This year, we’re inviting a handful of our most trusted colleagues to share their ideas and expertise on topics of interest to our clients. For this blog, we’re happy to introduce you to Laurie Kouzes. Laurie is a California Licensed Professional Fiduciary and partner with Professional Fiduciary Services, the largest group of licensed professional fiduciaries in Orange County.
It is a sad fact that financial abuse of elders during their lifetime is becoming very common. As the baby boomer generation ages and their life expectancy increases, incidents of elder abuse are increasing, too.
According to the Los Angeles District Attorney’s department of elder abuse, one in five seniors has been the victim of financial fraud.
Financial abuse can take many forms. It can come in the form of the con artist running scams over the phone, or sending mailings, magazine subscriptions or free gifts through the mail. However, most of the financial abuse in the country is committed by family members.
In my experience, it is not uncommon for family members or other persons close to the elder to—over time—start viewing the elder’s assets as their own. Unfortunately, the end result of this is that the elder is left with insufficient assets to care for his/her needs.
For example, a relative or other person(s) close to the elder may:
- Move elder out of his/her residence and into a low-cost assisted living facility in order to sell the home and pocket the profits
- Take over elder’s residence and relegate elder to living in one room with no concern for elder’s physical/mental care
- Exercise undue influence over elder to name family member, caregiver or other person as elder’s Power or Attorney, then proceed to drain elder’s financial assets
- Isolate elder from outside contact with friends or family members thereby maintaining control over elder, making financial demands and creating heightened level of dependence
These are a few examples from actual cases in which I have been involved; following are additional warning signs of financial fraud which I have seen:
- Unusual activity or withdrawals from elder’s financial accounts, or new names suddenly being added to accounts
- Elder suddenly seems confused, agitated or unkempt
- Bills not being paid on timely basis
- Change to elder’s Power of Attorney or Will that he/she did not authorize
- Elder does not have necessities for care, or experiences a decline in standard of living even though they have the means
Given that elder financial abuse has become a significant issue, what practical steps can be taken to help minimize the risk of financial fraud?
- Elder can establish personal working relationships with a banking institution and a Registered Investment Advisor. By doing so, these institutions will be familiar with the elder and his/her banking and spending habits. Under the California Welfare and Institutions Code, all officers and employees of financial institutions are mandated reporters of suspected financial abuse. It is for this reason, therefore, that having a relationship with these institutions is important for possible prevention of financial fraud.
- Elder can work with an attorney to draft a valid Durable Power of Attorney, naming a trusted person(s) to act on his/her behalf, if needed. He/she can then provide this notarized document to the financial institution(s) and Registered Investment Advisor so it is on file. If an institution requires additional paperwork, this can be completed immediately. (Some banks have their own Power of Attorney documents that will also need to be executed.)
- Elder can require a periodic audit of their finances, if the value of assets warrants, when the agent under the Power Attorney has begun to act. This may be advisable as an additional layer of protection.
- Elder can maintain regular contact with trusted parties such as friends, neighbors or family members and ensure these persons have current contact information, including the elder’s attorney’s name and contact information. In my experience, a family member or outside party may well be in a position to observe concerns or issues, and can alert the elder’s attorney to the situation.
If a trusted party cannot be identified or is not available, it may be appropriate for the elder to name an independent third party as agent for the Power of Attorney. A licensed professional fiduciary can act in this capacity and work in conjunction with banking institutions and financial advisors to ensure the best interests of the elder are being met. In my experience acting in this capacity, I have also dealt with mortgage companies, utility companies, caregivers, and many other groups to ensure the financial protection of the elder.
Although these suggestions are not a conclusive list, they are practical ideas to consider as the elder looks to the future.
While it is impossible to anticipate every situation, by recognizing that this problem exists and taking some basic steps now, elders may well go far towards protecting themselves from financial abuse down the road when they are most vulnerable.
Laurie is a California Licensed Professional Fiduciary and partner with Professional Fiduciary Services, the largest group of licensed professional fiduciaries in Orange County. She serves as Successor Trustee for trusts, Agent for Power of Attorney and Agent for Advanced Health Care Directive, representing clients in Los Angeles and Orange counties.