Thursday, May 11, 2017

Financial Exploitation: When Taking Money Amounts to Elder Abuse

A lone senior male stressed about financial issues late in the evening.
About 1 in 20 older adults report being financially abused by a family member in the year 
prior, according to research funded by the U.S. Justice Department. (iStockphoto)

When her husband died suddenly and unexpectedly from a massive heart attack, “Mary” – who asked that her real name not be used due to the sensitive nature of her story – was devastated and began spiraling downward.

He was only in his late 60s and in relatively good health, she recalls. Mary fell into a severe depression after his passing. “I withdrew. I isolated myself,” says Mary, now 70, who lives in Playa del Rey, California. In addition to her abject despair, she believes the antidepressants she was taking contributed to suicidal thoughts. She attempted suicide – overdosing on powerful painkillers she had for treating her arthritis, she says. She was hospitalized in 2015 and admitted into an inpatient rehab facility to recover.

Mary had previously appointed her daughter as trustee under a family trust and agent under powers of attorney to manage her finances if she was ever unable to do so herself. And it was during this time that – due to Mary’s psychiatric issues – her daughter's authority under the POA and trust became effective. Mary had been financially supporting her daughter, who was living in Mary’s home along with her daughter’s son. But instead of acting in her mother’s best interests, “she ran up $120,000 in credit card debt, which I only recently found out about,” Mary says – money spent on everything from online shopping to food delivery. She purchased a new car in her mother’s name, a new refrigerator and three new computers, all with her mother’s money and without permission; she rented out her mother’s bedroom to bring in more income for herself; and she failed to pay property taxes on Mary’s home.

According to research funded by the U.S. Justice Department, about 1 in 20 older adults report being financially abused by a family member in the year prior. Though definitions vary, elder financial abuse is generally considered to be financial exploitation, such as stealing money or taking over assets without permission, of an older adult – 60 or 65 and older – by a family member, caregiver or another trusted person, like a financial advisor. By one estimate from the San Francisco-based financial services firm True Link Financial, seniors lose nearly $36.5 billion to financial abuse annually. A previous widely cited estimate from MetLife put the figure at less than one-tenth of that – still a high loss, at $2.9 billion; but many experts say that’s most certainly a gross underestimate, given how very few financial exploitation cases ever see the light of day. “That’s based on only cases that got media coverage, which must be some tiny fraction of 1 percent of all elder abuse cases,” says Kathleen Quinn, a senior advisor and past director of National Adult Protective Services Association.

More Than Money

Money lost is only part of the profound price paid by seniors who are financially exploited. Quinn says that some people lose their homes, and notes – based on research of the issue in Utah – an estimated 9 percent, or nearly 1 in 10, of those who are financially exploited go on Medicaid as a direct result.

Because the perpetrator is typically a family member or caregiver, experts say being financially exploited can deeply undermine a person’s ability to trust others, and lead them to withdraw and become isolated, which can make a person more vulnerable to re-victimization. Studies show financial abuse can increase hopelessness and risk for depression and raise suicide risk. “This is obviously about more than just money,” says Sarah Barnard, a social worker who manages an elder abuse prevention program at WISE & Healthy Aging, a nonprofit social services organization in Santa Monica, California. Going from a place of stable financial footing to no longer having money needed for daily expenses can be “psychologically devastating,” Quinn says.

After Mary’s condition stabilized, she was transferred to an assisted living facility. “I really wanted to come home, but my daughter said I couldn’t come home,” she says. So instead she languished for six months at the facility, paying $2,000 a month to be there, before finally coming home. Eventually, Mary notes that her psychiatrist called Adult Protective Services, who reported the issue to local law enforcement. Mary also enlisted Bet Tzedek Legal Services in Los Angeles – which provides legal assistance and advice in elder abuse cases, including financial abuse – to revoke her daughter’s power of attorney and regain control of her finances.

That’s proved an involved affair, as her daughter had been withholding her driver’s license, medical insurance cards, credit and debit cards and other money, says Dominique Sanz-David, a staff attorney at Bet Tzedek. Instead, Mary’s daughter generally just used Mary’s money for her own benefit, Sanz-David says.

