EHDH Estate Planning

Elder Financial Abuse Can Be Prevented

Elder financial abuse is always upsetting, but it’s even worse when a parent is in a long-term care facility and adult children aren’t there to prevent it or stop it. This is especially true during the pandemic, when restrictions meant to keep residents safe from COVID make them more vulnerable to scammers.

The federal Consumer Financial Protection Bureau recently released a guide to prevent this very same problem, as reported in the article “Preventing Elder Financial Abuse When Your Parent Is In Long-Term Care” from next avenue.

The goal is to help professionals who work with the facilities to recognize red flags, develop policies and protocols and use technology to prevent residents from becoming victims. There’s also a lot of good information in the guide for the children of residents.

One reason elder financial abuse occurs so easily in long-term care facilities is because members of care teams can easily get access to financial records as well as medical records. Putting protections in place before financial abuse happens is the best strategy.

Banking and credit card accounts should be monitored regularly, and fraud alerts should be set up to be sent to the individual and a designated, trusted contact. An outside professional may also be hired to watch over the person’s finances.

Experts recommend listening to their loved ones during visits, online or in person. When a senior complains about money or personal belongings going missing, don’t assume these are part of cognitive issues. Take steps to investigate and document findings.

If an aging parent mentions a strange phone call or an unusual request by a staff member, immediately check their accounts, even if they insist no personal information was shared. Scammers are very good at what they do and can easily convince a victim nothing wrong has occurred. Even if something didn’t occur this time, a single phone call or conversation may be a warning of the parent being on someone’s radar as a possible victim.

Pay attention if small amounts of cash are missing from accounts. Scammers typically begin small, testing the waters to see if the person, their family, or the financial institution is paying attention. Banks cannot discuss your parent’s finances with their investment advisor, due to privacy rules, so the designated family member needs to be in touch with any institutions handling their money.

If no family member has been given Power of Attorney over financial accounts, this is a must-do, as long as the parent has legal capacity to grant this power. The POA gives the person the legal ability to manage financial accounts. If the person is incapacitated, it may be necessary for the child to be named guardian. An estate planning attorney will be able to discuss the situation and recommend the best way forward for the individual and their family.

Reference: next avenue (Dec. 17, 2021) “Preventing Elder Financial Abuse When Your Parent Is In Long-Term Care”

Can Elder Financial Abuse Be Stopped?

The numbers are chilling. One in ten Americans age 60+ has experienced elder abuse. One of the most common forms of elder abuse is financial, says a recent article from Forbes titled “What Is Elder Financial Abuse—And How Do We Prevent It?”

Financial elder abuse is defined as when someone illegally or improperly uses an elderly person’s money for their own use. Elderly people are easy victims for obvious reasons. They may be mentally vulnerable, suffering from Alzheimer’s or other form of dementia. They may also be lonely and find the company of a new “friend” is so delightful that it impairs their judgement.

Financial elder abuse occurs most often from adult children, but also in nursing homes and assisted living facilities. Be on the watch for those new friends who enter senior’s lives, especially if they seek to limit contact with family members.

Caregivers or nursing staff have access to resident’s possessions, including checkbooks, ATM cards and credit cards. Monitoring an aging parent’s bank accounts on a regular basis should be part of caregiving by adult children. Unusual transactions, large withdrawals or unlikely purchases by credit card should immediately be reported to their bank or credit card company.

Less obvious and harder to track, is when someone forces a nursing home resident to sign legal documents transferring ownership of homes, cars, bank accounts and even investment accounts. They may also be pressured into creating a new will.

Here are some red flags to watch for:

• New names being added to bank accounts or on credit cards.
• Finding unpaid bills, letters from collection agencies or past due notices from creditors, especially when the person has sufficient funds.
• Relatives who suddenly show up and want to be involved with an aging senior, including estranged children.
• The unexpected transfer of any kind of asset to someone who is not a family member.
• Any change in habits concerning money, including someone who was never worried about money suddenly being concerned about paying bills.

The elderly are often scared to report being victimized. They may fear further loss of control over their lives or be embarrassed to have been scammed. If a caregiver is stealing, they may also be physically threatened, or frightened of losing their familiar care provider.

