A recent report by insurance and retirement solutions provider Allianz Life reveals that as many as 37 percent of elderly Americans have been the victims of some form of fraud, scam, theft or other financial abuse. The number of victims has nearly doubled from the estimated 20 percent seen just a few short years ago (back in 2014).
On average, seniors who are unlucky enough to be preyed upon by scammers, thieves and con artists lose approximately $37,000. Sometimes the abuse is discovered before such a large amount is taken, but other times, the victim loses much, much more. It is all too common for people to lose their entire life savings (hundreds of thousands or even millions of dollars) before the theft is discovered.
Thieves most often take advantage of elderly people who are suffering from diseases causing diminished capacity or decision-making (particularly dementia and Alzheimer's, the numbers of which are expected to double in the next 30 years), or those who have limited support systems. Social isolation leaves people at risk, and it is becoming more common among the elderly as life expectancies increase, spouses pass away, children move further from home and seniors become more resistant to living in nursing homes or assisted care facilities.
How can advance planning help?
If you plan ahead for the possibility that an elderly loved one could need financial or caretaking assistance, you may be able to either prevent scams and abuse altogether, or at least catch it before the damage is insurmountable. For example, you could appoint a financial power of attorney or conservator for an elderly person, someone who has the ability to closely examine or approve financial transactions before they take place. This alone might be enough to prevent any economic losses at the hand of a scammer or thief.
Putting estate assets into a trust (that pays for living expenses and medical bills) while giving the senior citizen a budget for incidentals can also help prevent abuse; limiting the amount of funds to which a vulnerable person has access means that the chance of high-value theft or swindle is very low. Any high-dollar amounts would need to be approved by the trustee ahead of time, thus staving off such common abuses as:
- Writing checks from the elderly person's account
- Convincing the senior citizen to purchase jewelry, furniture, vehicles, vacations, electronics or other expensive items
- Tricking the elderly victim into wiring large sums of money (often purportedly for bail money or medical expenses for a grandchild or other young family member who has found themselves in need in another part of the country or world)
Of course, just educating capable seniors about the possible risks that could befall them can go a long way toward preventing financial abuse. If you have an older loved one, take the time to make sure that they are aware of common scenarios like these that could precipitate an abuse/scam/fraud incident:
- People striking up fast friendships and then requesting gifts or asking for loans
- Calls seeking large sums of money out of the blue
- "Lottery" scams that require the winner to transfer funds to cover administrative costs before the windfall can be paid
- Calls purporting to be from the IRS or other government agencies, or companies like Microsoft or Apple, that request personal information to cover debts or remove computer viruses
- Caregivers themselves (whether paid helpers, family members, friends or acquaintances) trying to steal funds, medications or heirlooms
To learn more about the ways in which estate planning could potentially lower your loved one's risk of losing money in a scam or abuse situation, contact an experienced estate planning attorney in your area today.