10 Ways the Elderly Can Avoid Financial Abuse
Increased dependency due to illness, disability or cognitive impairments can make seniors susceptible to financial abuse. Nest eggs accumulated over decades also often make seniors attractive targets for financial predators, whether the predator is a bogus offshore sweepstakes or a care provider who sees an opportunity to be paid more than an hourly wage.
Just as sunlight makes the best disinfectant, transparency provides the strongest abuse protection. If others are aware of the senior's finances, either would-be predators will see that no opportunity exists to take advantage of the senior, or the family members or professionals can step in to keep any fraud from going too far. Here are some steps seniors or their loved ones can take to prevent financial abuse.
1. Use direct deposit
Set up direct deposit, so pension and benefit checks are deposited directly into the senior’s account. That way checks cannot go missing in the mail or be taken by nefarious caregivers.
2. Arrange for account oversight
Make sure that someone close to the senior has access to his or her accounts to be able to see if anything unusual is going on, like big checks being written or larger-than-usual cash withdrawals from ATMs. The oversight can be through copies of monthly statements or online access to accounts. A joint account with someone gives them oversight as well as the ability to write checks, make investment decisions and take steps if necessary to protect the funds in the account. It also avoids probate, making the transition somewhat easier at the owner's death. But make sure you only add the name of someone you really trust to the account because it can also be an avenue for financial abuse if the joint owner becomes the perpetrator. And joint accounts can affect Medicaid planning.
3. Use a revocable trust
Revocable trusts can be useful for a number of reasons. They include all of the benefits of joint accounts, with few of the drawbacks. Your revocable trust gives someone you trust access to your accounts in trust and the ability to step in seamlessly if you become disabled. Unlike a joint account, it does not give the trustee any ownership interest in the account. If, for instance, you had four children but named one as a co-owner of your joint accounts, at your death she would have the legal right to keep the funds rather than share them with her siblings. That would not be the case with a revocable trust.
4. Build safeguards into a power of attorney
A power of attorney allows a person to appoint an agent to act in his or her place for financial purposes when and if the person ever becomes incapacitated. Unfortunately, unscrupulous agents can take advantage of this power. If this is a concern, the power of attorney document can build in safeguards. For example, the document could name co-agents or require the agent to periodically report to a third party.
5. Visit often
Nothing prevents financial abuse or stops it in its tracks better than frequent visits by loved ones. Either the potential perpetrator will see that the senior can’t be isolated and taken advantage of or family members and friends will notice the abuse before it goes too far. If possible, offer to help sort bills and look at finances.
6. Talk about finances and scams
You should talk to your loved ones about their finances and stay up to date on the various scams going around. You can check with the AARP fraud website to monitor current scams in your area. Make sure seniors understand not to click on links in emails or give out personal information over the phone.
7. Simplify finances
Over the years, seniors may have opened a number of accounts and have several credit cards. You should streamline these down to a few essential accounts and cards in order to make things easier to monitor.
8. Use a limited credit card
Credit cards are now available that allow another person to monitor the activity of the cardholder and to limit both the amount spent and where it can be spent. One of these is the True Link card. You could also use a prepaid Visa card.
9. Limit calls
It is quite easy to register your telephone number with the Federal Trade Commission's Do Not Call Registry either online at www.donotcall.gov or by calling 888.382.1222. While this may not stop someone intent on defrauding a senior, it should help reduce calls from salespeople. You can also sign up for Nomorobo to block some robo calls.
10. Opt out of mail solicitations
At www.dmachoice.org the Direct Marketing Association permits you to limit the amount of catalogs, credit card offers and other direct mail pieces you or a loved one receives.
Your attorney can help set up a revocable trust and durable power of attorney to assist with financial management, advise on the best protective steps to take in your specific situation, and provide additional oversight to discourage financial abuse.
While there's no foolproof measure you can take that will both prevent financial fraud and leave you or your loved one with at least some independence and control over his or her finances, the steps described above can make the world a safer financial place. Just remember what was said at the beginning: isolation is a breeding ground for financial abuse (as well as depression and other ills). Social involvement is the best protection.