Posted by Fred Lake

Effective Means to Prevent Financial Elder Abuse

Effective Means to Prevent Financial Elder Abuse

The financial abuse of the elderly is becoming more and more intense and increasing rapidly every day. This horrible problem is common among the rich and famous and is becoming a problem that affects many elderly people.

Many people talk about the financial abuse of the elderly, but we have to understand that the situation has gone beyond fraud and trying to target the elderly over their hard-earned wealth.


What is the financial abuse of the elderly?

Financial abuse of the elderly can be defined as a situation where relatives, family, friends, children, neighbors, and health workers of an elderly person attempt to manipulate and take advantage of their wealth and finances.

This form of crime against the elderly robs them of their hard-earned resources. The most painful part of this growing problem is that the people who commit this evil act are the ones the elders entrusted their finances too.

Financial abuse of the elderly takes place in various patterns, such as the elderly child charging their bills to the elderly parent's credit or even a caregiver who goes out of their way to get listed on the elderly person's will.

These things are done gradually, so the elderly person never knows they are being taken advantage of until it is too late.


Ways to prevent financial abuse of the elderly

Automate Accounts and Deposits 

Paying bills can be a complicated process. It is even more difficult for the elderly, who can easily get confused. Automating a senior's bill payment with direct debits from their checking account will help them stay organized, minimizing their chances of getting involved in a financial scam. If invoices have been automated, it can prevent older people from being tricked into sending money to a scammer.

Similarly, the establishment of automatic income transfers in the current account of the elderly helps to better organize their financial affairs. With age, income can come from a variety of sources. This can include social security, dividends, and interest, rental income, pensions, or annuities. It is much easier to deposit all of these income streams electronically than to receive multiple checks monthly. This will also prevent the loss or misplacing a check.


Use credit cards instead of cash

Once the money is sent elsewhere, it is very difficult to track or get the money back. Using credit cards for most expenses has the benefits of protecting against identity theft, giving third parties the ability to review previous transactions and work with the credit card company to be reimbursed for duplicate transactions.


Appoint trusted people to oversee finances 

A popular approach used by many families is to have a trustworthy child (or children) to help the elderly with their finances. This usually involves creating a Power of Attorney (POA), which is the power to act on behalf of another person in legal or financial matters. This should be put in place while the elderly person still can authorize it, so it is essential that an individual set it up as soon as possible before any significant mental decline. Once established, it is recommended that financial statements and duplicate records be sent to the POA. Therefore, if financial damage occurs, it is more likely to be noticed and resolved promptly.

The obvious problem is that loved ones commit most elder abuse. A study by MetLife in 2009 found that 55% of all financial abuse to the elderly is committed by family members, caregivers, and friends. Therefore, it is advisable to appoint more than one party to oversee your elderly finances. Appointing an accountant, lawyer, and bank, as well as a family member, should be considered to further isolate older people from bad actors, even around you.


Create a Trust

A trust can be a great way to protect and manage a person's assets. In a revocable trust, the elder can appoint multiple directors to oversee the management of their money. However, since the elderly can still withdraw money from the account, they are vulnerable to financial predators.

Another more secure option is an irrevocable trust. An irrevocable trust prevents seniors from easily withdrawing money or changing the trust without the administrator's consent. This type of planning offers more protection but can be greeted with hesitation as it forces elderly people to give up control. However, it should be seriously considered that the elderly help protect their property.


Appoint a Trustee

A Trustee is appointed to look after trust and ensure that it is not tampered with by unscrupulous trustees. In this role, they can replace directors, resolve disputes between all directors and beneficiaries, change distributions to beneficiaries, and veto investment decisions. A lawyer can help ensure that the administrator does not have too much control but enough to protect the elderly.

Anyone can act as a reliable protector. However, it is advisable to appoint an independent third party, rather than a family member, who has no other motivation than to make sure everything is running smoothly. The power of the trusted protector must be specified in the trust document. The more specific the wording, the more likely it is that the elderly wishes will come true.


Appoint a Corporate Trustee

Although many people appoint a long-time family member, friend, or accountant as a trustee, it is also worth considering a corporate trustee, such as a bank or investment company. There are many ways that a corporate trustee can help you that a loved one cannot. They have a lot of experience in dealing with situations like yours. They are completely objective. Even if your family gets along well pretty well, strong emotions tend to arise when it comes to money or taking care of loved ones. There is also the advantage of continuity. If the other human trustee falls ill or dies before the elders, the corporate trustee can continue to perform his duties.


Bottom Line

Finally, the best way to protect the elderly from the real possibility of financial abuse is to put in place a system of checks and balances. To achieve this, it is important to consider using several of the above planning strategies as part of a comprehensive retirement plan. In case of suspicious activity, the policies would also help to be detected and dealt with promptly. Taking a proactive approach will undoubtedly reduce the likelihood of financial abuse for elders.


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Fred Lake
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