Financial Exploitation: Dutiful Child or Manipulator Of The Elderly? By Austin Estate Planning Attorney Zachary D Kamykowski

financial exploitation risks can cause family rifts

As parents age and their physical and mental capacities diminish, it is natural for their adult children recognizing the parents’ decreasing ability to care for themselves, to step in and help them. Often, a specific child will take over most responsibilities, such as taking the parent to doctor’s appointments or the attorney’s office.

As the parent increasingly begins to depend on the child, it may make sense to appoint the child as a trusted decision maker and give them a larger inheritance to compensate them for their time. At the same time, other family members must take extreme care to ensure that a manipulative caretaker does not financially exploit the elderly parent. As an Austin Estate Planning Attorney, I can help you create a plan that decreases the chances of financial exploitation.

Who is susceptible to Financial exploitation?

With more people living into their eighties and nineties, elder abuse is a serious and increasingly common problem in our society.^[1] Elder abuse can take several forms, such as physical, sexual, emotional, and verbal abuse or caretaker neglect or exploitation. One-half of all elder abuse in the United States is financial exploitation^[2] (this article’s focus). Financial exploitation includes outright theft of money or property, illegal property transfers, identity theft, and misusing a position of trust, such as through a power of attorney.

Research has shown that the following characteristics indicate that an older adult is more likely to be financially exploited through undue influence^.[3]

characteristics of undue influence:

• Physical limitations that require them to depend on others to perform daily living activities such as home and yard maintenance, personal health and hygiene, preparing meals, paying bills, and transportation
• Mental limitations resulting from medication side effects, dementia, or injury
• Having recently experienced the death of a close loved one, such as a spouse or sibling
• Social isolation that results from few family or friends who visit or living alone with little or no access to community activities or healthcare services
• Experiencing anxiety or depression caused or worsened by loss or isolation
• Being generally naive and incredibly trusting
• Having little to no knowledge about their financial situation or little to no experience handling finances, for example, if their recently deceased spouse handled all the finances

Often, people who use undue influence to exploit an older adult financially do not begin helping them with the intent of using the older adult’s trust to manipulate or control them. Nevertheless, as time goes on, whether because of resentment or entitlement, or another reason, the helper begins to feel justified in helping themselves to the older adult’s money and property.

Although it is most often a family member who financially exploits the older person through undue influence, financial exploitation can also occur at the hands of any person whom the more senior person trusts, such as a neighbor, a fellow member of a religious organization, a housekeeper, or a professional adviser.

financial Exploitation warning signs

Below are some warning signs that a dutiful caretaker has crossed the line into elder abuse:

• The disappearance of the older adult’s cash or valuable possessions
• Unusual charges on the older adult’s credit or debit cards or unusual withdrawals from their bank accounts
• Unexplained transfer of funds to another institution or person
• Changes to legal documents, such as a power of attorney, will, or trust, by the older adult naming the caretaker to trusted positions or granting an inheritance or a larger inheritance, mainly when such a change goes against the older adult’s previously expressed wishes
• Placing the caretaker’s name on accounts as a joint owner or payable-on-death beneficiary
• Signatures other than the older person’s signature, or forged signatures, appearing on checks or credit card or loan applications
• The caretaker socially isolates the older person by limiting their access to communication (phone, mail, or email) or social visits or disallowing privacy on the phone or with visitors
• The older adult’s bills going unpaid or, the older person expressing concern about not having enough money to pay bills when there is sufficient income or other financial resources available
• Unexplained changes in the older adult’s demeanor or interests

how to prevent financial exploitation

Although the estimated annual cost of elder financial abuse is billions of dollars, it regularly goes unreported because the abuser is often a family member or trusted caregiver. Also, the older person may not report it because they are either unaware of the abuse or too embarrassed or afraid to say it.^[4] Yet by being aware of the warning signs and helping to create a community network around the older person, as well as taking careful and appropriate steps to plan for their decreasing ability to manage their finances, such as setting up automatic bill pay or creating a power of attorney or trust, you can significantly reduce the risks. We can help you take the steps necessary to protect yourself as you age or to protect your vulnerable loved ones. Contact us so we can discuss the appropriate steps to take.

^[1] Bennett Blum, M.D., Elder Financial Abuse and Financial Exploitation, Forensic and Geriatric Psychology, http://www.bennettblummd.com/elder_abuse_financial.html.

^[2] Michael J. Tueth, M.D., Exposing Financial Exploitation of Impaired Elderly Persons, 8 Am. J. Geriatric Psychiatry 104 (2000), https://www.ajgponline.org/article/S1064-7481(12)61467-5/fulltext.

^[3] Martin Hagan, Financial Exploitation of the Elderly through Undue Influence: How to Spot It and What to Do about It, Martin Hagan’s Estate Planning Resource Center, https://haganlaw.net/?page_id=95.

^[4] Marguerita Cheng, Elder Financial Exploitation: Warning Signs, Prevention and Reporting, U.S.News and World Report (May 27, 2021, 2:09 PM), https://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/articles/elder-financial-exploitation-warning-signs-prevention-and-reporting.