Financial Elder Abuse Costs $3 Billion a Year. Or Is It $36 Billion?

Financial elder abuse—broadly defined as the illegal or improper use of the funds, property, or assets of people 60 and older by family, friends, neighbors, and strangers—costs older people and their families billions of dollars. But how many billions? That's subject to debate.

When Consumer Reports recently reported on elder financial fraud, Lies, Secrets, and Scams: How to Prevent Elder Abuse, we used the number $3 billion. It comes from a study published in 2011 by the MetLife Mature Market Institute, in collaboration with the National Committee for the Prevention of Elder Abuse and the Center for Geronotology at Virginia Polytechnic Institute and State University.

We rounded up from that study's estimate of $2.9 billion annually (see page 2 of the download).

The MetLife study's methodology involved reviewing news articles mentioning elder financial abuse committed by strangers; family, friends, and neighbors; and the business sector, as well as Medicaid and Medicare fraud.

We chose that figure because a number of experts we interviewed thought it was a credible figure.

But they—and an author of the study—admitted to us when we first reported it a couple of years ago that the figure probably represents the tip of the iceberg. The figure is probably far larger than that.

Other, Much Higher Estimates

At the other end of the scale, TrueLink, a company that provides account-monitoring software for elders and their families, has projected that financial elder abuse costs families more than $36 billion a year, 12 times the MetLife estimate. TrueLink arrived at its estimate by surveying family caregivers of older people. TrueLink CEO Kai Stinchcombe says that abuse committed by strangers—the main topic of our article—is more than $29 billion.

The TrueLink study used a broad definition of financial elder abuse. It included exploitation (about $17 billion), in which fraudsters operate openly, claiming victims' consent; examples are quack weight loss or dietary products, work-from-home schemes, hidden shipping and handling or subscriptions, and misleading financial advice. It also included a loss of $12.76 billion from criminal fraud (anonymous con artists and identity thieves), and $6.67 billion from abuse by caregivers: family members, and others exploiting a trusting relationship.

These figures were compelling, especially given that TrueLink consulted experts from the respected Financial Fraud Research Center at the Stanford Center on Longevity. When I spoke with Martha Deevy, director of the center's financial security division, however, she noted that she and her colleagues didn't write the survey. "We gave them input regarding how to frame the questions," she said. "We believe the challenge with the TrueLink numbers was the way they extrapolated and generalized across the population and think that should have been questioned in a peer-reviewed journal."

On the other hand, Deevy noted, the MetLife results may have been too conservative. "I think they leaned on the pieces of evidence they could authentically count," she said. "But people misrepresent how much they lost. A large percentage of victims are not reporting at all."

A problem with both estimates, Deevy says, is that there's no standardized way to define fraud types. She and her colleagues are working on a taxonomy that she hopes will be used by all professionals who deal in the field, including researchers; law enforcement; consumer protection advocates; and adult protective services workers.  (Continue Reading)

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Financial Elder Abuse Costs $3 Billion a Year. Or Is It $36 Billion?

Protecting Special Needs Kids Financially

More than 56 million Americans have some type of disability, according to the Census Bureau.

Autism, for example, affects one in 50 children. For parents of a child with a disability, the great fear is: "What happens when we're gone?"

One answer: Set up a trust for the child.

To support a special-needs child during and beyond your lifetime requires truly special planning. Not only are there more costs and uncertainties but also heavier emotional weight. Many families simply avoid the process: Only 21% of parents with special-needs kids say they are familiar with the planning steps, even though most worry about their children's lifelong financial security, according to a 2011 by MetLife Center for Special Needs Planning.

(The MetLife survey reports some caregivers do tackle planning today: 38% have a will, 36% have planned for future housing for their special-needs dependent and 32% have identified a trustee. Those percentages are up from a similar survey in 2005.)

When setting up a special-needs trust:
1. Know what type of trust you need. Two kinds of special-needs trusts exist: self-settled and third-party. If a disabled child creates his or her own trust, it's self-settled. Parents of disabled children create third-party trusts.

2. Choose a trustee. This overseer distributes the trust funds to your child. Advisors suggest a combination of a family member and corporate trustee: The family member understands the child's needs and the corporate trustee has expertise to manage the funds.

3. Plan for funding the trust. Parents' life insurance policies often fund the trust, as do retirement accounts or real estate.

4. Inform other family members. Families sometimes neglect to tell other family members about the trust or, crucially, educate them how it works.

5. Do test runs. Make sure everyone knows the rules of maintaining a trust.

Full Article and Source:
Protecting Special Needs Kids Financially

See Also:
NASGA:  Some Scoop on Trusts

How To Prevent Financial Abuse of the Elderly

Elder financial abuse is an expensive drain on the U.S. economy. A study of media reports from April to June 2010 "estimated that financial exploitation cost older adults at least $2.9 billion" that year, according to a report by the Government Accountability Office, or GAO. According to the report: "The money that older adults lose in these cases is rarely recovered, and this loss can undermine both the health of older adults and their ability to support and care for themselves."

That often means that taxpayers end up footing the bill for housing and medical care once an exploited senior has been drained of his or her assets. In fact, the report says that in 80 cases involving Utah's elderly, that state's Medicaid program could pony up about $900,000 in Medicaid costs alone.

The GAO report points out that unless law enforcement, the courts and adult protective services get better at protecting the assets of older adults, this country could see a sharp increase in the amount of public dollars replacing private funds that are illegally drained from their estates. And as the senior population increases, those numbers will only continue to climb. Certified Fraud Examiner Steve Lee says that "pre-grave robbing" -- which often goes unreported -- is an issue frequently encountered by private investigators, specialists in elder care law and colleagues.

Tom Fields' personal experience has led him to crusade for more effective legislation targeting elder financial abuse. "There is a clear lack of protection under current laws and legislation," says Fields, who is from Mentor, Ohio. He believes that in addition to current law being insufficient, law enforcement often has little idea of how to handle these cases.

"It's true that police reaction to cases of elder financial abuse varies widely from jurisdiction to jurisdiction, and there is little crime-specific training available to them. Many jurisdictions treat these cases as civil, rather than criminal, cases, leaving families to struggle with stopping the siphoning of an elderly person's assets via a sluggish court system.

Full Article and Source:
How to Prevent Financial Abuse of Elderly Parents