By James D. Adelsperger, CPA
The news is full of stories about senior citizens being victimized by unscrupulous people stealing their money, investments, or other valuable assets. Several predators have attempted to defraud my 85-year-old mother-in-law, and I too have received the infamous “IRS phone call” where someone purporting to be from the IRS calls to threaten arrest and jail if money is not sent to them immediately. (By the way, the IRS will never call to collect a debt this way.)
Here are a couple of examples of what can happen to our elderly friends and family if nobody is paying attention.
When my wife reviewed my mother-in-law’s checking account statement recently, there was an unidentified debit of about $125. Upon investigation, my wife discovered that a telephone solicitor had called her mother with a warning that her car warranty was about to run out, and she could renew it for “only” $1,500 per year. The car was far out of warranty, being 10 years old at the time. But my mother-in-law was persuaded that this was a good deal and signed up. It took several phone calls and lots of time to get the transaction voided.
We have a choice of electrical suppliers in Pennsylvania. Going through my mother-in-law’s bills, we discovered that over the course of just a few months she had four different electrical suppliers. Each time she changed not only did her unit cost of electricity go up, but she also was paying a contract cancellation charge.
My mother-in-law (I am not picking on her; she is simply my closest example of the way elders make money mistakes or are victimized) had excellent supplemental health insurance due to her employment prior to retirement. The sponsoring entity, a local hospital, decided to change the insurance program and turn it over to an outside vendor. The instructions were for participants to log on to the vendor’s website and complete their enrollment. This was an impossibility for a woman who had never used a computer in her life. Even though in-person training sessions were scheduled, it was very complex for an elderly person to understand. Consequently, a quarterly premium was missed and she was canceled from the program. Again, after many calls, she was reinstated, but it took a great deal of time and effort to get the situation corrected.
These are not necessarily signs of financial abuse, but they do demonstrate how easy it is to take advantage of some elderly people.
Purposeful targeting is even more alarming. Here are some common signs of elder financial abuse as reported by AARP in a blog post by Sally Abrahms:
- Funds are vanishing from accounts, belongings are vanishing from the house, and bills are going unpaid. Or your relative is confused about financial transactions.
- Spending habits have changed and suddenly your elder friend or relative is secretive about money, needs more, or has unexplained credit card charges.
- A family member is not forthcoming about mom’s or dad’s finances.
- A new person has befriended your elderly parent or friend to the point of weirdness. This person’s name has been added on a joint account or has been given power of attorney.
- There are no checks and balances for a professional caregiver who has access to a loved one’s money.
As people age, it is vitally important that children or other loved ones become familiar with that person’s affairs and ask questions when things seem awry. In effect, roles will be reversed as children become caregivers for their parents.
Here are some resources to assist with that task:
The National Committee for the Prevention of Elder Abuse has an enormous amount of information on all types of elder abuse: financial, physical, psychological, sexual, neglect, and domestic violence.
The Pennsylvania Department of Banking & Securities has a hotline at (800) 490-8505 or you can go online to file a complaint if elder abuse is suspected.
The Pennsylvania Attorney General has a special segment dedicated to senior issues, including the ability to file a complaint if warranted.
The American Institute of Certified Public Accountants’ 360 Degrees of Financial Literacy website is full of educational materials designed for each stage of life.
Helpguide.org is a website devoted to dealing with all types of mental and emotional health challenges.
The Women’s Institute for a Secure Retirement has a website devoted to improving the long-term financial security of all women through education and advocacy. The advice is good for men too!
James D. Adelsperger, CPA, is senior family wealth guardian with ParenteBeard Wealth Management in York, Pa.