How prevalent is elder financial abuse?
I recently had two examples of elder financial abuse brought to my attention. Both situations involved someone “befriending” the elderly person and creating a sense of trust over a period of time. In one of the cases, the person had no immediate family and was being taken advantage of by his full-time caretaker. In the other, the senior was still living independently, but had “friends” who were needy. Wanting to be of help, she loaned them money that she has never seen again — and probably never will. In both of these cases, the retirees had amounts taken from them well into the six figures.
The National Center on Elder Abuse is a clearinghouse of information about elder abuse. The NCEA website notes that the Senate Special Committee on Aging has estimated that there may be up to 5 million victims of elder abuse (of all types) every year. What’s really alarming is that the “National Elder Abuse Incidence” study found that only 16% of abusive situations are reported. That means that 84% go unreported — and remain hidden. It’s also startling that, according to the NCEA, family members are more frequently the abusers than any other group. It’s a sad commentary on our society that some of its most vulnerable people will be taken advantage of, especially by family members.
What can happen? It can be easy for resources to be diverted. This can be done by making checks out to “cash” or putting unwarranted personal expenses on the elder’s credit cards. It can get much worse. Elders often become both physically and emotionally dependent on their caregivers (whether family or not). They let their guard down and may be talked into signing legal papers that really don’t correspond to their true wishes. Assets can be redirected by modifying a will or trust, and deeds on houses can be signed over. Elders who have experienced substantial memory loss are especially vulnerable. Consider it a red flag if a caretaker or trustee closes the rest of the family off from a parent or doesn’t allow the parent access to his or her financial records.
One of the best ways to avoid elder financial abuse is to make sure that a solid plan is in place before the parents need it to be implemented. And rather than parents handing over responsibility to one child as trustee, safeguards should be built into the trust that provide accountability for the trustee, while not making the work more cumbersome than it already is. This can be done by providing that a third party, another family member or attorney, for example, receive periodic updates about the care and financial status of the parent. With an understanding of what resources are available and the annual budget needed to care for the parent, it becomes relatively easy to notice any large unwarranted changes in the parent’s financial position. God love you.
Phil Lenahan is president of Veritas Financial Ministries (VeritasFinancialMinistries.com) and author of 7 Steps to Becoming Financially Free (OSV).