Elder fraud and financial exploitation has become an epidemic.
More than ever before, con artists and family members alike are taking advantage of their elderly relatives, friends, or neighbors.
Could your parents or grandparents be next?
The best defense against elder fraud is having caring friends or family with the senior's best interests at heart. But those friends and family can only prevent elder fraud if they know how to spot it — and that's what this blog post will teach you.
This post will cover five ways you can help keep your loved ones safe from elder fraud and financial exploitation. Specifically, you can:
Talk with them about their finances.
Ask them about suspicious phone calls or interactions.
Keep abreast of changes to their estate plan.
Inquire about about caretakers, helpers, or sudden "best friends."
Investigate abrupt or unexplained transfers of assets.
But before we dive in to prevention, let's cover some of the basics of elder fraud.
What is Elder Fraud?
Broadly defined, elder fraud is when someone improperly (or illegally) uses or steals a vulnerable senior's assets.
Every state has a different definition of "elder fraud" or "financial exploitation" of an elderly person, so look to your state statutes to find an exact definition for your jurisdiction.
Definitions are great, but what does financial exploitation look like?
A recent survey by the Investor Protection Trust identified the three most common scenarios of financial exploitation:
Theft or diversion of funds or property by family members
Diversion of funds or property by caregivers
Financial scams perpetrated by strangers
Notice anything surprising on that list?
How about this: in the two most common scenarios of financial exploitation, the fraud is committed by someone who knows the elderly person.
Most people think of fraud as emails from Nigerian princes or telephone scams. In reality, however, financial exploitation is commonly perpetrated by family and friends.
Another misconception is that adults are only susceptible to elder fraud if they have Alzheimer's or another type of cognitive impairment (in other words, a condition that causes a deterioration of cognitive abilities, which can affect memory and reasoning skills).
To be sure, seniors with dementia are particularly at risk for elder fraud. And odds are, you may have a loved on that falls into that category.
According to the Alzheimer’s Association, 15-20% of elders 65 and older have some type of mild cognitive impairment. Even more staggering, approximately one-third of people age 85 and older have Alzheimer's disease.
But it is important to recognize that any senior can fall victim to elder fraud.
How Can I Prevent Financial Exploitation?
There are a number of things you can do to help prevent your loved ones from being taken advantage of:
1. Talk with them about their finances.
For starters, you can educate them (and yourself) about financial exploitation and the potential dangers they may face. After all, knowledge is power.
Meet their financial advisors, accountants, attorneys, and other advisors so those people know you and can potentially contact you if they believe something suspicious is going on.
But be careful: becoming so involved in a loved one’s financial life may create the appearance of undue influence. One way to avoid this is to make sure you are not receiving an inequitable or uneven share of your loved one’s estate.
For example: If you have two siblings, but you are receiving 80% of your parents’ estate, your interest in your parents’ finances may look more suspicious. Or if a neighbor gives you $20,000 as a “thank you” for mowing his yard over the years, you may want to consider rejecting the gift or alerting the neighbor’s family members to let them know about the offer.
It is important to keep loved ones avoid from being exploited, but you also don’t want to find yourself the subject of a lawsuit claiming that you are the one committing financial exploitation.
2. Ask them about suspicious phone calls.
Swindlers often cold-call seniors to get personal information. Here are a few common scams your loved ones should be aware of:
Sweepstakes scams: An elder receives a call that they have “won” a sweepstakes and must provide bank account information for a direct deposit or send a check to pay taxes on their“winnings.”
Grandchild scams: An elder receives a call saying something like, “Grandma, it’s me... please don’t tell my parents.” The caller then claims they are out of town and need to be wired money to make bail, pay for travel expenses, etc.
Healthcare scams: An elder may get a call offering discounts on health insurance or a call from someone claiming they work for the government and need a Medicare number or Social Security Number to issue a new card.
Whatever the scam, here is the best protective measure: Encourage your loved ones to never give out personal information to strangers (or even people claiming to be friends or loved ones) over the phone.
3. Keep abreast of changes to their estate plan.
This is a little more difficult, since estate plans are often very private documents. We recommend that clients review your estate plan with your family and/or representatives at least once a year. That sort of “fire drill” could be a good excuse to review your loved one’s estate plan and discover if there have been any unexpected changes.
Check to see if a non-relative has been included as a representative or beneficiary, or if any relatives have been cut out of the estate plan since the last time you reviewed it. There may be perfectly reasonable explanations for these changes. However, they could also indicate that someone is trying to manipulate your loved one.
4. Inquire about about caretakers, helpers, or sudden "best friends."
Has a non-relative, long-time friend, or neighbor started spending a lot of time with your loved one? Do they suddenly have a new “best friend” or someone who takes care of them at home?
These developments could be a sign that someone is trying to work their way into an elder’s life in order to exploit them, financially or otherwise.
It might seem innocuous enough (and even generous!) for a new friend to “hang out” with an elder and to take care of their medical and financial needs. But because of the potential for abuse, we recommend hiring only licensed caregivers. Obtain reviews and make sure they have the proper licensure and training.
Making new friends and meeting people is fine. The goal is simply to communicate with your loved one to make sure they are not giving un-vetted people undue control over their life.
5. Investigate abrupt or unexplained transfers of assets.
This is also difficult to prevent. If you don’t regularly review your loved one’s financial statements, how will you know whether they transfer assets?
To a certain extent, you can’t. That is why it is important to talk with your elderly loved ones about finances so that, if they consent, you can regularly review their statements or stay up to date on other financial developments.
There are, of course, other ways to determine if assets have been transferred. Look in their garage: is a car missing, or has a nicer car been traded in for one of lower quality? Walk around the house: Are any items missing? Or, on the other hand, has your loved one made any new and unusual purchases?
You can also keep an eye on public records such as the County Clerk real estate records. Those records reflect transfers of real estate. If your loved one recently gave their house, for example, to a non-relative, you should investigate why.
Unexplained or unexpected transfers (or purchases) of assets can indicate that someone has convinced the elder to give them assets or that they have duped the elder into buying something they don’t need.
A strong estate plan can help prevent elder fraud.
Although it can be difficult to stop fraud in its tracks, you can maintain a greater degree of vigilance. Keep an open dialogue with neighbors, friends, and advisors connected to older relatives or other loved ones. The more people you have looking out for your loved one, the less likely it is that someone can take advantage of them without your knowing.
To speak with a qualified attorney about estate planning or elder law issues, call the Oklahoma City estate planning attorneys at Postic & Bates to schedule a FREE, no-obligation consultation appointment.
David M. Postic is an associate attorney at Postic & Bates, P.C. His practice includes estate planning, probate, real estate, adoption, business law, and litigation.
You can email David through our Contact Us page or by calling our office at (405) 691-5080.
[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]