Elder Abuse Continues as a Billion-dollar Problem

Elder abuse continues to be a problem for seniors, but individuals can take steps to protect themselves in their estate plans and finances.

Aging baby boomers are a giant target for scammers. A report issued last year from a federal agency, the Consumer Financial Protection Bureau highlighted the growth in banks and brokerage firms that reported suspicious activity in elderly clients’ accounts. The monthly filing of suspicious activity reports tied to elder financial exploitation increased four times from 2013 through 2017, according to a recent article from the Rome-News Tribune titled “Financial abuse steals billions from seniors each year.”

When the victim knew the other person, a family member or an acquaintance, the average loss was around $50,000. When the victim did not have a personal relationship with their scammer, the average loss was around $17,000.  See this recent blog for more background.  https://www.galliganmanning.com/elder-financial-abuse-is-increasing/

What can you do to protect yourself, now and in the future, from becoming a victim? There are many ways to build a defense that will make it less likely that you or a loved one will become a victim of these scams.

First, don’t put off taking steps to protect yourself, while you are relatively young. Putting safeguards into place now can make you less vulnerable in the future. If you are suffer bad health and lack of capacity later, it may be too late.

Create a durable power of attorney as part of your estate plan. The power of attorney names a trusted person you name as your legal representative or agent, who can manage your financial affairs if need be.  You should also consider using a trust which owns assets during your lifetime.  While it is true that family members are often the ones who commit financial elder abuse, you’ll need to put your trust in someone. Usually this is an adult child or a relative. You may also consider a bank as a trustee.  They will charge for their services, but their professionalism makes a bank an excellent choice.

It may also help to bring your agent, trustee and other loved ones into the discussion about assisting with your finances well before incapacity and be open with them about what you want your fiduciaries to do.  Of course, many people are hesitant to discuss finances openly, but as Justice Brandeis remarked over a hundred years ago, “Sunshine is said to be the best of disinfectants.”  Having multiple people aware of what is happening and what your fiduciaries are doing may prevent one bad actor from attempting or getting away with elder abuse.

Consider the guaranteed income approach to retirement planning. Figuring out how to generate a steady stream of income as you face the cognitive declines that occur in later years might be a challenge. Planning for this in advance will be better.  Social Security is one of the most valuable sources of guaranteed income. If you will receive a pension, try not to do a lump sum payout with the intent to invest the money on your own. That lump sum makes you a rich target for scammers.

Consider rolling over 401(k) accounts into Roth accounts, or simply into one account. If you have one or more workplace retirement plans, consolidating them will make it easier for you or your representative to manage investments and required minimum distributions.

Make sure that you have an estate plan in place, or that your estate plan is current. Over time, families grow and change, financial situations change and the intentions you had ten, twenty or even thirty years ago, may not be the same as they are today. An experienced estate planning attorney can ensure that your wishes today are followed, through the use of a will, trust and other estate planning strategies.

Resource: Rome News-Tribune (April 27, 2020) “Financial abuse steals billions from seniors each year.”

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