The Five Most Common Ways Elder Financial Abuse Happens

Editor’s Note: This is the first in a series of articles by Michael Hackard, Esq., that are excerpts from his book, The Wolf At The Door: Undue Influence And Elder Financial Abuse.

Wrongdoers have their methods and tactics, and it’s our responsibility to counter them at every turn. What follows is an analysis of the most common ways elderly Americans are taken advantage of.

Caregiver Abuse

When a Michigan trial judge dismissed a family’s lawsuit against a home care company for sending a caregiver with two felony criminal warrants to care for a man in his eighties, the national press erupted with questions about how this could happen.

In this particular case, the Kentucky-based home care company, ResCare, sent a woman to a retired Detroit-area businessman’s house to look after his ailing wife, who had dementia. It didn’t take long until the wife’s jewelry began to disappear—as well as the businessman’s fortune. Court filings estimated the losses to be as high as $1.5 million. The caregiver, if she could be called that, moved the businessman out of his bedroom into the basement of his lakefront home and moved her own mother into the home. The businessman’s wife died, and within a matter of months, the caretaker “married” the businessman.

When the businessman’s family members finally intervened and removed him from his home, his finances were in shambles. None of his bank accounts had positive balances, nor did he have any working credit cards. He had his monthly Social Security payment—that’s it.

The businessman and his family are sadly representative of the widespread abuse affecting our growing elderly population. I have handled a number of cases where predators, posing as legitimate caregivers, quickly took advantage of their elderly charges. This misconduct includes physical and medical neglect, and is often coupled with embezzlement and theft.

The Michigan case didn’t work out well. Then again, by their very nature, no abuse case can really ever work out well. Even with a partial financial recovery, the seismic emotional repercussions stemming from misplaced trust don’t easily recede.

Financial Exploitation

Financial exploitation takes many forms. Even though I have been counseling families for decades, I am regularly surprised by some new form of abuse. An incomplete list of malfeasance could include the sale of an elder’s medications; grocery bills more attributable to cash withdrawals taken by caregivers than bread and milk purchased for the elder; lawn services for a small yard being billed at $300 per week; money being used for gambling fees; medical care and dental care being neglected because of a theft of funds; and assignments of bank accounts into joint tenancy with a wrongdoer.

Most families with victimized elders could readily add to the list of the ways elders can be financially exploited. Vigilance helps. Here are some ways you can remain alert:

• Be very careful and take precaution when hiring caregivers. Simply hiring a caregiver company is not an insurance policy against wrongdoing.

• Watch your elder’s bank accounts—particularly withdrawal activity or changes in accounts. Sometimes the horse is out the barn door before you discover bank transfers, but late is still better than never (or a year later).

• Be careful and inquiring if you hear that your elder has been making frequent trips to the bank.

• Be vigilant about watching your elder’s mail. We have seen situations where financial information is hidden from the view of the elder and his or her relatives. Beware—this is a sign of great danger. Some financial advisors believe that an elder’s credit report should be ordered periodically, reasoning that a questionable report could be a useful “canary in the coal mine.” We have also seen cases where perpetrators cashed Social Security checks belonging to their victim. Accordingly, direct deposit of Social Security, retirement, and dividend checks provides some distance between an abuser and your elder’s money.

• Review receipts from vendors (grocery stores, pharmacies, Costco, etc.) for goods purchased for your elderly relative. We have seen multiples cases in which wrongdoing was first discovered by this kind of review. A $350 receipt from the local grocery store showing a $200 cash withdrawal can make even the most oblivious family member suspicious.

• Watch for service scams. New heaters, air conditioners, garbage disposals or lawn irrigation systems sold at an excessively high premium are not unusual.

• Reverse mortgages can be a blessing or a curse. They may provide a large lump sum payment or a stable, predictable monthly income to senior adults, but money coming in from a reverse mortgage may also be a large and tempting “cookie jar” for unscrupulous caretakers or relatives. More than once I have seen reverse mortgages paid to vulnerable senior adults with questionable capacity, and the existence of a reverse mortgage often isn’t discovered by a senior’s family until the senior has passed away.

Misuse Of Powers Of Attorney

Durable powers of attorney can be a potent legal vehicle for ensuring a senior adult’s health, legal and financial well-being is in the hands of a trusted agent. If used with prudence by trusted family members or agents, these powers provide legal protection when and if the senior becomes incapacitated or incompetent. When exercised appropriately, such powers are an unfettered blessing. If misused, however, they can destroy a lifetime of planning.

The effective and prudent use of durable or medical powers of attorney brings no headlines. In the same way, the misuse of these legal privileges is often kept secret and met with incredulity by relatives when discovered.

My firm has seen several incidents where power of attorney was misused at the end of an elderly adult’s life to benefit the holder of the power of the attorney. Examples of misuse include the transfer of real property to the holder by negating trust provisions that provide for a different distribution; the seizure of personal property held in safe deposit boxes coupled with later denials of the existence of the property; dramatic changes in bank accounts that are inconsistent with will or trust provisions; and the transfer of title to vehicles.

Some holders of medical powers of attorney have even misused their privileges to prevent family members from visiting the hospital bed of a gravely ill or dying relative. The state of California has recently addressed this issue via legislation, making this kind of abuse much more difficult, but stories abound about how a son or daughter, or grandson or granddaughter, could not visit a dying relative because a stepmother or stepfather prevented the visit. If someone is forced to deal with this issue, he or she should immediately contact a lawyer familiar with elder abuse laws. Medical facilities should also be aware of their limitations of their power in preventing visits.