Not having access to her own financial means or identification did more than rob Mary of money. “I was basically a faceless person,” she says. “She had me totally isolated.” Mary notes that she couldn’t even talk to her doctor without her daughter’s permission. The ordeal has not only taxed her financially, but it’s taken a toll on her mentally. “I was depressed,” Mary says. “I was hopeless.”

Outside Help

Experts say the scenario Mary found herself in is a familiar one, where an adult family member exploits a supportive relationship, such as when the perpetrator is already living in the home. Often those who are financially abused have recently lost a spouse and may otherwise be alone.

That makes it incredibly important – while also often being exceedingly difficult – for the individual experiencing the financial abuse to seek outside help. That includes contacting Adult Protective Services and law enforcement to put pressure on the perpetrator to cease the abuse. Though it can be difficult in many cases to recoup money lost – since frequently it’s spent and perpetrators commonly have limited monies of their own – experts still often advise filing a civil lawsuit as well.

Mary says Sanz-David has been instrumental in helping her regain control of her finances, while huge hurdles remain. Mary has worked with a debt consolidation attorney to begin paying down a lower negotiated amount on the credit card debt. She’s looking to return to the workforce – a difficult prospect, given her age, she says. And she’s planning to sell her house when she’s able and relocate, possibly out of state, she says, so that her property tax burden is lower. It’s all together a monumental undertaking.

It remains unclear what repercussions – including any criminal charges – her daughter will ultimately face as a result of Adult Protective Services reporting the issue to local law enforcement. Experts say victims – particularly older parents – are often unwilling to take action, like contacting law enforcement, against family members who’ve taken advantage of them.

Similarly torn, Mary still allows her daughter to live with her. Sanz-David advised Mary to get her daughter out the home, and told her she could get a restraining order against her because of the financial abuse. She also advised her to take civil action. But Mary has declined to do so. “Mothers and grandmothers do not want to hurt their children and grandchildren even at their own expense,” Sanz-David says; she adds that she’s advised Mary to contact her if she changes her mind.

A reluctance to take action – as well as shame and embarrassment of having been exploited – is frequently used against victims of financial abuse by those perpetrating the abuse, experts say, to not only conceal it, but to re-victimize.

Mary, for one, says she is firmly back in control of her finances – if still struggling mightily to pay for damage done by her daughter. “She doesn’t have the durable power of attorney, so she can’t commit any financial obligation to me without my permission,” Mary says, while acknowledging that some patterns continue.

“She’s told me that she’s sorry, and she’s going to get a job, but she isn’t looking for a job. So I’m looking for a job – a part-time or a full-time job to help pay the property taxes,” she says. As for not putting distance between herself and her daughter, she sees no choice in the matter. “She’s my daughter, and I do have unconditional love for her. She has nowhere to go. She has no income … she would be homeless,” Mary says; in which case, she adds, her daughter wouldn’t be able to take care of her 10-year-old son. “So I wouldn’t do that.”

But even though Mary has opted not to take legal action against her daughter as advised, she echoes elder abuse experts in emphasizing that outside intervention is absolutely critical to combat financial exploitation – even if it’s perpetrated by next of kin. “If you don’t, it just becomes a quagmire. It’s like one of the sinkholes in Los Angeles,” she says. “It just appears out of nowhere, and suddenly you’re in the sink hole, and you feel hopeless – you feel like there’s no way out.

Full Article & Source:
Financial Exploitation: When Taking Money Amounts to Elder Abuse


Joanne R. said...

The problem is theft by power of attorney is a license to steal.

StandUp said...

These are great articles!

Chris Baker, CPA said...

This type of unfortunate scenario plays out all too much across the country. One way for people to protect themselves is to hire a financial professional such as a CPA who provides daily money management services. These services include things such as bookkeeping and financial monitoring. Sometimes having an independent third party perform these tasks is a much safer alternative than handing over financial responsibility to a family member.