Elder Financial Abuse: Where did Grandma’s Money Go?
When I was growing up, I remember an instance where Elder Financial Abuse happened to my Grandmother. My Grandmother was one of the sweetest souls that God created, and I never remember her saying a bad word about anyone. She constantly smiled and talked to everyone and had a way of making people feel safe in her presence. It probably helped that she was a small person, all of 5 feet tall with heels and a perm adding to that total. Unfortunately, this same magnetism also made her a target for people to take advantage of her. They could immediately sense her endearing personality and inclination towards generosity.
I remember an evening where my parents were upset about something that happened with Grandma. At the time, she lived in a house that was on my parent’s driveway, so it was easy for them to stop in and see her on a regular basis. She had a visitor that day. Someone in the financial profession stopped at her house and sold her some type of annuity. My grandmother, at the time, was in her 70’s. There was no financial need for her to have this annuity. There were very high surrender charges that were not appropriate for someone her age. The person was motivated by earning a commission, he influenced her decision and took advantage of her. Now, to her, she did not invest a lot of money into this product. However, it would no longer be available to her in an emergency if she needed it. The fine print of the product was not fully explained. Thankfully, my parents were able to get her out of the contract. This is just one example of Elder Financial Abuse.
There are many forms of Elder Financial Abuse and it is not just financial professionals that are guilty of this abuse. Forms of abuse can include fraud, undue influence, scams by family members and trusted other, illegal viatical settlements, abuse of powers of attorney or guardianship, identity theft, internet “phishing”, failure to fulfill contracted health care services, and Medicare or Medicaid fraud. It’s as if the elderly are the perfect targets, but what makes that the case?
What risk factors make the elderly the prime targets for financial exploitations and abuse? They have stuff, they have wealth, they have equity in their homes, they have regular income and social security, they have savings and retirement accounts. However, that’s just the financial side of things. What about the people who are lonely? They have recently lost a loved one and do not want their caregiver to leave, so they will pay them to stay. What if they have a disability and a caregiver has to access all of their personal assets through a POA? What if they are isolated and no one else is around to talk to and they are pressured to make a decision without understanding the product, or medicine, or whatever is being sold?
People need to realize this is a crime. These crimes are broken down into three categories. The three categories include crimes of occasion or opportunity, crimes of desperation, and crimes of predation or occupation. Crimes of occasion or opportunity occur because the victim is in the way of what the perpetrator wants. Crimes of desperation are those in which family members or friends are desperate for money and will take whatever means necessary to get what they want. This may be a family member or caregiver that is dependent on the victim for housing and feels that they “should be compensated”. Crimes of predation happen when trust is built, and a relationship is formed to specifically exploit the victim’s financial situation down the road.
If you have someone who is elderly in your life, please consider what you can to do prevent these things from happening to them. Ask them questions about what is coming in the mail. Ask them if anyone new is now involved in their life. Have any relatives been asking for money on a regular basis? Are there relatives or friends that are showing an unusual amount of interest in their well-being? Are they talking about a new miracle pill? Consider reviewing bank statements and retirement accounts to make sure no unusual transactions have taken place. Do life with them and be aware of who has an influence on them.
Chief Financial Officer