning of the elder.  A ride is provided to the attorney’s office and the estate planning is changed to favor the younger family member or the home helper. 

These are all forms of elder abuse – abuse that is not physical or verbal, but fiscal.  So, you have a loved one who may be at a point where they need someone to look after their finances so that they aren’t abused, but what can you do?  Here are a few suggestions to consider:

  • Consider changing the mailing address for financial accounts. 
  • Don’t allow a checkbook to be accessible.
  • If the elderly person isn’t agreeable to giving up control of their checkbook, perhaps you can open a new account and only leave a small balance in the account in the control of the elderly person.  If Social Security or pensions are automatically deposited to this account, arrange for a monthly transfer to the new account so that the original account does not carry a big balance. 
  • If there is a financial advisor involved, share your concern about the decline of the elder and that you want to be aware if there is any suspicious activity or if there could be a hold placed on the account.
  • Lock down the credit of the elderly person.  We have seen credit cards being applied for using a deceased person’s information and the card was issued, so a new card could be issued to a living person.  Locking down credit can be done by contacting the credit reporting agencies.
  • Attempt to consolidate accounts so there are fewer accounts subject to possible abuse.
  • Automate payments for regular expenses. 

While there is no foolproof way to prevent theft from the elderly, being proactive as possible may be all that you can do.  The family member taking these proactive steps should be the agent under a Durable Power of Attorney so that they have the authority to take such action.   Or perhaps a trustee under a Revocable Trust of the elderly person. 

If you have this authority, establish a good relationship with a financial advisor.  The more precautions taken, the better for all concerned.  Assemble a team to look out for the elderly person – attorney, tax preparer, Power of Attorney agent for the elder, financial advisor.  Working as a team will help to protect the elder from potential financial abuse.  However, be careful that your actions cannot be construed as to your having influence upon the elder.  An attorney will most likely wish to speak directly with the elder to make their own evaluation as to what the elder’s capacity is by observing the elder’s ability to articulate reasoning in leading to a decision, the variability of their state of mind, their ability to understand the consequences of their decisions, fairness in their decision and irreversibility of their decisions.  It will be likely that the attorney will want to speak to the elder alone without a family member or friend in the room and to document the meeting.  By taking such measures, it could be helpful in the future should any issues arise.

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Kay Sowa

About the Author

Kay Sowa is a paralegal in the Trusts and Estates Group at Capehart & Scatchard, P.A. She is an IRS Enrolled Agent, an Accredited Estate Planner®, and a Certified Trust and Financial Advisor. She oversees the trust and estate administration practice for the firm. She is an accomplished author and lecturer who has frequently spoken on behalf of a number of organizations including the National Business Institute and the Institute of Paralegal Education.

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