As your parents age, you may wonder how you will manage their care. While helping them stay in good health is vital, it's just as crucial to think about their financial health. That includes protecting them against elder financial abuse.
Elder financial abuse involves the misuse of a senior's financial resources by a third party, such as a caregiver, neighbor, friend, or family member. The New York State Office of Children and Family Services reports over five million seniors in the U.S. are financially exploited each year.
In a 2018 Wells Fargo survey, 38% of adult children say their parents are vulnerable to financial scams and 51% say they're concerned that someone could try to gain access to their parents' money. If you have older parents, here's how to spot and protect them against elder financial abuse.
What Does Elder Financial Abuse Look Like?
Elder financial abuse can be subtle. It may require taking a close look to find any misuse of your parents' assets. Different types of scams can be carried out by people in other areas of their lives. For instance, some of the most common elder financial abuse scams involving strangers include:
- Lottery or contest scams
- Home repair and yard work scams
- Telemarketing scams
- Charitable donation scams
- Door to door sales scams
- Reverse mortgage or predatory lending scams
- Medicare fraud
- Investment scams
- Annuity fraud
- Identity theft
- Phishing scams
In these instances, the scammer may look legitimate, which makes an aging senior think it's ok to hand over their money or access to it. In some cases, the scammer may use high-pressure tactics to achieve their goal.
When elder financial abuse involves someone that's known to the victim, it may take a different form. Caregivers, friends, or family members can misuse assets by:
- Getting a power of attorney under false pretenses to gain access to your parents' accounts.
- Setting up a joint account with your parents for the purpose of stealing money.
- Using their ATM or debit card without their knowledge or cashing checks from their bank account.
- Using their credit cards to make bogus purchases.
- Billing too much for their services in the case of caregivers.
- Saying they will withhold care or cause harm unless they're granted access to the older person's money.
These types of scams are more common than those that take place with strangers. The Wells Fargo survey showed that two-thirds of elder financial abuse is done by friends, family members, or another person the victim trusts.
What Makes Aging Parents Open to Financial Abuse?
There are certain factors that can make aging parents more open to being targets for elder financial abuse. Knowing what those are is one way to keep parents and their assets safe.
To start, parents are not talking about money with their adult kids. One-third of older people in the U.S. do not discuss later-life or end-of-life plans with their children. This includes things like a will and estate plan or power of attorney for money decisions.
Isolation and poor health can open the door to elder financial abuse.
It may be easier for strangers or caregivers to take advantage of aging parents if there are no friends or family members close by who can check in with them often. Health issues or mental deterioration can also cause problems. If an aging parent's mental capacity is in a decline due to dementia or a similar condition, it may be easier for a caregiver or a stranger to convince them to sign over assets or grant access to accounts without raising questions.
Protecting Parents Against Elder Financial Abuse
There are many things you can do to stop elder financial abuse before it begins.
In the best case, you and your parents should be looking over financial accounts together to check for any suspicious actions. If they don't feel right sharing their financial details with you, at least discuss whether bills are being paid on time and whether they have any money concerns.
Next, make sure your parents have the right legal and financial safeguards in place. That includes a will and a power of attorney for financial decisions. This document should spell out who your parents would like to have access to their accounts and what choices they're comfortable having that person make if they can no longer manage their money.
Protect your parents by having money talks with aging parents, and don't be afraid to bring up the subject.
Helping them to close unused accounts and streamline their finances can also help prevent elder financial abuse. The fewer accounts they have to manage, the easier it should be for them to keep track of where their money is going. If they are able and willing to use a mobile device to track their finances, setting up banking and credit card email or text alerts can also be helpful for checking their accounts often.
Help them to review their credit reports at least once a year to look for any mix-ups or accounts that may be fraudulent. Ask them if they'd be OK with signing up for free monthly credit monitoring and giving you access to that account so you can help them keep an eye on their credit.
These steps can help you put up a stronger defense but you should still be aware of what to watch out for. Some of the signs that can tip you off to elder financial abuse include:
- Assets or property that goes missing without a reason.
- Notices for unpaid bills or accounts that your parents don't know about.
- Unexplained withdrawals or purchases from bank accounts.
- Missing bank or credit card statements.
- Signatures on checks or other financial documents that don't match your parents' writing.
If you see any of these warning signals, you can contact the Administration on Aging for help. This federal agency can help you take the necessary steps to resolve elder financial abuse issues.