Precautions to Prevent Financial Abuse
Financial abuse against elderly or isolated persons is an issue that is widespread. Due to the current global pandemic, the need for physical distancing, and often mandated isolation from family and friends a lot of people are currently susceptible to being taken advantage of and having their assets stolen.
Elder financial abuse can result in theft, fraud, misuse of a person's assets or credit, or using a close relationship to apply pressure and undue influence to gain control of a person's money or property. In more extreme situations a person can be manipulated and pressured to change his or her estate plan to only benefit the abuser. Unfortunately, in certain circumstances it is a family member of the elderly person that inflicts the financial abuse. Potential victims of financial abuse are often lonely, isolated, have mental or physical disabilities, have recently lost someone, or may be unfamiliar with matters dealing with money. In this current climate it is very important to make sure that you and your loved ones are set up to protect against potential financial abuse and fraud.
Set forth below are some precautions that can be taken to protect you and your aging loved ones.
While a person still has capacity, it is best to make an estate plan if a plan has not been developed already. The estate plan should put people in fiduciary positions that are trustworthy and have the person's best interests in mind. This also allows the person while capable to develop his or her plan for the distribution of assets upon death by way of a will, trust, and beneficiary designation. It is important to have the person designate agents in a general power of attorney (to assist with financial decisions) and in a living will and durable power of attorney for health care (to assist with healthcare decisions.) The designated agents can assist when needed and take over when the person lacks the necessary capacity.
It is important to stay in touch and connected with your older loved ones. As mentioned earlier isolation is often a trigger for financial problems. Connection can be difficult based upon distance, family circumstances and the current need for separation due to COVID -19. Starting some routine with checking in and developing an ongoing plan for connection can do a lot to keep your loved one from feeling isolated. Connection can be through visits, phone calls, family emails chains, group texts or zoom/Facetime calls. Even if the engagement does not feel significant, it is better than no engagement and does a lot to prevent isolation and vulnerability.
Create a family financial management plan. Discussing finances with a loved one can be difficult and oftentimes people want to keep their finances private. However, as people age there can be respectful conversations around a management plan and/or budget. It is best to have all family members involved in some fashion so there is transparency and less opportunity for one individual to inflict financial pressure or abuse. This may not be possible in smaller families or for people that have no family. In those circumstances it is even more important to have established trusted relationships with financial advisors, friends, or even third-party fiduciaries. The financial management plan can discuss bill paying, budget tools, expenses and delegate duties and tasks based on skills and proximity.
Another tool to assist your loved one and to reduce the risk of fraud is to simplify finances. This may result in closing extra credit accounts, setting up auto bill pay for ongoing expenses, and setting up automatic deposits of income. This can also tie in with the family financial management plan and provide the feeling of independence with some necessary oversight.
Providing education to your loved ones about potential scams and fraudulent activity is also a good idea. It is important to keep up to date on current scams that are circulating so you can keep your loved one apprised. Remind them to never reply to email requests asking for private information such as account numbers or social security numbers. It is also important to advise them to never give out their social security number or credit card numbers to someone on the phone unless they initiated the call. Advise them to not feel threatened by pushy telemarketers or solicitors and can and should say “no” when necessary. They do not have to answer the phone or the door if they do not recognize the number or person. Remind them if they do not understand or feel confused about a bill, contract, or any financial matter to come and talk to you. Tell them they do not need to sign anything until they feel comfortable and fully understand what they are signing.
If a family member begins to develop a close relationship with a care provider, a new friend, or a neighbor, it is a good idea for you to also develop a relationship with this person. This may reduce any potential risk of influence or financial abuse if the person recognizes that the loved one's family is actively involved and paying attention.
Another way to be alerted to changes in finances is to sign up for a service that can track financial activity. One such service is EverSafe. It sends suspicious activity alerts, including warnings for unusual withdrawals, missing deposits, odd charges, and changes in spending patterns to selected trusted people. It is possible to pick a few people that would receive such alerts, such as family members, friends or a family attorney.
Financial fraud tends to happen over time so with the right precautions it can be avoided, addressed and stopped altogether. It is a good idea to start these conversations now and prepare as much as possible.
This article is not intended to replace legal advice applicable to your situation and should be used only for informational purposes. Consult with your legal or tax advisors before implementing any suggestion contained herein. Ms. Soyer is an associate attorney with the firm of Sandra L. Clapp & Associates, P.A. and can be reached at firstname.lastname@example.org or (208) 938-2660