Financial exploitation (FE) in older adults is the “illegal taking, misuse, or the concealment of funds, property or assets of a vulnerable elder,” according to the National Center on Elder Abuse, and poses a serious public health problem.
FE represents the highest percent (5.2 percent) of self-reported abuse among cognitively intact community-dwelling older adults and occurred in 21 percent of all cases reported to Adult Protective Services (APS).
The estimated financial loss among older Americans in 2012, as a result of FE, was $2.9 billion.
Perpetrators are more likely to be a relative who is chronically unemployed and financially dependent on the older adult, an abuser of alcohol or drugs, or an in-home caretaker.
For a variety of reasons, these incidents go largely unreported. The reasons include shame and loyalty to the family member or caretaker.
Recently, I was approached by a friend who knew I was a financial counselor and educator, and asked for my help with her finances. Several years prior, she had suffered from a stroke and was determined to reclaim control over her finances.
While ill, one of her daughters, who was charged with bill paying, did not do so in a timely manner. Now that my friend had recovered enough to be independent, she was determined to learn how to manage these issues herself.
I agreed to meet with her and asked that she bring all statements that concerned finances and debt. She arrived at the first meeting with a box of papers. After some time I realized that her adult children were responsible for most of the debt. While my friend did not have much money in savings, she had predictable income. As a retired government employee she received a pension, as well as Social Security. She also played the organ at her church, for which she was paid a few hundred dollars per month.
This friend was essentially supporting most of the adult children in some fashion, which kept her in debt. Because she did not understand the nature of “pay day lenders,” she took money from them to pay off her credit card debt. The interest rate on the payday lender loan was 37%, the maximum allowed by the state. (She was shocked when we called to ask about this.)
Additionally, my friend had two “six-month same as cash” loans that were scheduled to be paid by certain dates. What she did not understand is that if she was one day beyond the “expiration date” in paying the final amount, the lender would go back to Day 1 and calculate interest at the rate of 30 percent and add it to the balances of these loans.
One daughter asked her mother if “she could help” her son, who had to appear in court because of several speeding tickets, to pay tickets, fines and court costs. My friend was unable to refuse. When I tried to counsel her about saying “No,” her response was “I am praying about it.”
Another family asked for my help because the live-in caretaker was taking the grandmother to the casinos to “have fun” and upon checking, $140,000 of grandmother’s money was missing. Additionally the caretaker had persuaded grandmother to gift her home to the caretaker at grandmother’s death.
My advice was for her mother to hire an attorney immediately before more damage could be done, fire the caretaker and have her arrested, if possible, or sue her, as there are laws against “undue influence.” (Many attorneys specialize in elder law, which is very important, as laws vary from state to state.)
Financial exploitation happens within many families, from all socioeconomic and ethnic categories, and, once again, are largely unreported. For this reason all of us need to remain vigilant for signs of this abuse.
Bankers and investment brokers can be the line of first defense by noting unusual withdrawals of money, clients being “accompanied” by caregivers or family members, and paying special attention to any signs of dementia or confusion by the client.
As a former investment adviser at a major financial institution, we were constantly reminded to be careful of unauthorized transactions, suspicious signatures and signs of “undue influence” by family members. We attempted to monitor the clients’ mental acuity by asking questions that could give us signs of trouble, and to report any suspicions to management.
We as a society must do what we can to protect our most vulnerable citizens. “It is meet and right, so to do.” (From the “Book of Common Prayer”).
Karen Shea is a Certified Financial Planner TM, (fee-only) and can be reached at 901-237-9783.