Financial abuse of the elderly will explode in the next ten years. More elderly people will have lump sums, live alone, and begin to suffer cognitive decline, making them targets.
This problem is an American one – Americans suffer five times the risk of financial abuse than our counterparts in Europe. The U.S. is a ripe environment for financial abuse because Americans are expected to handle so much cash alone.
I do not believe that financial tips will help people significantly because the problem is systemic, widespread and deeply-rooted. The only way to make an impact is to change the system, which includes heavily regulating the money management and advice industry. And other countries have proven that it is possible to minimize the abuse. But until our government moves boldly and quickly to prevent it, I feel obligated as an American to provide protection tips. Whatever we do, we must not let these financial tips become an easy way to blame the victims; to stop financial abuse, we need a system-wide fix.
Here are some tips. Warning: the list is insanely long and not always practical to elders living alone and in isolation.
- When you or someone close to you is still mentally sharp, create powers of attorney and health care directives. Unfortunately, for those who are alone and without a trusted family member or friend, options are limited. Bank trust advisors are not regulated well enough. Some tip sheets suggest going to a financial institution (but I do not), or an attorney (they are usually helpful for contracts but not financial advice). I recommend a fee only financial advisor, which are more transparent and objective. You can find a fee only advisor here.
- To protect your parent, develop a relationship with his or her caregiver and be a hawk over finances. The caregiver will be deterred from financial exploitation if they know you’re paying attention.
- Set up direct deposit for checks so others don’t have to cash them.
- Consult with a financial advisor or attorney before signing any document – assume you don’t understand it.
- Shred receipts, bank statements and unused credit card offers before throwing them away.
- Lock up your checkbook, account statements and other sensitive information when others will be in your home.
- Order copies of your credit report once a year to ensure accuracy.
- Never give personal information, including a Social Security Number, account number or other financial information to anyone over the phone unless you initiated the call and the other party is trusted.
- Never pay a fee or taxes to collect sweepstakes or lottery “winnings.”
- Never say yes to a financial decision the first time a decision is asked for. Never. Get all the details in writing and get a second opinion.
- Have the bank and advisor look out for any suspicious activity related to your account.
- Don’t allow people you have hired (caregivers, cleaners, etc.) to have access to information about your finances.
- Get references for any worker you hire. Do not be afraid of sounding mean or rude. In double checking, you are you are being careful, professional and friendly.
- Pay with checks and credit cards instead of cash to keep a paper trail.
- Say no more often than yes. It is your money.
- Trust your instincts. Watch and acknowledge your own feelings of being threatened or intimidated. Don’t ignore those gut feelings – they are important clues. If you think or feel someone close to you is trying to take control of your finances, call your local Adult Protective Services or tell someone at your bank. There are new rules to make banks proactive about elder abuse. Exploiters and abusers are often very skilled. They can be charming and forceful in their effort to convince you to give up control of your finances. Don’t be fooled; if something doesn’t feel right, it may not be right. If it sounds too good to be true, it probably is.
Here are some worrisome bank activities that are warnings signs of financial abuse or exploitation.
- Unusual activity in an older person’s bank accounts, including large, frequent or unexplained withdrawals or ATM withdrawals by an older person who has never used a debit or ATM card.
- Changing from a basic account to one that offers more complicated services the customer does not fully understand or need.
- Withdrawals from bank accounts or transfers between accounts the customer cannot explain.
- Uncharacteristic attempts to wire large sums of money.
- New “best friends” accompanying an older person to the bank. Also, a caretaker, relative or friend who suddenly begins conducting financial transactions on behalf of an older person without proper documentation.
- Sudden non-sufficient fund activity or unpaid bills.
- Closing certificates of deposits (CDs) or accounts without regard to penalties.
- Suspicious signatures on checks, or outright forgery.
- Confusion, fear or lack of awareness on the part of an older customer. Shame could be conveyed by refusal to make eye contact and reluctance to talk about the problem.
- Checks written as “loans” or “gifts.”
- Bank statements that no longer go to the customer’s home.
- New powers of attorney the older person does not understand.
- Altered wills and trusts and/or loss of property.
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