Elder Financial Abuse

If there were one single issue that every wealthy family could identify as top priority for the coming year, it would be increasing awareness of elder abuse. While physical or emotional abuse may be top-of-mind, financial abuse is increasingly a common event.

Fraud, Scams, and Phishing.  Con artists often prey on seniors, who may have difficulty identifying a scam, whether they are approached in person, over the phone, or online.

Elder financial abuse has become such a pervasive and serious issue that Hollywood has created a film for it. The 2020 film “I Care a Lot” features a slick court-appointed guardian (Rosamund Pike) who takes advantage of wealthy retirees. The plot twists when she targets the mother of a dangerous gangster.

This dark comedy takes a humorous approach to a painful subject and illustrates just how quickly victims can become entangled in a scam.

While Pike received a Golden Globe Award for Best Actress, the film’s most rewarding financial lesson is this: Be aware of the characteristics of recent scams to protect. Remember, if it sounds too good to be true, it probably is.

Why Now?  A confluence of factors has led to the increase of abuse. The number of older Americans is growing steadily as the bulging demographic of Baby Boomers retire and the Silent Generation lives longer. This is compounded by the significant amount of wealth that retirees now control.

In addition, the investment industry’s trend away from corporate pensions toward self-directed retirement accounts has left more retirees responsible for their own investment decisions, which is both good and bad.

Finally, the unavoidable aging process plays an important role, as a decline in cognitive health can result in lapses in memory, judgment, and intuition, skills that help us identify and protect ourselves against financial fraud.

Beware of Friends, Family, and Caregivers.  Sadly, financial abuse is often perpetrated by the people closest to the victims. Family members, relatives, neighbors, and friends can be very manipulative and may drive a victim to an ATM and force them to withdraw cash, forge checks, or manipulate older relatives to change their wills.

The abusers also can include professionals, such as caregivers, investment advisors, attorneys, or accountants. These professionals often enjoy a trusting relationship and access to important documents or assets.

If you don’t believe that elder abuse occurs in your community, just remember that abuse is an under-reported crime due to the shame and embarrassment it brings to the victims.

Gray Divorce. With the Silent Generation and Baby Boomers living longer, the incidence of older couples divorcing is on the rise. Silver Splitters – or Diamond Divorcees – also are getting remarried, bringing younger second spouses into the family.

If the second spouse is also a caretaker for an aging partner with declining cognitive abilities, it can be difficult to determine if undue pressure exists to change an existing will. This can cause friction between the children from a first marriage and the new spouse. Unfortunately, changes to estate plans are often discovered by heirs only after a loved one is deceased, too late to clarify the circumstances around redistribution of assets.

Next Steps. These examples merely scratch the surface of the issues related to elder financial abuse. Commit yourself to increasing your defenses against elder abuse in the coming year and be prepared if it occurs.

Step 1: Meet with your accountant, attorney, investment advisor, doctor, and other professionals to solicit their advice. Addressing elder abuse is a huge issue in these professions. Each will have recommendations relevant to your family’s situation. One hot topic is identifying a “Trusted Contact” at all your financial institutions.

Step 2: Protect your family at home. Be careful what people you allow into your house. Secure your checkbook and valuables. Use your safety deposit box. Shred old financial statements. Check your credit report. Get your legal documents in order.

Step 3: Monitor your assets. Keep an eye on transaction activity in your accounts. Get access to duplicate statements for your parents’ accounts or other family members’ accounts.

Step 4: Talk to your attorney. Wealthy families often include a family member experiencing financial pressures, substance abuse, divorce/re-marriage that might be a catalyst for one family member to take advantage of an elderly relative. An attorney can help update trusts and wills to help protect the family from financial misfortune, internal conflict, and embarrassment.

Conifer Bay Capital has increasing knowledge and resources in the area of elder financial abuse. For suggestions about where to start with your family, call us.

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Why Is Elder Abuse in the Family Governance Section?

Wealthy families have two primary interests. The first is maximizing the value of a family’s assets and efficiently passing them from generation to generation. This is all about investing, financial planning, and tax/estate planning.

The second is preparing future generations to inherit wealth, which is where Family Governance comes in. Financial literacy, shared values, philanthropy, genealogy or family history are all tools for preparing your heirs, including being knowledgeable about financial scams and elder abuse.

NOTE: This is an update from our September 2019 newsletter.