Minimizing Chances of Elder Financial Abuse

Most seniors are quite capable, but there does come a time for all of us to turn over our financial affairs, whether we want to be timely about admitting it or not.

I have written on this subject before but want to revisit it for two reasons. The first is that I was recently approached by a patient's son asking me to declare his mother was no longer competent to manage her financial affairs. The conflict of interest was obvious so I obtained an outside, expert specialist to do the determination. The psychologist found that this once alert, sharp-tongued senior had, in fact, lost her executive decision-making ability and certified her disability. And now the third-person legal system, armed with impartial assessment, had the hot potato, and I avoided a recurring pothole.

The second reason that I want to revisit financial elder abuse is a recent column by Claudia Buck in the Sacramento Bee. After citing a too-frequent example of a vulnerable senior being taken financial advantage of, she points out that in 2010, an estimated $2.9 billion was exploited away from them. It is highly likely that this is a low-side estimate, given that people are very wary of publicly showing their dirty linen. And people are often not even aware that such things are going on. There is a fine line between routine financial foolishness that even younger folk engage in and the bullying and fraud that is so much easier to accomplish in the vulnerable, often isolated senior population.

Another major cause of under reporting is that no one wants to appear incapable or hapless. There are an estimated 50-million-plus people over the age 62, with 10,000 baby boomers retiring daily. Most are quite capable, thank you very much, but there does come a time for all of us to turn over our financial affairs, whether we want to be timely about admitting it or not.

That is one reason why at the large retirement complex where I am the Medical Director, we require all incoming residents to get their ducks lined up — health care directives, power of attorney, POLST, the whole package.

Note that being organized and prepared for the necessary and inevitable legal arrangements later in life does not mean that there will be no confusion, consternation and conflict both while deciding now and when executing later. Rather, advance planning minimizes the trouble, gets people to think ahead and lets us sleep nights. You know, “Man plans and God laughs” — but we still have to plan.

A brief list of actions to reduce the risk of senior financial abuse might also include getting professional help. Just like a doctor for specialized health advice, so legal, accounting and financial planner advice is essential. A designated fiduciary for the expected, and unexpected, need is a critical decision — maybe first on the list of decisions to be made.

As if we need to beat this drum, having accurate and complete financial records for seniors is even more important than for younger folk, because there may be a circumstance where the senior is unable to recall events, dates and amounts. And these records should be separated from those of the putative caregiver and easily available when needed.

Lastly, as painful as it might be, if discovered, instances of elder financial abuse should be reported. Buck cites a 2012 national survey of financial planners that showed that more than half (56%) had worked with clients who had been victims of "unfair, deceptive or abusive" financial practices. More than half! And that's only the ones who became aware of abuse and were willing to admit it!

Google "Financial Self-Defense for Seniors" and then apply it to your parents, relatives and friends who can benefit from at least learning about the most common problems. Oh, and this advice applies to all of the rest of us, too, come to think of it.