Elder financial abuse is a broad term that describes the theft, fraud or otherwise misuse of an elderly person’s assets. Seniors can be targeted for fraud scammers but it can also happen within a caregiving or family setting. Elder financial abuse is problematic for victims as it can deprive them of much-needed resources to meet daily living expenses or pay for larger expenses, such as long-term care. Building some protections into your estate plan can help to insulate your assets against this type of financial abuse. A financial advisor can help you take prudent steps to limit your vulnerability to elder financial abuse.
What Is Elder Financial Abuse?
Elder financial abuse can mean different things in different settings but, generally, it involves the exploitation of a senior citizen’s financial resources. Seniors can be targeted by strangers for financial abuse but they can also be victimized by people they know. That can include relatives, friends and caregivers. Some examples of financial elder abuse include:
- Stealing physical property, such as collectibles or valuables
- Withdrawing money from bank accounts that belong to the victim
- Stealing government benefit checks, including Social Security benefits
- Opening credit card accounts or loans in the victim’s name
- Using an elderly person’s credit cards to make purchases or take cash advances
- Forging financial documents to gain control of vehicles or homes
- Withdrawing money from investment accounts in the senior’s name
Scams can also fall into this category as well. For example, someone posing as a contractor may approach an elderly person about repairing their home’s windows or roof. The scammer may promise a good deal to help them fix the issue, collect a deposit or down payment against the final total and skip town with the senior’s money.
In terms of who is at risk for elder financial abuse, the short answer is anyone. But the risk may be greater for seniors who require some form of caregiving, are suffering from dementia or Alzheimer’s or who live alone and are isolated from friends or family.
Signs of Financial Elder Abuse
If you’re worried about becoming a victim of elder financial or you’re concerned that your aging parents might be targeted, it helps to know the signs to watch out for. Here are some common red flags that may suggest someone is exploiting an older person financially:
- Unexplained bank account withdrawals or transfers
- Valuables that seem to disappear without explanation
- Checks, credit cards or debit cards that go missing
- Bills going unpaid
- Property that is retitled into someone else’s name
- Financial documents that appear to be forged
Elder financial abuse can sometimes be difficult to detect, especially if someone else is responsible for handling your finances. And it can also be harder to uncover if you’re paying a caregiver to manage household bills and accounts for an aging parent. That’s why it’s important to be aware of the potential red flags that may suggest someone is taking liberties with assets.
How to Prevent Financial Elder Abuse
Elder financial abuse can have short and long-term consequences for its victims. In a worst-case scenario, a senior who’s subject to financial abuse could lose all of their assets and be left with very little financial means to meet their day-to-day needs. But it’s possible to avoid that outcome with proper estate planning. Here are some of the most important things to consider.
Secure Bank Accounts
If you believe you’ll need someone to help with managing day-to-day finances at some point, consider carefully who you want to have access to your accounts. Once you add someone to your accounts, whether it’s one of your adult children or a hired caregiver, they share in its ownership. Also, think about who you want to receive those accounts once you pass away if you opt not to make the accounts joint.
Making bank accounts payable on death (POD) to the person of your choosing means they can only access the funds once you pass on. You may consider this option if you’d prefer to retain control over the accounts during your lifetime.
Other tips for protecting bank accounts include:
- Set up direct deposit for Social Security benefits, pension payments and other benefit checks so that paper checks can’t be stolen
- Use unique passwords for each bank account login and store them in a secure password keeper
- Opt for electronic statements or if you prefer paper statements, shred them after reviewing them each month for errors or unusual transactions
- Set up banking alerts to notify you when new debit or credit transactions post or when new online banking login attempts are made
Organize Financial Documents
A last will and testament is one of the most basic estate planning tools you can have. You may also consider adding life insurance or an advance health care directive in the mix. And there are other financial documents that may be important, such as the deeds to real estate or vehicle titles.
If you have any of those documents, it’s important to keep them in a secure place. This can prevent anyone from attempting to change your will or retitle property without your knowledge. And it can also keep someone from attempting to change the beneficiaries to your lie insurance policy.
Keeping these documents in a secure safe deposit box can ensure that they don’t fall into the wrong hands. If you choose to designate a co-owner, think carefully about who you allow to have access to the box and its contents.
Establish Power of Attorney
A durable power of attorney and financial power of attorney are two important estate planning documents to have. A durable power of attorney allows an agent of your choosing to make decisions on your behalf if you’re unable to. A financial power of attorney allows an agent to make financial decisions on your behalf.
Creating these documents can keep unauthorized persons from making legal or financial decisions for you. But just like with managing bank accounts, it’s important to choose someone you trust. And you should also understand under what conditions you can revoke power of attorney or change your agent if the original person you selected isn’t working out.
Consider a Revocable Trust
A revocable trust is a type of living trust that allows you to transfer assets to the control of a trustee. This trustee has a fiduciary duty to manage those assets according to your wishes. You may consider setting up a revocable trust if you want to ensure that your assets are not misused or abused if something happens to you that leaves you incapacitated.
You can transfer different types of assets to a revocable trust, including:
- Bank accounts
- Investment accounts
- Antiques or collectibles
An estate planning attorney can help you to set up a revocable trust. They can also discuss other types of trust options with you to help you decide if something else might better meet your needs.
The Bottom Line
Elder financial abuse is a serious matter and planning ahead can help you minimize your chances of being targeted. Likewise, if you have aging parents you may want to have a discussion with them about what you can do to prevent financial abuse. An estate planning attorney can help with finding appropriate solutions for managing assets so they don’t fall into the wrong hands.
Tips for Estate Planning
- One issue you may have to contend with is the question of guardianship and conservatorship. Guardianship gives someone else the right to make decisions on someone else’s behalf; conservatorship extends that right to financial decision-making. Either one may be necessary if you are no longer able to care for yourself and don’t have a power of attorney or financial attorney in place. You may also run into this with your own aging parents. So consider how your estate plan may need to account for those scenarios.
- Consider talking to a financial advisor about the best way to insulate yourself against financial elder abuse as you age. If you don’t have a financial advisor yet finding one doesn’t have to be complicated. SmartAsset’s financial advisor matching tool makes it easy to connect with professional advisors in your local area. It takes just a few minutes to get your personalized advisor recommendations online. If you’re ready, get started now.
Photo credit: ©iStock.com/azndc, ©iStock.com/Highwaystarz-Photography, ©iStock.com/SIphotography