Protect Elderly Family Members from Financial Crimes by Jack Winter. CPA
Posted on June 26, 2019
by
Jack Winter
Financial crimes against the elderly more than quadrupled between 2013 and 2017, according to the Consumer Financial Protection Bureau (CFPB). While anyone can fall prey to these scams, the elderly are typically more at risk. They may be challenged with the Internet of things and using new technology safely, or they may be unfamiliar with managing their household finances, especially when those responsibilities were previously managed by a now-deceased spouse. To protect your loved ones from falling victim to these frauds, it is critical that you educate yourself and your family members.
Following are the 10 most common financial crimes the committed against older adults:
- Financial exploitation by a fiduciary or another individual who uses a power of attorney for illegal and unauthorized personal profit or gain or for depriving older persons of the benefits, resources and assets to which they are entitled;
- Theft of money or property, often by a family member, caregiver or in-home helper;
- Investment fraud and scams, including deceptive “free lunch seminars” selling unnecessary or fraudulent financial services or products;
- Lottery and sweepstakes scams;
- Grandparent/imposter scams;
- Tax and debt collection scams;
- Charity scams;
- Scams by telemarketers, mail offers or door-to-door salespersons;
- Computer and Internet scams, including identity theft; and
- Contractor fraud and home improvement scams
Be Involved
The more you know about your family members’ finances and needs, the better. Talk about who they trust to act in their best interest and encourage them to draft a power of attorney naming that person with the legal authority to make financial and healthcare decisions on their behalf, if the event they are unable to do so themselves. Get to know their accountants and their financial and legal advisors as well as any caregivers who regularly visit their homes or accompany them to the bank. Some of the most common signs of financial abuse include the following:
- Loss of property;
- Large, frequent and unexplained withdrawals from bank accounts or transfers between accounts that the owner cannot explain;
- Attempts to wire large sums of money;
- Sudden non-sufficient funds or unpaid bills;
- Closing accounts without regard to penalties;
- Suspicious signatures on checks or a suspicious level of checks made out to cash or noted as “loans” or “gifts”;
- A caretaker, relative or friend who suddenly begins conducting financial transactions on behalf of an older person without proper documentation;
- Bank statements that no longer go to the customer’s home; or
- Altered wills and trusts or newly created powers of attorney
Educate
Knowledge is one of the best forms of protection against financial crimes. Take the time to educate your elder family members about staying safe online, guarding their personal information, including social security number and financial accounts, and shredding all documents that contain these personally identifying details. Addition fraud prevention tips to share with family members include:
- Checking references before hiring advisors and or caregivers;
- Taking time to make financial decisions and avoiding high-pressure sales tactics;
- Obtaining written explanations of investment opportunities and getting second opinions
- Creating a money trail by using credit cards or checks for large financial transactions
- Making checks payable to a financial institution or business entity rather than to individuals or to cash
- Do not respond to unsolicited phone calls, emails or texts asking for your private information;
- Learn how to safely use the internet and email, including using virus protection software and recognizing the telltale signs of a scam;
- Never click on links or attachments contained in emails unless you are sure of the message sender; and
Anyone can fall prey to financial crime, but the elderly are typically more at risk, especially when they are unfamiliar with managing finances, they are not technologically proficient or they are physically or cognitively impaired and dependent on others. Make it clear to your family members that they should never feel embarrassed to ask for help. Moreover, if they think they are victims of financial crime or if you are suspicious about some of their recent financial activities, act quickly. The sooner a financial fraud is recognized, the sooner it can be quashed and action can be taken to minimize its impact.
About the Author: Jack Winter, CPA/PFS, CFP, is an associate director in the Tax Services practice of Berkowitz Pollack Brant, where he provides estate planning, tax structuring and business advisory services to individuals, families and business owners. He can be reached at the CPA firm’s Ft. Lauderdale, Fla., office at (954) 712-7000 or via email at info@bpbcpa.com.
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