Talk to your estate planning attorney, speak with the local Adult Protective Services office, or contact the National Elder Fraud Hotline, if you are concerned about a loved one being financially exploited.  If you believe a loved one is in physical danger, contact the local police. Don’t hesitate to ask for help.

Reference: Forbes (Nov. 9, 2021) “What Is Elder Financial Abuse—And How Do We Prevent It?”

Elder Financial Abuse on the Rise during Pandemic

The same isolation that is keeping seniors safe during the pandemic is also making them easier targets for scammers, reports WKYC in a news report “Northeast Ohio family warns of elder financial exploitation during the pandemic.” While this report concerns a family in Ohio, seniors and families across the country are facing the same challenges.

Two brothers enjoyed spending their time together throughout their lives. However, for the last three years, one of them, Michael Pekar, has been trying to undo a neighbor’s theft of his brother Ronnie’s estate. A few months before Ronnie died from cancer, a neighbor got involved with his finances, gained Power of Attorney and began stealing Ronnie’s life savings.

The money, more than a million dollars, had been saved for the sons by their mother. Pekar went to see an attorney, who helped uncover a sum of about $1.6 million that had been transferred from Ronnie into other accounts. A civil complaint was filed against the woman and $700,000 was eventually recovered, but nearly $1 million will never be recovered.

How can you prevent this from happening to your loved ones, especially those who are isolated during the COVID-19 pandemic?

An elderly person who is isolated is vulnerable. Long stretches of time without family contact make them eager for human connection. If someone new suddenly inserts themselves into your loved one’s life, consider it a red flag. Are new people taking over tasks of bill paying, or driving them to a bank, lawyer, or financial professional’s office? It might start out as a genuine offer of help but may not end that way.

The possible financial abuser does not have to be a stranger. In most cases, family members, like nieces, nephews or other relatives, prey on the isolated elderly person. The red flag is a sudden interest that was never there before.

Changes to legal or financial documents are a warning sign, especially if those documents have gone missing. Unexpected trips to attorneys you don’t know or switching financial advisors without discussing changes with children are another sign that something is happening. So are changes to email addresses and phone numbers. If your elderly aunt who calls every Thursday at 3 pm stops calling, or you can’t reach her, someone may be controlling her communications.

According to the CDC, about one in ten adults over age 60 are abused, neglected, or financially exploited.

Be sure to check in more frequently on elderly family members during the pandemic because increased isolation can lead them to rely on others, making them vulnerable to abuse.

Reference: WKYC (Nov. 19, 2020) “Northeast Ohio family warns of elder financial exploitation during the pandemic.”

Preparing for the Impact of Alzheimer’s Disease

The impact of these diseases will not just be on the individuals, but on their spouses and families. Surveying 1,000 mass affluent and high net worth families currently caring for relatives with cognitive decline, the study found that the lifetime direct and indirect costs can be more than $750,000. A recent article from Think Advisor, “4 Things Advisors Should Know About Cognitive Disorder Caregiving,” explains how families can prepare for this challenge.

Expect expenses to grow over time. Most people with cognitive decline problems live for five to fifteen years, with an average cost of $750 per month early on. However, as the disease progresses, those expenses increase, to as much as $1,200 per month. Families need to work with an experienced estate planning attorney to apply for Medicaid as soon as the individual is diagnosed, or as soon as possible. Failing to plan may mean spending down all assets to qualify.

Cognitively impaired adults mismanage finances. This is often the first symptom that something is wrong. The study found that 80% of people with dementia experience financial mismanagement. Bills go unpaid, spending patterns change dramatically and they are often victims of financial elder abuse. If multiple calls concerning the same question are made to a family member, that should be treated as a warning signal that something is wrong.

Women continue to carry most of the caregiving responsibilities. Women make up about 66% of family caregivers. The impact on their ability to earn wages, from leaving the workplace for a time period, retiring early or leaving the workforce permanently, takes a huge toll on their income and savings. This also hurts future income, with losses to 401(k) plans, pensions and Social Security benefits.

