Financial exploitation of the elderly: An overview
If it seems too good to be true, it probably is. – 16th Century Adage
Trust, but verify. – Ronald Reagan
If you see something, say something. – Homeland Security
The Problem
Financial exploitation of the elderly falls into two general categories: fraud by strangers and exploitation by family and caregivers.
Fraud involves a deliberate attempt to deceive the victim with promises of goods, services or other benefits which do not materialize. Some of the frauds perpetrated on the elderly include: prizes and sweepstakes, investments, charitable contributions, repairs, loans and mortgages, health remedies, funeral, life insurance, travel and confidence games. These come by mail, email, telemarketers and face to face.
Financial exploitation is perpetuated by persons who already have a trust relationship with the elderly person and include: stealing money and valuables, borrowing money with no intent of repayment, denying services or medical care to conserve funds of the estate, cashing Social Security or pension checks without permission, using credit cards for purposes not intended or without permission and forcing the elderly to part with resources or sign over property rights.
Financial exploiters use deceit, coercion, emotional abuse and empty promises of lifelong care. They isolate the victim from family, friends and other concerned parties. Frequently used means of financial exploitation include joint bank accounts, deeds or title transfer of cars, powers of attorney, and living trusts and guardianships.
While seniors are not the sole victims of fraud and exploitation, certain factors may make them more vulnerable. Decline in functional skills such as memory, hearing, plus isolation and fear of helplessness and going to the nursing home are issues that must be understood to recognize and help victims.
The largest category of financial exploiters include adult children, grandchildren, and other relatives. Next comes professional caregivers and then close friends and others such as neighbors, handymen, investment advisors and even lawyers. The victim is most often a white female, with the average age of 79, who may suffer some form of dementia or physical impairment and frequently suffers more than one impediment which often makes her dependent on the abuser for her daily needs. She tends to be isolated, fearful of reporting abuse thinking it may lead to further harm, placement in the dreaded nursing home or abandonment.
Warning signs of exploitation include the following: difficulty covering basic needs when income should be adequate, companion who encourages large bank withdrawals, a caregiver or relative who is overly interested in the senior’s financial affairs, a relative who is reluctant to spend money for needed medical care, bills not being paid, isolation of the elderly by relatives or caregivers, missing check statements and unusual charges on credit card statements, inappropriate legal documents and concern or confusion about money.
Resources
The Adult Protective Services Act (320 ILCS 20/) gives us some of the tools needed to deal with the problem of financial exploitation of the elderly.
“Financial exploitation” is defined as the use of an eligible adult’s resources by another to the disadvantage of the adult or the profit or advantage of a person other than the adult. An “eligible adult” is an adult with disabilities aged 18 to 59 or any person aged 60 or older, who is not institutionalized. The statute makes a large number of professionals mandated reporters and includes, among others, the usual suspects: those licensed to provide care, social or medical services to seniors, law enforcement, and educators. Reporting is not required when the reporter believes the senior is capable of reporting the abuse themselves. Lawyers and bankers are not mandated reporters because of their professional obligation of confidentiality.
Adult Protective Services are provided locally by 45 provider agencies. Case workers from these agencies conduct investigations and work to resolve abusive situations. Anyone can report abuse. Those who report suspected abuse in good faith and cooperate with the investigation are immune from criminal or civil liability or professional disciplinary action and the reporter shall not be disclosed except by the permission of the reporter or by order of court. The Adult Protective Services Hotline is 866-800-1409.
After the report is made a trained adult protective services caseworker will respond within 24 hours for life threatening situations, 72 hours for neglect and non-threatening physical abuse and up to seven days for emotional abuse or financial exploitation.
The caseworker will contact the victim and determine what services are appropriate including financial or legal assistance and protections such as representative payee, direct deposit, order of protection, civil action, including guardianship or referral for criminal charges.
The downside of this law is that a competent adult may refuse services, which in my experience is a problem in the area of financial exploitation (and physical abuse, too!) as many victims are reluctant or refuse to identify a loved one, friend or caregiver as an abuser. In those cases in which the eligible adult has dementia or cognitive impairment, the agency may petition for guardianship.
Our Challenge
Attorneys who represent or care for seniors are on the front line in protecting them from financial exploitation. When asked to prepare wills, trust, powers of attorneys, deeds, etc. have a frank, private and in depth conversation with your client to determine if they are competent and understand all the implications and consequences of the documents you are being asked to prepare and double check this information before the documents are signed. Discuss with your client the importance of choosing an executor, trustee, agent, etc. that is someone who is trustworthy. Not necessarily the oldest child, the nearest child, especially not the child with a credit card, other financial, gambling or drinking problems, but someone who is trustworthy in every way. Consider provisions in estate planning documents that provide transparency. Do not draft a deed conveying the family home to your client’s children until you discuss the Medicaid and other implications. Let your clients know that they should call you if they receive or are approached by anyone with a questionable scheme or suspected scam. You can check it on the internet and become an instant “hero” to that client.
Most of all read and reread Rule 1.14 - Client with Diminished Capacity of the Rules of Professional Conduct and the Comment every time you deal with a client that you suspect or know has diminished capacity. You may take action if there is risk of substantial physical, financial or other harm, including consulting with individuals or entities that have the ability to take action to protect your client.
In addition to Adult Protective Services there are other agencies that collect and aggregate information about fraud and financial exploitation: Illinois Attorney General Consumer Protection, U.S. Postal Inspection Service, and Federal Trade Commission. While these agencies may not be able to directly remedy your client’s situation, they do aggregate and act upon the most widespread and egregious complaints both domestically and internationally.