Fraud by a Family Member or Person of Trust

During the last 10 of his 97 years, every time my father introduced me to someone, he always said, “This is my oldest daughter, Marti, and she manages all my finances!” He had six sons, so maybe it showed a bit of his old school nature that he pointed out it was me and not one of them who had taken on this task. He had made me co-executor of his estate along with my youngest brother, but he was very willing to have me take on the whole responsibility.

I felt very fortunate that none of my eight siblings questioned my ability to handle Dad’s money wisely, other than an occasional poke from one brother who expressed his concern about what portion of Dad’s money I might have invested in the stock market. I had financial power of attorney that I used to consolidate his assets under the watchful and trusted eye of my own investment counselor who did an excellent job of making them grow.

When my father passed away, no one complained about the amount of their inheritance, even after Dad’s assets had been divided nine ways. In fact, all of them expressed some degree of amazement. As I’ve learned, they were fortunate—compared to many other families—to have had a financially savvy and honest-to-a-fault sibling who didn’t ask for compensation for time spent, let alone take any more than her one-ninth share.

Something new I learned from Governor Cox’s Symposium on “Aging with WISE Purpose” is that, on average, older adults lose the largest amount of money to fraud perpetrated by family members or other persons of trust. Sadly, it’s one or more of their own children or another person they trust who manages to dip into their assets, sometimes depleting all of them, a costly form of elder abuse.

How to protect ourselves and our loved ones from financial fraud by a family member or another trusted person is something all of us should learn, regardless of how unlikely it might seem. Even “mentally sharp” older adults can easily fall prey to financial exploitation, but being lonely, isolated, dependent on others, or suffering some degree of cognitive impairment makes an older person especially vulnerable. This type of fraud often is not reported because the victim is ashamed that they let it happen, or they don’t want to get a family member in trouble.

Some typical scenarios are:

1. An unemployed adult son or daughter who lives with a surviving parent in that parent’s home who has access to financial statements, credit cards, bank accounts and other legal documents
2. A family member who feels entitled to the parent’s money because they take care of him or her
3. A trusted “friend” who uses “undue influence” to coerce the elder to change his or her power of attorney, will, trust, titles to property or insurance policy to benefit themselves and exclude the rightful heirs
4. A family member who talks an unsuspecting loved one into co-signing on a fraudulent “loan”
5. Use of credit or ATM cards without the family member’s permission

To protect against family member fraud, it’s important to stay involved with your older loved one’s financial dealings. Do not let him or her become totally isolated. Appoint a trusted person as power of attorney before the person becomes incapacitated. Consider having any major financial decision require the agreement of two or more trusted persons.

Five legal documents you and your loved one need for protection

1. Medical Directive: sets out the level and extent of care your loved one wants to receive when they become ill or incapacitated and provides clarity and guidance to family members.
2. Power of Attorney for Healthcare: allows you to make healthcare decisions for your loved one. Fast decisions can be made in the event of illness or incapacity
3. Power of Attorney for Finances: gives you permission to manage your loved one’s financial affairs, pay bills, sell property, contract for services, rent property, pick a living arrangement, etc.
4. Revocable Trust: allows your loved one to retain control over their estate while making transfers of assets to beneficiaries. It allows their estate to avoid probate at the time of their death.
5. Will: lets your loved one decide who should receive which of his or her assets after death. Without a will, the courts decide what happens to the assets.

Exploitation

Obtaining or using (unjustly or improperly) a vulnerable adult’s funds, credit, assets, or other property by deception or intimidation, is against the law. Such abuse might be committed by family members, in-home care providers, or even trusted people outside the home, such as financial advisors or spiritual advisors. Watch for these possible signs that exploitation is taking place:

• Disappearance of possessions
• Unreasonable charges for home repairs
• Inadequate living arrangements
• Unable to afford social activities
• Not enough money for food, clothes or other necessities
• Termination of utilities such as telephone, water, electricity, or gas
• Unpaid bills, despite adequate income
• Transferring assets to new “friends” assisting with finances
• Checks written to “cash”
• See a full list on daas.utah.gov

Financial abuse is sometimes committed by perceived romantic interests, who may take advantage of a lonely older person’s generosity or interest in maintaining the relationship. Many situations fall into gray areas. Family members may have different perspectives on such situations. In some cases, it may seem clear that what happened is financial abuse of an older person, but other situations will be more challenging to sort out legally.

What to do to protect yourself

• Realize that you are at risk. Most of us have trouble imagining a time when we might become vulnerable, gullible, or cognitively impaired.
• Consider giving up some financial privacy and autonomy. Be willing to let a trusted person periodically review your financial activity, and under some circumstances, override what you are trying to do.
• Simplify your finances so that there are fewer accounts to oversee or regularly review.
• Authorize each of your financial institutions to contact 1-2 trusted individuals (such as an adult child or one’s agent designated in a durable power of attorney), in case of suspicious financial activity.
• Have a series of “planning ahead just in case” conversations with one’s family or close friends. Encourage loved ones to talk about how family could intervene if they get worried about your potential financial exploitation.

What to do, if you suspect the financial exploitation of an older family member

If you suspect that your older loved one is being financially exploited, exactly what to do depends on the circumstances, the evidence you have found, the older person’s relationship with the perpetrator, and your relationship with the person. Here are some steps to consider taking:

• Talk to the person. Get a sense of how they see the situation. This helps them feel understood and respected, which may make it easier for them to accept advice or assistance.
• Gather more evidence to determine what is occurring. Make sure you have information to confirm your concerns or suspicions. Get the perspective of other family members. Coordinate your efforts.
• Contact the person’s financial institution.Newer rules are making it easier for them to refuse or stop disbursements if there is suspicion of financial abuse.

Do Something!

If you still are concerned about financial exploitation or other elder abuse, call Adult Protective Services so that they can investigate. They will not disclose the name of the reporting party to the older person or suspected perpetrator. Use the Eldercare locator online to find your local APS office.

See also:

• How to Protect Yourself and Your Loved Ones from Fraud - Utah Commission on Aging - University of Utah
• Elder Fraud: Difficult to Prevent, Even Harder to Recover Your Loss - Utah Commission on Aging - University of Utah

 

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