With life expectancy on the rise due to modern medicine, prioritizing the wellness of older adults has become more important than ever. As June marks Elder Abuse Awareness Month, the issue of financial exploitation among seniors should not be disregarded. It is estimated that seniors suffer losses of approximately $20 billion annually due to financial abuse by acquaintances, caregivers, and even family members.
In many cases, the perpetrators of elder financial abuse are not outsiders but individuals in positions of trust. Learning of this abuse can pose significant challenges for victims, especially when family members are involved.
A recent webinar from the National Center on Law and Elder Rights (NCLER) discussed the nuances of financial exploitation involving family caregivers, including the root causes of this abuse and potential solutions. NCLER remains a valuable resource for legal support and assistance to communities dealing with aging and disability.
WHAT DEFINES ELDER FINANCIAL EXPLOITATION?
Elder financial exploitation occurs when an elderly individual experiences financial loss or property misuse due to another party. Abuse by a trusted individual can manifest in various ways, including:
- Unauthorized withdrawals from ATMs or bank accounts by a caregiver with account access
- Coercion by a family member for the senior to provide substantial gifts (such as a car)
- Influence from a trusted individual leading the elder to transfer property titles
Events Leading Up to Financial Abuse
Financial exploitation often arises after significant life events jeopardize a senior’s ability to maintain independent living. These events may include the loss of a spouse, a debilitating fall, or the diagnosis of a serious illness.
When committed by a family member, financial abuse doesn’t always proceed with malicious intent. Often, when an elderly individual living alone requires assistance, it is mutually beneficial for a family member to step in and provide support. The family caregiver may offer aid with household chores, transportation to medical appointments, and managing financial affairs. In turn, the senior may appreciate the companionship and assistance from a familiar face.
However, in some instances, a minor transgression can escalate into more significant misuse. If small amounts of money go unnoticed, the perpetrator may feel empowered to exploit further.
Family caregivers are particularly susceptible to engaging in financial abuse when pressured by relationship breakdowns, financial strain, substance abuse, or mental health issues. These challenges can promote feelings of desperation, increasing the likelihood of exploitation occurring.
Challenges That Arise from Family Financial Abuse
Seniors faced with financial abuse by family members often experience multiple challenges, dissuading them from seeking assistance. The inclusion of family in caregiving roles can also prevent older adults from implementing protective measures like formal contracts or rental agreements. However, documenting said arrangement protects everyone involved.
Seniors experiencing cognitive decline may lack awareness of their financial status. Studies cited by the National Library of Medicine indicate that approximately two out of three older adults encounter some level of cognitive decline by age 70.
Pressure to make substantial financial gifts may be misunderstood by seniors, particularly regarding the impact on long-term care expenses. For example, significant gifts could affect Medicaid eligibility, as the program enforces a five-year “lookback” period. Therefore, gifting assets to family members could render seniors ineligible for benefits for up to five years.
Feelings of dependency and fear of losing familial ties can deter older adults from reporting abuse. Those reliant on caregivers may feel compelled to comply with demands for large gifts or to agree with specific financial decisions.
In certain cases, victims may hesitate to take action due to concerns about relocating to a nursing home. For these individuals, relinquishing control of their finances may seem preferable to being placed in an institutional setting. Additionally, seniors often fear damaging their relationship with caregivers, especially when the caregiver is a family member.
ADDRESSING FINANCIAL EXPLOITATION BY FAMILY MEMBERS
Although those who fall victim to financial abuse may hesitate to seek solutions, several options exist to address the issue while preserving familial bonds:
- Restorative justice focuses on repairing the damage done, with all involved parties voluntarily participating to allow the perpetrator to make amends.
- Mediation provides an alternative to litigation, employing a neutral third party to facilitate resolution. In cases of financial abuse, mediation should incorporate similar safeguards as those in domestic violence situations.
- Criminal justice might be necessary, including obtaining a temporary restraining order (TRO) to separate the elder from the abuser. Documentation of financial abuse through filing a police report may also be essential.
Even though older adults rarely pursue civil remedies, litigation aids in restoring rights to real property. Legal assistance from an attorney may be sought to pursue a lawsuit for undue influence. For those unable to afford private legal representation, some legal service programs cater to elder abuse, neglect, and exploitation, offering free or low-cost legal aid.
Steps to Prevent Elder Financial Exploitation
Seniors and their families have options to proactively prevent financial exploitation, with education serving as a crucial preventive measure. Organizations like the Consumer Financial Protection Bureau (CFPB) offer valuable resources, such as brochures on money management, which can empower individuals to recognize and avoid potential pitfalls.
Having a neutral, trusted advocate involved, especially when a family member assumes a caregiving role, can provide an added layer of protection. This advocate can serve as a watchdog for the older adult’s financial well-being, promptly identifying and addressing any signs of abuse.
Regular account monitoring is another effective strategy for detecting and preventing financial exploitation. Financial institutions, family members, or older adults themselves should regularly monitor bank account activity, credit cards, and other assets.
Additionally, seniors can establish an estate plan that includes safeguards against abuse, ensuring their assets are protected and distributed according to their wishes.
PROTECT YOURSELF AND LOVED ONES: WORK WITH AN ELDER LAW ATTORNEY
Elder law attorneys play a crucial role in protecting older adults from financial exploitation and other forms of abuse. Beyond addressing legal issues post-exploitation, they also assist in proactively creating comprehensive estate plans.
For example, a legal expert can tailor a power of attorney to mitigate the risk of exploitation, imposing limits on the caregiver’s authority. Additionally, they provide insights into the potential misuse of a power of attorney and offer guidance on selecting trustworthy agents.
Bromlow Law, PLLC and Laura L. Bromlow, are dedicated to the practice of Elder Law and Estate Planning. Our practice focuses solely on working with clients in these and closely related legal fields. Laura L. Bromlow is a Certified Elder Law Attorney with the National Elder Law Foundation. Bromlow Law, PLLC strives to enhance communication among family members and loved ones and to keep them all out of conflict so they can stay out of court. We want to help you keep your close circle safe!
Please contact our office today at (281) 665-3807 to schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.