A Family Affair: Five Ways To Foil Family Financial Abuse

I know family members are responsible for elder financial abuse because I’ve seen it happen. It occurs more often than you think.

The scenario goes like this: A sibling “takes over the management” of Mom or Dad’s finance. They obtain power of attorney and start fleecing their own parents. I wish I could say this is a rare scenario, but it isn’t.

In one piece that I wrote, I came across a son who had robbed his 103-year-old mother. She had to go to court to stop the exploitation.

According to the SIFMA Senior Investor Protection Resource Center, of the $3 billion in elder financial fraud, more than half of the crimes are committed by family members or caregivers.

“In cases where such exploitation is discovered, it is often only after large, questionable requests or aggressive power of attorney tactics,” the SIFMA Center notes.

“On top of this, senior investors are also heavily targeted by fraudsters who often utilize common schemes such as the Jamaican Lottery Scam, Nigerian Letter Fraud, Sweetheart Scams, Granny Scams, Contest Scams, and the Sale of Non-Existent Investment Products.

Moreover, it is estimated that only 1 in 44 instances of senior financial exploitation is ever reported.”

How can you protect your family members from fraud? Here are what financial watchdogs recommend:

– Have a responsible family member monitor and pay bills. More than two family members should be involved. That way you can spot any large charges, withdrawals or changes in account ownership.

– Financial (durable) power of attorney should be granted to the most responsible, financially savvy siblings. That way, in the event of cognitive decline, a family trustee can take over. Siblings who’ve had financial setbacks or suddenly move in with Mom or Dad should be monitored closely.

– Keep in touch with all financial professionals in your parents’ lives. You should have access to their lawyer, accountant, financial planner and broker. Are they making any major moves such as cashing out accounts or buying new investments? Talk to them every week.

-- Know your recourse. If there’s fraud involved, you can always involve your state attorney general’s office. You can also file for arbitration against brokers.

– Communicate with your elders. Have they met a “new friend” who just happens to be selling insurance, brokerage products or real estate? Are they going to “free” lunches sponsored by brokers?

There are lots of scams out there. You can’t be on top of every one, but you can certainly be vigilant with your relatives.

For more on how to prevent financial abuse, click here.

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A Family Affair: Five Ways To Foil Family Financial Abuse