United States: Elder Financial Abuse: What It Is. How To Spot It. What To Do About It.

Last Updated: January 24 2007
Article by Frederick Caspersen

Originally Published in the AICPA Wealth Management Insider

Let me begin with a few facts about the elderly. The number of Americans over the age of 75 has increased significantly, even dramatically, in the last 10 years, and that trend is likely to continue. Furthermore, the number of wealthy elderly is also increasing, as is their combined wealth.

As Willie Sutton is famously known to have said, when explaining why he robbed banks: "That’s where the money is." It seems that a number of individuals, and some organized gangs, have realized that many single elderly persons have that in common with banks: they have money, and it is all too often available for the taking.

The New York Times, September 27, 2006, reported on elder abuse in Orange County, "Forensic Skills Seek to Uncover Elder Abuse." Or again, readers may have noted the sensational case of Brooke Astor, age 104, whose grandson accused Brooke’s son, and the accuser’s father, of siphoning off in the neighborhood of $14 million for his own use. And not that long ago, the Groucho Marx case was in the headlines.

There are less sensational cases too. For example, in California’s Napa County, a 40-something home-care nurse insinuated herself into the household of an 88-year-old recently widowed man with no children. She first set her sights on the victim when the victim’s wife was still alive, convalescing in the nursing home where she worked. Within a matter of months, the home care nurse to the widower to Reno, made him her husband, fired his long-standing attorneys, shifted his legal affairs to her immigration attorney and his investment advisor to hers and made herself the new and sole beneficiary of his multi-million dollar estate. The former heirs were unable to change that outcome when they discovered the scam after he died — she had the funds to hire the best attorneys available to take the case and she did.

And let’s also remember the Reader’s Digest sweepstakes offers and the Canadian lottery telemarketing scams; or the financial advisor who sells an annuity with a very heavy load to an 85-year-old. They are more impersonal than the nurse who marries her patient, but they are vacuuming up the elder’s financial assets just the same.

What Is Elder Financial Abuse?

While the statutes and cases deal with legal concepts like "undue influence" and "diminished capacity," those concepts are often not adequate to deal with the problem of the slightly demented individual, or the fact that the elderly typically become increasingly dependent on those in close contact with them. And those in close contact — whether a family member, a nurse, a gardener — cannot resist the temptation to accept the gifts, often freely offered.

We, as Americans, highly prize our autonomy, and this highly-prized value runs straight into the problem of the influence the unscrupulous have over the susceptible elderly. If an unmarried person has the power to give his property to anyone — and all states, with the possible exception of Louisiana, grant that power even when there are children — why can’t that person give his property to his nurse?

At some point, we recoil and say — I may not be able to define elder abuse, but I know it when I see it.

What Are Some Indicators of Potential Elder Financial Abuse?

There are signs, and those who care about the elder individual will want to be alert to them:

  • A new person in the life of the elder, in which, the new person assumes an increasingly exclusive role in the elder’s life.
  • A change of close and long-time advisors — attorneys, financial advisors, CPAs.
  • The new person does not allow the elder any unaccompanied visits and shuts off phone communication.
  • The new person takes the elder on long, exhausting trips unlike prior travel itineraries.
  • The elder person is increasingly isolated from the outside world.
  • The new person marries the elder.

What Can Be Done About It and by Whom?

Other family members have their own lives. Often they don’t have the time — or think they have the time — to monitor the care and affairs of elderly family members closely. If they do decide to intervene, they may face severe challenges. In one case in which our firm was involved, a wealthy elderly man with Huntington’s chorea had been virtually imprisoned and his assets extracted. We had to involve the sheriff and the public health authorities to raid his home and move him to a care facility. Then began the process of trying to find and recover the assets that had been stolen.

It is much easier to act (if not exactly easy) if the elder is still living. Once they have died, it is impossible to conduct an evaluation of their competence, and if they were married to their abuser, it is far more difficult to annul the marriage and defeat the rights that an abuser acquires as a surviving spouse.

Those closest and most able to spot the problems are the elder’s advisors, bank tellers (several cases have been foiled by an alert teller who wondered why the elder was withdrawing $20,000 or more in cash!) and especially the CPAs. You see the elder or at least their financial records every year to prepare the tax returns. You have an opportunity to alert family members — or in serious cases the district attorney or the elder’s own attorney — that things are not right.

So the lesson: Stay alert to this threat — it is easier to take candy from an elder than it is from a baby. We owe it to our clients to help them when they need us most.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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