As more and more Baby Boomers retire and advance in age, increasing numbers of American seniors are at risk of falling victim to schemes aimed at their wealth. In fact, a recent study found that financial exploitation affects many seniors, causing losses of more than $2.9 billion¹ annually. Sadly, the losses often aren’t reported when discovered and they’re rarely recovered.
So what can you do to protect your loved ones? It starts by gaining an understanding of what elder financial exploitation is, learning how to spot the red flags, and putting preventative measures in place.
What Elder Financial Exploitation Looks Like
Elder financial exploitation and abuse occur when someone misuses or takes advantage of a vulnerable adult’s assets for their own benefit. It’s often done without the vulnerable adult’s knowledge or consent and can drain their financial resources.
Elder financial exploitation and abuse can often be prevented by paying attention to tell-tale signs that someone you love is being scammed. Here are some red flags to watch out for:
- Unusual or unexplained withdrawals, purchases, or changes in financial habits
- Abrupt or unexplained changes to wills, trusts, powers of attorney or beneficiaries
- Reluctance to discuss financial matters
- New friends or sweethearts, or withdrawal from existing relationships
- Fearful or confused behavior
- The onset or worsening of an illness or disability
Family Dynamics Play a Role
Family dynamics are likely a reason why many elder abuse crimes do not get reported. Often, the perpetrator in these crimes is actually a member of the victim’s own family or someone close to them such as a caregiver or a “companion.” Because the victim may rely on the abuser for care or basic needs, victims are reluctant to report an issue. According to a report by the National Adult Protective Services Association, only 1 in 44 cases of financial abuse is ever reported, and 90 percent of abusers are family members or trusted contacts.
Planning and Communication
It’s a strange role reversal when adult children must become actively involved in their parents’ finances. Although there may be some hesitation or resistance, it’s important to start having financial conversations before there’s an issue. The key is to start gradually and make sure that all relevant parties are included in the conversation. Too often, important discussions between parents and adult kids happen one-on-one rather than as a family—and that can create problems down the road. The best way to avoid any issues is to review and discuss financial and estate plans together as a family. It can also be helpful to involve an impartial professional advisor, such as a financial advisor working in a fiduciary capacity.
An Ounce of Prevention
There are several steps one can take to avoid or limit the risk of financial exploitation:
- Help your loved one get organized, including locating and filing key financial records
- Regularly review wills, trusts, powers of attorney, account statements, insurance policies and beneficiary designations
- Choose a trusted contact so that their financial institutions and professional advisors know who to contact in case of suspected financial exploitation
- Discuss your loved one’s goals and attitude toward money so that you’re more likely to spot any irregular spending habits.
- Talk about how to spot and respond to potential scams
Our team at ML&R Wealth Management participates in training and education to recognize the vulnerability of older clients and how to report suspected abuse through the proper channels. If you suspect elder abuse and exploitation is occurring, please connect with our team. We can advise you on the process and connect you to local resources to get you the help you need.