How to Recognize and Prevent Financial Elder Abuse
Financial elder abuse is becoming an increasingly present risk for aging adults in the United States.
So much so that just last month, the U.S. House of Representatives passed the Financial Exploitation Prevention Act to give the financial industry better tools to address suspected exploitation of seniors.
If you have an aging loved one, they may be susceptible to financial elder abuse and exploitation. The good news is you can put safeguards in place to help protect them from unnecessary financial losses.
What is Financial Elder Abuse?
The U.S. Department of Justice defines financial exploitation as the illegal or improper use of an elderly person’s money, property, or other resources for monetary or personal benefit, profit, or gain. However, financial abuse may also include less obvious offenses, like a caregiver withholding or negligently mismanaging funds.
Unfortunately, up to five million older Americans are abused every year, according to the National Council on Aging. As a result, the annual loss by victims of financial abuse is estimated to be at least $36.5 billion. Moreover, victims of elder abuse often experience significantly higher levels of psychological distress than those who haven’t experienced abuse.
In many cases, the abuser is a close friend, acquaintance, or family member. And oftentimes the victim is completely unaware of the abuse, which is why these types of crimes tend to go unreported.
Who’s at Risk?
While elderly adults in general tend to be targets, certain factors can make someone particularly vulnerable to financial abuse. For example, seniors with cognitive impairment or poor physical health are often targets of abuse. This is especially true if they have trouble with activities of daily living. In addition, elderly adults living in social isolation tend to be more susceptible to scams and exploitation.
According to the National Center for Biotechnology Information, older women who are white and live alone are the most likely victims of financial elder abuse. In general, women are more likely to be victims of abuse than men. However, regardless of gender, a lack of familiarity with financial matters often contributes to this type of abuse.
Spotting the Warning Signs of Financial Elder Abuse
According to the National Center on Elderly Abuse (NCEA), common signs of financial elder abuse and exploitation may include:
- Sudden changes in bank account or banking practices, such as an unexplained withdrawal of large sums of money or the addition of signatories to an account
- Abrupt changes to a will or other financial documents
- The unexplained disappearance of funds or valuable possessions, or sudden transfer of assets
- Substandard care provision, unpaid bills, or eviction proceedings
- The provision of unnecessary services
- Evidence of poor financial decision making
In addition to the financial warning signs, the NCEA cites malnutrition as one of the potential signs of financial elder abuse. Emotional changes such as depression, irritability, and withdrawal may also indicate abuse.
How to Prevent Financial Abuse and Exploitation
Knowing how to recognize the warning signs of financial elder abuse may help you prevent a bad situation from getting worse. However, the best way to avoid financial abuse and exploitation is to put a plan in place before there’s any evidence of a problem.
Though it may be uncomfortable, having an open and honest conversation with your loved ones about financial elder abuse is typically a helpful first step. Consider designating a trusted financial power of attorney while they (or you) are still of sound mind. This can help prevent the wrong person from gaining financial control in the event of incapacity. You may also want to work with a trusted advisor or attorney to ensure their (or your) intentions are well documented.
In addition, you can appoint a trusted contact for accounts and investments. This is someone you authorize a bank or financial institution to contact about questionable activity on an account.
Lastly, if you’re concerned about your elderly loved ones, it’s important to stay connected with them so they don’t slip into isolation. If they’re under someone else’s care, get to know their caregivers and check in periodically. Since abuse victims often lack a strong advocate, let people know you’re paying attention. This alone may help protect your loved ones from financial abuse and exploitation.
Protect Yourself and Your Loved Ones from Abuse
Financial elder abuse is a rampant and often underreported issue among the elderly community. The best way to protect yourself and your loved ones is to start planning now. A trusted advisor can help you take the necessary steps to avoid financial abuse and exploitation. If you’d like to get started, please contact us to schedule an introductory conversation.
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Investment advisory services provided by Lantz Financial, LLC, an SEC registered investment adviser.
Non-investment topics discussed are for informational purposes only and should not be considered legal, tax or cybersecurity advice. Individuals should consult with their own legal, tax or cybersecurity expert concerning their own specific situation.