Isolation And Freeze-Outs

Isolating elders from their families, neighbors and loved ones is an all-too-common occurrence in instances of abuse. Changed door locks, newly locked front gates, cell phone seizures, failure to answer or open the door to visitors and unreported removals of elders from their homes are part and parcel of the isolation process. These actions cause family members to fear for the safety of their loved ones and also may create a sense of helplessness. Unfortunately, such conduct is common.

For Californians dealing with isolation or freeze-out abuse, the first step is to call Adult Protective Services; residents of other states should contact their local equivalent. Many local law enforcement agencies also have task forces that deal with such abuse. Civil lawyers skilled and experienced in elder abuse issues can assist with these contacts and can also address such issues in civil filings that include restraining orders and other appropriate measures.

Some words of warning, however: While isolation and freeze-out conduct might be obvious to a family member of the elder, this form of misconduct may not be as obvious to authorities. Criminals and wrongdoers do not usually jump at the chance to admit guilt. While there is no excuse for elder abuse, wrongdoers will readily provide them. Here are some common excuses:

• “I had to keep everyone away because they just upset [the elder].”

• “We had to move Grandpa to Arizona because they have the best medical care there.”

• “I had to keep Aunt Bessie away from the phone because she only got upset when she heard from her relatives.”

• “Of course I had to keep my dad away from my sisters and brother—they’re greedy and they only wanted to get his money.”

• “I needed to protect my uncle because he was afraid that his children were going to hit him, push him down or lock him up in a mental asylum.”

Don’t expect the isolator to readily admit that she bought her boyfriend a new Harley with Grandma’s money, that the house and surrounding area are a pigsty because she’s doing meth, or that all of Grandma’s jewelry was sold to support her drug habit. You’ve got to dig at it when your loved one is isolated and you’re frozen out. The process can be demanding, frustrating and anxiety producing. Still, don’t turn your back on your elder—do something to protect the vulnerable.

Unwarranted Transfers

First, an acknowledgment: Families often find it difficult to transfer an elderly family member to an assisted living or nursing facility in situations where it is absolutely in the senior’s best interest to be transferred. In fact, I’d venture to say that most transfers are absolutely warranted and done with love and care for the senior. It’s the unwarranted transfers, coupled with wrongdoing, that can petrify family members.

The common setting for unwarranted transfers is the presence of a family member—maybe a stepbrother or stepsister—who is estranged from the senior’s other children and family members. For whatever reason, and by whatever treacherous means, the wrongdoer is able to get the elder into his or her home and amend the elder’s estate plan. Once the estate plan is effectively altered, it can be “Katy, bar the door!” for change.

More than once, we have seen situations in which a senior is transferred, against his or her wishes, to a facility geographically removed from other family members. In the meantime, personal goods and family mementos are often discarded or hidden. These actions often cause more anger than money transfers. You simply can’t replace photographs, family heirlooms, military awards or personal collections with money. Confiscating family treasures is an affront to the remaining family members—a complete disregard of invaluable family history and a glaring mark of the wrongdoer’s greed.

Difficulties abound when trying to address unwarranted transfers. First off, the senior often lacks capacity. So what do we do in this scenario? One way to deal with an incompetent senior is to seek a conservatorship of his or her person and estate. This option can come with complications, however: Does the senior really wish to be supervised by a stranger or even a well-meaning family member? Conservatorships can be expensive and time-consuming. Prospective conservatees are afforded legal counsel from a public defender or a private attorney, and the costs of this counsel are paid from the conservatee’s estate. It should be noted, though, that courts are often reluctant to appoint conservators, even for those with considerable impairment. Taking away someone’s freedom is not done lightly, even if such freedom increases the person’s vulnerability to scams and unscrupulous people.

Detecting The Tactics Of Elder Financial Abuse

The sooner elder financial abuse is detected, the better the chances for recovery of estate and trust assets on behalf of the victim. So what are the typical signs or “red flags” to look out for? According to the guidelines of the National Adult Protective Services Association, the following factors should be watched closely to avoid a potential personal tragedy and financial disaster:

• Liabilities and unpaid bills. What if an elderly loved one who should have the means to pay the bills every month somehow gets their utilities get shut off? There might be more in play than just a faulty memory—a bad actor may have made off with money from the elder’s accounts, leaving the victim high and dry.

• Surrender of oversight. Very often we see cases where a “new friend,” often a neighbor or opportunistic relative, appears on the scene to offer their “help” in managing the elder’s finances. At times, they even succeed in gaining power of attorney. Concerned relatives should closely look into any effective forfeiture of oversight for indicators of suspicious activity.

• Suspicious withdrawals. As any good investigator will tell you, follow the money. When financial accounts begin registering unexplained withdrawals or checks made out to “cash,” it’s time for you to speak with bank employees and get further details on who’s making these transactions.

• Vanishing assets. Another telltale sign of elder financial abuse is when valuables begin to disappear. Suddenly an elder’s jewelry, cash or financial documents, such as stock certificates, vanish, and the perpetrator takes to living lavishly with new purchases of fancy attire, vehicles, property, etc.

• Changed estate documents. Wrongdoers who commit elder financial abuse will often seek to legitimize their predatory behavior with the stamp of legality. While exercising undue influence on the elderly victim, they’ll “shop around” for any lawyer who will agree to change a will or trust document in their favor. Ask your elderly loved one about any such changes. If you are up against such a situation, it may be time to consult an experienced trust litigation attorney.

• Creditors come knocking. Is the elder encountering financial trouble where there should be none? Find out the explanation for any property liens or foreclosure warnings. The reason behind a creditor’s claims may be more than just a mistake—your elderly family member might have been financially exploited by an abuser who cleaned out their accounts.

Michael A. Hackard, Esq., heads Hackard Law, an estate, trust and probate law firm in Sacramento, California. A veteran of the legal field with 40 years of experience, Hackard is devoted to protecting his clients.