Estate planning attorneys, CPAs and financial advisors are important resources for caregivers. The financial and emotional stress on caregivers, loss of income and pressure to avoid their own problems means that caregivers need support from family, friends and professionals. Planning for the legal and financial impacts of caregiving needs to happen proactively. Professionals are also in a position to help through their networks of colleagues, like geriatric social workers, nursing homes, etc.

Most people are happy to plan for college, retirement and vacations. No one likes to plan for difficult events, like disability and death. However, planning as early as possible allows the family to have more control during a difficult period of time. Allowing trusted professionals to become part of the support network can lessen some of the burden.

Reference: Think Advisor (Oct. 13, 2020) “4 Things Advisors Should Know About Cognitive Disorder Caregiving”

Is It a Call from Social Security or a Scam?

If you get a call allegedly from the Social Security Administration, the chances are good that it’s a scam. Prior to disclosing any information or money, there are some steps you want to take.

CNBC’s recent article entitled “Social Security scams have caused millions of dollars in losses in 2019 alone. How you can avoid becoming a victim” explains that it’s common for an unknown caller to say that your Social Security number has been suspended or canceled.

This is the latest version of a robocall scam that the IRS warned people about in early 2019.

Other criminals attempt to convince people to pay up with cash or gift cards, in order to avoid getting arrested.

In the first six months of 2019, people filed 73,000 reports about Social Security fraud, according to the Federal Trade Commission. The losses from these calls was more than $17 million.

However, Congress is trying to stop these practices.

The House of Representatives passed a bill in early December to restrict robocalls by requiring carriers to block the numbers, without charging consumers extra money. The Senate passed a similar bill earlier this year.

Several lawmakers also asked the Social Security Administration to review scam calls purporting to come from the agency.

“While SSA has taken steps in recent months to prevent and raise public awareness about these imposter calls, we are alarmed that the scams continue to be widespread and severe,” the congressmen wrote in a letter to Andrew Saul, commissioner of the Social Security Administration.

The Social Security Administration also won’t send you an email with a “click here” link.

It is important to limit when you give out your Social Security number. You should think twice before revealing that information on healthcare forms, for example, where that information is usually unnecessary.

Reference: CNBC (Dec. 16, 2019) “Social Security scams have caused millions of dollars in losses in 2019 alone. How you can avoid becoming a victim”

Adding an Elderly Parent to a Checking Account: What Could Go Wrong?

Doing paperwork at the bank may not enjoyable, but, adding an elderly parent to a checking account for a single large cash transfer – and then leaving him on the account as a co-owner, because the paperwork is onerous – presents a number of issues. A scam targeting the father is just one concern addressed in the article from nj.com, “Is having a joint bank account with my father going to cause any problems?”

The father is still a named joint holder of the account, so he can withdraw some or all of the funds in the checking account at any time. As a result, the transfer is neither a completed gift nor a payment from the father to the adult son, until the son withdraws funds.

If the elderly father predeceases the adult son, the checking account would be included in his taxable estate. There may be taxes due on the estate, depending on the size of the estate and the state in which he lives, since some states have their own estate taxes at much lower levels than the federal thresholds. In New Jersey, there is a procedure where a tax waiver would need to be obtained to release the funds to the son in this case.

If the adult son dies before his father, the checking account funds would automatically pass to the father by operation of law, and not pursuant to the terms of the son’s will, nor to his children or spouse.

In light of the fact that the father can withdraw the funds during his lifetime as a joint holder of the account, those funds in the checking account are subject to him being a victim to scams.

To safeguard these funds, the adult son should take the time to properly title the checking account. If the transfer of funds was a gift to the son in excess of $15,000, the father would also need to file a Form 709, U.S. Gift and Generation-Skipping Transfer Tax Return, even if no tax is due because the federal gift and estate tax exemption is at $11.4 million per person.

If the transfer was made by the father to qualify for Medicaid, it is important to understand that the Medicaid five-year look-back period and penalty could be an issue. The look back is from the time of the application. Any gifts or transfers made within this period, are subject to a penalty, that is equal to a period for which Medicaid benefits are denied. Since the transfer isn’t complete until the son removes his father’s name from the account, for purposes of Medicaid qualification, it would be best to remove the father’s name ASAP.

