Thursday, June 22, 2017

How Safe is My Mother from Financial Exploitation?

Jennifer’s 80-year-old mother seemed to be running low on funds every month.  By the end of the month, she had no money for groceries.  Jennifer had helped her mother with a budget, so she thought her mother had plenty of money to make it through each month.  When she asked her mother to allow her to look at her bank statements, though, Jennifer discovered a series of automatic debits to several companies she did not recognize.  It turns out, her mother had signed up for monthly book delivery clubs, as well as recurring magazine subscriptions for magazines Jennifer knew her mother did not read.  In addition, Jennifer found monthly donations to several charities that her mother had never donated to in the past, as well as large checks made out to cash.

It turned out that Jennifer’s mother had been victim to telemarketers selling book and magazine subscriptions, as well as fake charities soliciting donations.  In addition, Jennifer’s mother had fallen victim to a scheme where someone pretended to be a grandchild soliciting funds to help get through a “crisis”. 

A MetLife Mature Market Institute study determined that approximately one in five Americans over the age of 65 have been victimized by financial fraud. The exact numbers are difficult to come by because many of the victims do not report the crimes.  They are often aren’t aware they have been a victim, are embarrassed to let anyone know they were “stupid” or that it is a family member that is the perpetrator.   In addition, many of the victims suffer from dementia and are not able to report financial fraud or abuse.

Some of the financial schemes perpetrated against the elderly seem to be fairly innocent, such as getting an elderly person to sign up for a recurring book or magazine delivery. Often, an elderly person doesn’t understand what they’ve just signed up for, cannot remember that they signed up for anything, and cannot figure out how to stop the payments once they have started.  Of course, once an elderly person signs up for these types of services other similar companies target the elder.

How can you find out whether your parent or another loved one might be the victim of some of these schemes?  What can you do about it if they are?

The best way to be aware whether someone is becoming a victim of fraud or other types of financial exploitation is to discuss finances with your loved one on a regular basis.   Keep your eyes out for stacks of magazines, books, trinkets, etc. that your parent would not normally buy.  Ask your parent if you can go through their piles of mail to see whether they are getting regular solicitations, and check to see whether they are able to pay their regular bills.  Of course, you need to get their permission to go through their stuff.  In addition, you might request permission to go through their bank statements to see what they are spending their money on.

If your parent has dementia, you may need to use your powers under a durable power of attorney for finances to access bank statements or to talk with their financial institutions.

What are some of the legal tools you can use to combat financial exploitation or fraud?

Financial Power of Attorney

A power of attorney is a document in which a person, also known as a principal, nominates a trusted person or company as an agent who will be able to make financial decisions for the principal.   Provided the document authorizes it, the agent can have access to bank statements and other financial statements of the elder.  A Power of Attorney cannot necessarily prevent fraud, in that when you serve as an agent under power of attorney your parent will still continue to have access to his or her own bank accounts.  The power of attorney can, however, give you the ability to speak with financial institutions so that you can get an idea of what the person is spending money for.

Living Trust

You can have your parent make a trust and appoint you or another trusted individual as the Trustee or a Co-Trustee.  A Trust is like a wagon, or a bucket.  It is a receptacle, a place to put “stuff” such as bank accounts, real estate, bonds, etc. With a revocable living trust, your parent can put their stuff in the receptacle and take it out whenever they want.  While they are alive and well, they can be the trustee.  The trustee is the person that is responsible for making sure the “stuff” gets put into the trust, that the “stuff” is taken care of while in the trust, and that distributions of “stuff” are made when necessary.   A trust will have rules to determine when the acting trustee should no longer act, and should hand over the receptacle to a successor trustee.  Once that successor is in place, the trust will have rules as to what that successor trustee can make distributions for.   If your parent is not willing to make you a co-trustee in the beginning, ask them to come up with the rules as to when they might want you to become the trustee.  For instance, your parent can do a letter stating that if you notice them making bad financial decisions or having trouble paying bills, it is time for you to take over.


In extreme cases you may have to seek guardianship and conservatorship of your parent.  

Guardianship and conservatorship are legal relationships created by the Probate Court.  The guardian has the legal authority to make decisions about the healthcare and living arrangements of another person, called a ward.  The guardian also has the duty to look out for the welfare of the ward.  The relationship is very much like that of parent and child, where the law presumes that the ward is not able to make his or her own decisions about his or her healthcare or living arrangements.

The Conservator has the power to manage the finances of the ward, under strict guidelines established by the court.

If you suspect that your parent has been the victim of a fraud, you should alert the police, the bank, and Adult Protective Services.  In Georgia, the number for Adult Protective Services is 888-774-0152.

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