Seniors, and their families, need to be in the know.
Financial fraud of seniors is becoming increasingly common and is now a major problem in the United States. Elder financial exploitation varies in type and extent, but always leaves older adults and their families vulnerable. The epidemic is becoming so widespread, in fact, that award-winning author and journalist John F. Wasik has described elder financial abuse as “the crime of the 21st century.”
While it is challenging to define, experts at MetLife have described elder financial abuse as any type of unauthorized use of funds or the illegal taking of resources or property of people over 60 years old. In the “Broken Trust: Elders, Families, and Finances” study, MetLife reports that one million elders are defrauded of about $2.6 billion each year in the U.S. While it is estimated that one million older adults are victims of financial abuse each year, some experts argue that this number is too low, because many cases go unreported. Most people assume that the perpetrators are usually strangers, but the majority are actually close friends, family members or trusted individuals with access to the victim’s personal and financial information. Research reveals that the most common perpetrators are financial professionals, attorneys, fiduciary agents, family members, and non-agency related caregivers. Given the unfortunate reality of the problem, older adults and their families need to be aware and arm themselves with knowledge and protective practices.
Here are seven strategies to help protect your assets, resources and wealth:
1. STAY INVOLVED IN YOUR FINANCIAL MATTERS AND REMAIN CAUTIOUS.
At the very least, monitor your account statements, credit card bills, and bank balances. Meet with your financial advisor at least once a year and be sure to notify your attorney or accountant of any major life changes, such as the sale of an asset, a move to a new home, the loss of a loved one, or an inheritance. According to James L. Flanagan, founder of Bentron Financial Group, a wealth management firm specializing in planning for people age 60 and older, “Client involvement is critical. It does not mean understanding the details of every prospectus or legal document you read but rather having a basic understanding of what you own and why you have it. There is really no bad question to ask. It is your money and your life; anyone who is put off by your questions should probably not be your advisor.”
2. SEEK PROFESSIONAL AND TRUSTWORTHY COUNSEL BEFORE MAKING FINANCIAL DECISIONS.
If something sounds too good to be true, it probably is. Don’t be taken in by promises which don’t pass the “smell test.” You can begin by checking references at your local chamber of commerce or Better Business Bureau. Here are a few other places to check out professionals before engaging their services:
finra.org allows you to research brokers, brokerage firms, investment advisor representatives and investment advisor firms
cfp.net allows you to check the registration of a certified financial planner
naela.org allows you to find attorneys that specialize in elder care
caregiver.org allows you to do background checks on caregivers
3. AVOID ISOLATION AND STAY IN TOUCH WITH TRUSTED FAMILY MEMBERS.
As we age, and our circle of family and friends shrinks, we crave human connection. This natural desire for connection can put us at risk if we trust the wrong people. People who are isolated face a greater risk of financial abuse because they are often more vulnerable. It is important to maintain a sphere of healthy and trusted relationships.
4. BEWARE OF PEOPLE WHO ASK TO TAKE CHARGE OF YOUR FINANCIAL MATTERS OR BECOME YOUR LEGAL REPRESENTATIVE.
When someone asks to have their name added to your bank accounts and property titles, it should be a major red flag. Be careful sharing control of your assets.
5. KEEP YOUR LEGAL AND FINANCIAL DOCUMENTS IN A SAFE PLACE.
It used to be commonplace to store these documents in a bank safety deposit box. However, this can be problematic. According to a recent New York Times article by Paula Span, “Most of the time, [hospital] patients who have advance directives somewhere and don’t bring them to the hospital have simply left them at home. But lawyers’ offices and safety deposit boxes are also popular locations. All of which are useless if a person can’t direct his own care, or if family members are at odds, or they are rummaging through drawers and files looking for the paperwork while the ER staff stands by.” Flanagan suggests that his clients keep these very important documents in a fireproof safe in their home and “always make sure someone you trust has the combination,” he says. “These documents need to be available in an emergency and especially on a weekend.”
6. BEWARE OF TELEPHONE SOLICITATIONS OR EMAIL SCAMS.
Flanagan notes two recent scams targeting seniors in Chicago, Ill. The first he describes as the “grandparent scam.” This is when someone posing to be your grandchild calls on a very muffled phone saying they need money to get out of jail. They will usually say they are traveling or at school and have gotten into trouble that they would prefer not to share with their parents. The grandparent is then directed to send money to the child via some money transfer agent. Another scam involves people calling and saying they are from the IRS. This is extremely popular near tax season. The caller explains they are from the IRS and that you owe back taxes. They threaten to lien your assets, bank accounts, and your home if you do not pay immediately. They will accept payment by credit card to “solve your tax problem.” Flanagan explains, “The IRS does not work that way. You should be notified in writing through the U.S. Mail. If someone calls saying they are from the IRS, and you have not received a letter, hang up immediately.”
7. PROTECT YOUR EMAIL ADDRESSES AND PASSWORDS.
Remembering all of your usernames and passwords to navigate life on the web can be difficult for even the most organized person. You need to guard this information and only share it with your most trusted family members or financial advisors. Do not leave it in public view or write your passwords on a Post-It note next to your computer.
If you have concerns or feel that you or a loved one may be a victim of elder financial abuse, do not hesitate to report the issue to authorities. Look for the agency that provides services to older adults in your area. They will be able to assess what the next steps should be or what protections you can put in place. For immediate needs, call the local police department who in turn should contact the local state’s attorney. You can also discuss these concerns with a trusted loved one, family member, or professional (attorney, bank manager, or financial advisor). It is vital to address your concerns in a timely matter. Trust your gut, and let someone you trust know about your discomfort.