If the father has any debts or financial problems, the joint account could be subject to creditors.

This seemingly simple solution to one transaction actually creates a number of problems. It would have been better to speak with an estate planning attorney, who would have addressed how the transfer could have been made with tax planning and Medicaid in mind.

Reference: nj.com (September 25, 2019) “Is having a joint bank account with my father going to cause any problems?”

Michigan Improving Law Enforcement Process for Elder Abuse

According to The Detroit News’ recent article, “Mich. task force rolls out new elder abuse reporting form,” state law enforcement associations will distribute new forms, a list of best practices for elder abuse investigations and training videos to assist police officers to better understand and respond to elder abuse.

“People are not getting caught and this is one of the reasons,” Attorney General Dana Nessel said at a press conference announcing the initiative Tuesday. The model’s development is part of the ongoing work of the Elder Abuse Task Force established this year.

The Attorney General remarked that the form will bring some clarity to what can be, a complicated investigation. Law enforcement must look for signs of physical abuse or neglect, as well as financial evidence from banks, legal documents, and purchases.

“People will know now that law enforcement is really paying attention to crimes that earlier, it wasn’t that they didn’t care about, it was that they needed assistance in identifying these crimes,” Nessel said. “Now people know that they’re watching these types of offenses.”

Michigan doesn’t have a specific elder abuse statute, so many elder abuse cases are investigated using a standard police report form that looks to establish whether the suspected crime could fall under the vulnerable adult statute, said Assistant Attorney General Scott Teter, division chief for the department’s Financial Crimes Unit.

“It’s a very complex crime,” Teter said. “There’s not a lot of teaching in the police academy on it.”

The program helps to create best practices across the state for the investigation and prosecution of elder abuse, according to Michigan State Police Director Joe Gasper. He said that it’s similar to a standardized form created in 1994 to help law enforcement investigating domestic violence cases.

“The form aids in identifying not only physical abuse but financial abuse,” Gasper said. “This will be a good foundation for all law enforcement to follow.”

The new form will prompt officers to identify items that may qualify a person as a vulnerable adult, like if they need assistance walking, cooking, bathing, driving, or taking medication. Officers will use a checklist for potential signs of physical risks, like bodily injury, dehydration, soiled conditions, bad odors, or malnutrition. The form also requires officers to find out if a senior is at risk of financial harm through a “parasitic” caregiver, poor care, the person controlling the victim’s bank account, or through legal provisions that remove an individual’s decision-making capacity, such as guardianships, conservatorships or power of attorney.

One of the challenges of prosecuting elder abuse cases in the past has been a lack of legal documents, financial statements and photographic evidence of the senior’s living conditions. These are things that need to be proved in a courtroom but aren’t necessarily the first thing on a police officer’s mind when looking at elder abuse cases.

Reference: The Detroit News (September 10, 2019) “Mich. task force rolls out new elder abuse reporting form”

Arizona Financial Professionals Can Now Press Pause on Questionable Transactions

Senate Bill 1483 became law in late August, reports The Queen Creek Independent in the article “New Arizona law helps protect vulnerable adults, seniors from financial exploitation.”

The new law lets securities dealers and investment advisory firms report suspected or attempted financial exploitation of a vulnerable adult and delay a questionable disbursement or transaction.

The new law lets these financial firms impose an initial delay of disbursements from an eligible adult’s account for up to fifteen business days, if financial exploitation is suspected.

The firms must report the delay within two business days to the Commission or the Department of Economic Security—Adult Protective Services. The government can then extend the delay for an additional ten days or longer.

If additional delay is required, a judge can extend the time even further.

It’s important to note that the law provides immunity from administrative or civil liability to qualified individuals for taking preventative actions that are permitted under the law.

The 2010 Investor Protection Trust Elder Fraud Survey reports that one out of every five citizens over the age of 65 has been a victim of financial fraud.

Arizona’s new law aims to help protect individuals who are over 65 years old or who are unable to protect themselves from abuse, neglect, or exploitation by others, due to a physical or mental impairment.

“Protecting senior investors has long been a top priority for the Corporation Commission,” Arizona Corporation Commission Chairman Bob Burns said in a news release.

