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Posted: April 26, 2008

A First-Hand Account

Keeping Loved Ones Safe from Elderly Financial Abuse

It's all too common and simple for the elderly to become victims of financial abuse. After all, they may be losing -- or already have lost -- some of their cognitive ability, and their judgment may be clouded. And while the abuser is sometimes a stranger, it often is someone they know -- a friend, caregiver, relative, or trusted financial advisor.

“As people grow older, they grow dependent on others for care, and part of that care means someone must help them with their finances,” says Larry Pickard, who supervises the unit that deals with financial abuse of the elderly at San Francisco Adult Protective Services.

I have seen financial abuse in action during the course of my own work. Mr. Smith (all names in this article have been changed) was 101 years old and living independently in an upscale facility in Connecticut's Fairfield County. None of his children or relatives lived nearby. About three years ago, I started helping him with his bill-paying and financial organization, and visited him twice a month to sort through his mail and help him decide what was junk and what he needed to read. I also took all the bills back to my office to prepare the checks.

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During the entire time I worked with him, Mr. Smith was very independent, but he was starting to slow down physically. A few months ago, he fell, and it became obvious that he needed 24/7 care to stay out of assisted living. He gave in to having what he referred to as “24-hour surveillance.”

The home health aide, Maria, came from an agency and was recommended by the facility. She took very good care of Mr. Smith, helping him bathe and dress, and staying constantly by his side. She won his trust and confidence. And when he fell again, Maria was the one to take excellent care of him.

But then things changed. Maria slowly started having Mr. Smith write checks payable to “Cash” for drug store supplies and the few groceries he needed. Maria also started paying some of the bills, which is how I think she convinced him to sign the checks during his time of weakness. Maria then endorsed the checks with her own signature and deposited them to her own checking account.

Since I wasn't a signer on his checking account, I didn't notice this until it was too late. By the time the bank statement arrived, there was a total of $16,000 in either forged checks or checks Mr. Smith had been coerced to sign.

I reported this to the police, and Maria was fired from the agency. Since the agency was bonded, it had to make good on the losses. But that's only part of the story: unfortunately, Mr. Smith was devastated to learn that someone he trusted took such advantage of his sweet, trusting, and generous nature, and just a few weeks later, Mr. Smith passed away. It was terrible for him to spend his last weeks knowing about this crime against him, especially by someone he trusted.

Financial abuse of the elderly knows no boundaries. It can occur when someone steals or embezzles money, Social Security checks, or other property from an older person. It can be as simple as taking money from a wallet or manipulating a victim to turn over or sell personal property or belongings. In many cases, the financial abuse is done by someone the victim knows and trusts. But make no mistake about it: this is a serious and shameful crime.

Sometimes the abuser has gambling, substance abuse, or financial problems. Mrs. Green's daughter passed away suddenly at age 50. Her teen-aged granddaughter stole her grandmother's credit cards and charged, with interest, more than $20,000. Mrs. Green's surviving daughter took her mother's medications to feed her own substance abuse problem. This daughter also stole money, perhaps thinking it was “rightfully” hers. Mrs. Green could barely make ends meet, and the fact that her own relatives were stealing from her made it even worse.

Generally, the elderly are afraid to report this abuse, fearing that their children will consider them to be too demanding or unfit to handle their finances. The elderly naturally fear losing an important part of their independence and can be embarrassed that they can't handle the situation themselves. Mrs. Green did not want to report these crimes because she was afraid of alienating her only surviving daughter and didn't want to get her granddaughter into any more trouble. She was also depressed over the loss of her daughter.

Another client of mine, a wealthy man in his 80s, was rushed to the hospital with heart palpitations. Immediately, his children wrote gift checks to themselves in case their father didn't make it. That was a few years ago, and he is still going strong. This client also complained to me that his son, a co-signer on his safe deposit box, took his jewelry without asking. The client did not want to confront his son, because he was afraid of alienating him. Financial abuse affects the elderly in all financial, social, and cultural groups.

People over the age of 55 control 70% of the nation's wealth. Many of our elderly do not realize the value of their assets and how those assets make them vulnerable. An FBI investigation found that fraudulent telemarketers were directing nearly 80% of their calls to seniors; the elderly are often dependent on others for help, and a “helpful” voice at the end of the telephone line can exert significant influence. Still, sadly, family members commit more than half of the financial abuse of the elderly.

For family caregivers, there are many signs to watch for in detecting financial abuse of their loved ones. Someone could force an elderly person to sell or give away property or to sign a power of attorney. Valuable objects may start to disappear. There may be unusual activity in bank accounts, such as sudden withdrawals of large amounts, many checks made out to cash, and low bank balances when there should be plenty of available funds. A new “best friend” or “sweetheart” might appear on the scene. Signatures on checks might not resemble the older person's signature. Out of nowhere, a name may be added to an older person's bank account.

There are several ways to prevent this financial abuse. Have several family members be involved with the older person. Encourage the elderly to become involved with the community, senior centers, or religious groups, where they can enjoy a strong support system. Take advantage of direct deposit of income checks, including Social Security checks and dividend checks. Carefully screen and verify professional caregivers' references, and do a thorough background check.

The older people become, the more vulnerable they become. Anyone suspecting financial abuse should report it. (It is estimated that only one in six cases of financial abuse is reported.) When in doubt, err on the side of caution. Financial abuse too easily can continue and even escalate, if there is no intervention. Reporting the abuse and intervening in time can save the assets, health, and dignity of elderly loved ones.

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Judith Heft is the founder of Judith Heft & Associates LLC, a Stamford, Connecticut-based firm providing personal financial management with an emphasis on the elderly. Her website is www.judithheft.com, and she can be reached at judy@judithheft.com.

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