Financial elder abuse has become widespread and difficult to detect and therefore, one of the biggest issues facing senior citizens today. According to The National Institute on Aging, financial abuse is not limited to the theft of an older person’s money or assets but also includes
- Financial Neglect – failure to pay bills such as rent, mortgage, utilities, taxes, etc.
- Financial Exploitation – misuse or mismanagement of property or assets and
- Health Care Fraud – committed by doctors, medical personnel and other health care workers resulting in overcharging, falsifying Medicaid or Medicare claims or charging for care or treatment that was never provided.
Not only are there serious financial damages from financial elder abuse, but research has also indicated that elder abuse can result in worsening physical and mental health as well. A study by the National Institute of Justice found that victims of elder abuse reported higher rates of depression, generalized anxiety disorder, post-traumatic stress disorder, and poorer self-reported health when compared to non-victims.
Seniors are often targeted over the telephone, through the mail and online in scams involving fraudsters posing as Internal Revenue Service agents, sweepstakes scams, and other schemes to defraud them.
People with dementia can be more susceptible to abuse because of impairments in memory, communication abilities, and judgment. According to the National Center on Elder Abuse, research indicates that people with dementia are at greater risk of elder abuse than those without.Close to half of all people over 85, the fastest growing segment of our population, have Alzheimer’s disease or another type of dementia. Several studies have confirmed that as dementia progresses, so does the risk of abuse.
One way to help stem this tide of elder financial abuse is for the children of aging parents to become more involved in managing their parent’s investments, estate plans and other financial affairs. Talking about money can be uncomfortable, and aging parents may become defensive, suspicious or reluctant to divulge such personal information. As a result, many children of aging parents forgo these discussions until it is too late, which inevitably results in a crisis.
Although elder abuse is an acute public safety and health care concern, it is a difficult problem to address because it is often underreported. Unfortunately, elder abuse is most often committed by family members. According to the National Council on Aging, in almost 60% of elder abuse and neglect incidents, the perpetrator is a family member. Two thirds of perpetrators are adult children or spouses. Therefore, it is important to be careful even when relying on family members to help.
Warning Signs of Senior Exploitation
A normal part of aging includes a decrease in cognitive ability. Senior citizens are more likely to become afflicted with dementia or Alzheimer’s as they age, not only limiting their ability to make good financial decisions, but also increasing the likelihood that they will be the victim of a financial fraud. Unfortunately, it may be difficult to see the signs that parents are being financially exploited.
Some common signs of elder abuse:
- Confusion about financial situation;
- A change in or unwillingness to discuss finances or estate plan;
- Unpaid bills or collection notices;
- Unusual, sudden or unexplained withdrawals or payments, particularly larger amounts;
- Opening or closing accounts suddenly;
- Expected checks are missing or never deposited;
- Missing bank or investment statements;
- Changes in beneficiaries on financial or retirement accounts;
- Changes in beneficiaries in wills, trusts or powers of attorneys;
- Bruises, pressure marks, broken bones, abrasions, burns
- Unexplained withdrawal from normal activities, a sudden change in alertness, or unusual depression; strained or tense relationships; frequent arguments between the caregiver and older adult
- Bedsores, unattended medical needs, poor hygiene, unusual weight loss
- Belittling, threats, or other uses of power and control by individuals
How to Help Aging Parents Manage Their Finances
Whether parents show signs of being exploited or are just becoming more forgetful as they age, it is important for children of aging parents to discuss financial affairs before the onset of cognitive decline so they can be involved in developing a long-term plan for their finances. When discussing financial affairs with aging parents, children should really focus on the following areas:
- Review Estate Planning Documents: It is important for aging parents to have the proper estate planning documents in order, such as a will, trust, medical and durable powers of attorney and a HIPPA form. Even if they have these documents, it is advisable to review them to make sure they are up-to-date, because likely their personal and financial situations have changed since they originally completed them. While a parent may not want to give complete control of financial matters to their child, there are ways that can keep them involved and provide assistance when needed. For example, a durable power of attorney or a trust can give an aging parent continued control over their financial affairs while also enabling a child to help in making financial decisions if the situation changes.
- Gather Information on Parent’s Financial Accounts: With all the financial accounts that people have, we all have difficulty keeping track of everything. Now imagine trying to determine what accounts an aging parent has in the event they become forgetful or incapacitated. Gathering documents and information on all financial affairs, including bank and investment accounts, credit cards, and recurring bills for health insurance, mortgage, property taxes and utilities, will permit children to act quickly to resolve any financial issues if they arise. Access to these accounts often includes online user ID and passwords. Having access to passwords and log in information is critical in today’s digital era. Internet companies are often very difficult to work with if you need to access someone else’s accounts (email, Facebook, Apple, Amazon, etc.)
- Review Financial Plans: While aging parents may lose their cognitive skills over time, they could still live well into their 90s, so it is necessary to ensure they have enough money in retirement to cover both the cost of living expenses and medical care. An important part of any financial conversation should include a review of an aging parent’s retirement income and portfolio, including pension, Social Security benefits and investments. Once you have reviewed their financial income and savings, it would be good to talk with a financial advisor to ensure their portfolio is properly invested to provide both growth and income as they age. If the services of a financial advisor are not being used, consider consulting with one. No one wants to run out of money in the later years of their life. While many aging parents may be fearful of growth investments, they need to understand that their cost of living isn’t going to decrease as they age, so having a portfolio that provides both growth and income will be vital to living a comfortable life.
- Discuss Potential Scams and How to Deal with Them: It seems you hear about a new financial scam every week, and many of them take advantage of senior citizens. That’s why it is important for children to discuss the common IRS email and phone scams they may encounter and what they should do to avoid falling prey to today’s financial thieves. The IRS NEVER calls the house or cell phone and demands payment or threatens action.
Do Not Procrastinate Regarding Parents Financial Affairs Conversation
While having a conversation with an aging parent about their financial affairs may be difficult, it is something that will help protect both parents and children in the long run from potential financial exploitation and mismanagement. It may take time to discuss all the various financial issues, so taking things one item at a time may be the best strategy to avoid overwhelming an aging parent. Staying attentive to your loved ones as they age can help them identify potential scams, minimize financial losses and enjoy a happy and fulfilling life in retirement.