“Early detection and reporting of financial exploitation are critical to help prevent elder financial abuse and the devastating financial and emotional impacts that ensue.”

There is a page on the commission’s website to give information about the new law and to receive complaints.

Reference: Queen Creek Independent (September 16, 2019) “New Arizona law helps protect vulnerable adults, seniors from financial exploitation”

A New Law in Illinois Gets to Another Part of Financial Elder Abuse

Kudos to Illinois State Senator Rachelle Crowe (D-Glen Carbon), who introduced a piece of legislation that denies an inheritance to anyone convicted of physically assaulting an elderly family member.

Wealth Advisor’s recent article, “New Illinois law denies inheritance to those who abuse elderly family members,” says with the current Elder Abuse and Neglect Act, an individual who is convicted of financial exploitation, abuse, or neglect of an elderly person is prohibited from benefitting from the victim’s estate.

Senator Crowe’s proposed legislation broadens the law to include assault, aggravated assault, battery and aggravated battery against anyone over the age of 60.

“It’s disheartening that we need legislation such as this to prevent family members from taking advantage of their elders,” Crowe said.

“Seniors are targeted every day for their estate, and I’m proud to put this legislation forward to prevent abusers from benefitting after committing this serious crime.”

“Every day, we see the devastating effects of abuse of senior citizens, often by family members,” said Tom Gibbons, Madison County State’s Attorney. “I’m thankful to Senator Crowe and our legislators passing this important measure to prevent abusers from profiting from their abuse.”

Crowe has worked on other protective legislation for the elderly. She has created Illinois’ Elder Abuse Task Force. The state senator plans to be a member of the task force and to study senior mistreatment and protective services and laws. The task force will then report the findings back to officials.

“We hope not to merely punish cruelty, but to deter it with this law,” said Crowe. “The message for abusers should be clear: You get nothing.”

More states are recognizing the growing problem of elder financial abuse, as the baby boom generation ages and wealth is transferred across generations. Laws like this are a clear indication that legislators are aware of the increasing cases of abuse and the need to create stronger laws to protect seniors.

Reference: Wealth Advisor (August 6, 2019) “New Illinois law denies inheritance to those who abuse elderly family members”

How Elder Abuse is Being Addressed in San Diego

The chance to spot exploitation of seniors as they conduct their financial affairs at banks and credit unions, among other places, puts financial professionals on the front lines of financial elder abuse. San Diego’s District Attorney Summer Stephan held a news conference to announce a new outreach campaign to protect vulnerable seniors from financial elder abuse.

Fox 5 San Diego’s recent article, “County battles financial elder abuse with new campaign,” says that under California law, employees of financial institutions are required to report suspected elder and dependent adult financial abuse.

This applies whether they have direct contact with a potential victim or even just witness an incident they suspect may be financial abuse.

“Employees in financial institutions can make a real difference in the lives of some of the most vulnerable in our community to help protect them from losing their life savings,” Stephan commented.

The new program, launched in conjunction with Financial Elder Abuse Awareness Month, gives finance workers examples of warning signs to watch out for and details on how to report any suspected abuse of the elderly.

The training materials include a video featuring industry representatives from the Credit Union League and Western Bankers Association, as well as Marlene Ruiz, a longtime local bank employee who helped prevent a financial elder-abuse crime.

When Ruiz saw that one of her older clients was the victim of an obvious scam, she intervened. As a result, she was able to prevent the victim from having thousands of dollars stolen from his bank account. In honor of those actions, the District Attorney’s Office named Ruiz one of its “Citizen of Courage” in 2018.

An estimated $36.5 billion is lost every year in the U.S. from elder financial exploitation. Last year, U.S. banks reported nearly 25,000 suspected cases of elder financial abuse to the Treasury Department. That’s more than double the amount of five years earlier.

Of the 4,563 reports of financial abuse allegations handled by San Diego County Adult Protective Services in fiscal 2017-2018, nearly 15% came from financial institutions.

The more “eyes and ears” that are open and watching out for the financial well-being of seniors, the better.

Reference: Fox 5 San Diego (June 18, 2019) “County battles financial elder abuse with new campaign”