Elder financial abuse: How families can cope
Your mom, dad or grandparent may have fallen for an online scam. Their caregiver could have exploited their finances. Someone within your own family may be manipulating them for money.
Elder financial abuse manifests in many forms, but it leaves a similar ripple effect. Besides harming the senior who's been targeted, it often leaves relatives with psychological and financial stress surrounding what's happened to their loved one.
Emotions in the aftermath range from guilt to anger and even blame within a family, according to Maggie Baker, a financial psychologist with more than 30 years of practice.
“The intensity of people’s reactions are heightened because everybody has lost something and it’s one of the most vulnerable times for family discord,” she says. “People react so strongly to loss, and if there’s conflict, sometimes it’s really bad and families can go for years without resolving it.”
Seventeen percent of American seniors have experienced some form of elder financial fraud, according to a March 2016 report conducted by Public Policy Polling for the Investor Protection Trust (IPT), a nonprofit organization focused on investor education and protection. Forty-seven percent of kids with parents who are 65 or older are somewhat or very worried their parents “have already become or will become less able to handle their personal finances over time,” according to the report.
If sibling relationships are contentious or conflicted, it can get really nasty and there’s a lot of blame that’s steeped in the past ...
|— Maggie Baker
Andy Cohen, CEO of Caring.com, a resource for adult children looking after their aging parents, says elder financial abuse is very much on his radar. “A lot of adult children have parents who have fallen victim to it or they’re worried it will happen,” he says.
On the flip side, a lot of cases of elder financial abuse are perpetrated by family members, says Brad Klontz, a financial psychologist and associate professor at Creighton University.
Common forms of elder financial abuse
Cohen and Klontz point to the three most common forms of elder financial abuse they see:
- Caregiver exploitation and abuse: A person
taking care of a senior whose health is failing may have access to the home,
buy the senior’s groceries and help with daily banking and other expenses. “If
they’re very vulnerable and dependent, the care worker assumes a lot of power
over the dependent,” Cohen warns. Seniors “can make critical
errors like thinking this person has their best interests at heart, and even be
fond of the person.” Meanwhile, caregivers could be withdrawing extra
cash for themselves, paying for groceries and other bills on the senior’s dime
or taking jewelry and other possessions from the home.
- Telephone and online fraud: In this
case, scams are initiated over the phone, in emails or even at the door. Fraudsters
pose as government officials, distant family members or even vacation agencies
handing out prizes. In the IPT report, 35 percent
of seniors said they had people calling them asking for money or telling them they
had won the lottery.
- Familiar fraud and financial dependence:
In the IPT report, a small but disturbing percentage of seniors conceded that
they give loans or gifts that are worth more than they can afford, they’re
being pressured to give away money or change their will or they knew someone
was accessing their accounts because money was disappearing. Sometimes, kids
or grandkids are put in charge of paying for the senior's living expenses. If
they have access to the accounts, they could be helping themselves to their
elders’ funds, too.
“It’s horrible. There are a lot of bad people in the world,” Cohen says. The victims are “vulnerable, their memory is going and they lose their hearing so they can’t hear clearly, think clearly, and they get confused.”
ramifications for family members
Once fraud has come to light, families are faced with distressing repercussions. They may have deep roots, too.
You might’ve been counting on your parents’ inheritance and now you’re going to have to help fund their lives.
|— Brad Klontz
“It all depends on what the family relationships were like before this happened. If sibling relationships are contentious or conflicted, it can get really nasty and there’s a lot of blame that’s steeped in the past and the quality of past relationships,” Baker says.
If one child was the appointed watchdog, he or she could take the fall for failing to spot the fraud. If another sibling lives out of town and hasn’t been as hands on as the rest of the family, resentment and guilt could bubble up.
Meanwhile, depending on the senior’s cognition, he or she could be oblivious to the fraud they've encountered or could be embarrassed or humiliated, Baker says.
When the elder financial abuse occurs within the family, trust is broken. This kind of abuse can tear families apart, she warns.
Tips for dealing with elder financial abuse
Adult children often have to clean up the mess when their parents fall victim to financial abuse. Here are some tips to consider:
- Vet caregivers
carefully. Cohen suggests that families work with
caregivers tied to licensed facilities and agencies. If things go awry,
they have an organization that has to be held accountable for the employee’s
wrongdoing. Police and the department of human services could get involved in
that case, Klontz says.
If you hired a caregiver through other means and they’ve disappeared, your money is probably lost. That applies to online, phone and door-to-door scams, too. “People have a tendency to ignore fraud information until it happens to them, but obviously this is now an opportunity to educate you and put safety measures in place. It’s a bitter pill to swallow,” Klontz says.
off relatives taking advantage of the senior. If
the elder abuse was occurring within the household, Klontz says seniors need to
get involved, especially if they’re cognizant of the situation. They need to be
taught that they are financially enabling their loved one and that it isn’t
helping them in the long term.
Financially cutting off the manipulative family member could even ease heated tensions. “The siblings have less resentment and family relationships improve when the parent isn’t allowing them to take advantage,” Klontz says. “There isn’t this added wound that your sibling is still hurting one of the most important people in your lives.”
a plan to deal with the financial loss. Most
seniors are on fixed incomes without much wiggle room. The money they lost
could be their retirement funding, their nest egg or what their kids were hoping to rely on as
an inheritance down the road. Now the money’s gone.
“You might’ve been counting on your parents’ inheritance and now you’re going to have to help fund their lives. Some of this will be a mourning process and it could have a significant impact on your life,” Klontz says.
You may want to seek the advice of an elder law attorney who can wade through the process of potentially getting the money back and safeguarding your family’s assets moving forward. A debt counselor and financial planner may also help if your family has to figure out how to reorganize finances to make up for the senior’s losses.
- Seek counseling. In almost all cases, experts say professional help needs to be sought in the form of a family counselor who can repair the household dynamic and mend fences. “Seeing a therapist could be incredibly useful to try to resolve all of these issues around the abuse and the loss of finances so people can be free to go on,” Baker says.
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