As loved ones and parents age, they become more vulnerable to fraudulent schemes. This article explores how a solid estate plan can help protect the elderly from becoming victims.
With age comes wisdom and often, vulnerability. While aging is inevitable, it’s often hard to face as previously routine tasks become more difficult or require the assistance of another. Suddenly, keeping up with the latest technology overwhelms an individual who abandons the project in frustration. Minds become addled and scam artists more creative making recognizing a scam more difficult. As a cruel backdrop to this increased vulnerability, once dutiful children seldom visit and outings with friends become sporadic. Loneliness ensues only exacerbating the helpless feelings that may accompany aging. These factors together with the continued global pandemic and our increased reliance on technology to connect create the perfect storm for exploitation of the elderly. Studies show that one in ten people over the age of 60 has experienced some form of abuse. Our aging population has never been more vulnerable, and we have a duty to protect them.
Unfortunately, abuse occurs and often isn’t discovered until months or years later, in some cases much too late to take corrective action. Telephone and mail scams jump to mind as examples of rampant elder abuse; however, sometimes the abuse comes from much closer sources. A family member, long-time friend, or even a trusted caregiver may take advantage in a needy situation. These individuals may rationalize their behavior because of their increased presence in the elder person’s life. If that individual provides access to certain necessities like rides to the doctor or helps with groceries, the situation becomes more complex and ripe for abuse. Pick up any newspaper, magazine, or browse the headlines online and you can find a story about the exploitation of the elderly. It has become an increasingly common, although preventable, occurrence.
Obviously, it’s hard to attribute the issue to just one cause. Usually, several factors lead to an abusive situation. As the following example illustrates, it’s a slippery slope. Assume that Denise took over check-writing duties to ease the emotional burden on her newly widowed mother, Molly. Molly expresses her immense gratitude for Denise’s help and tells her that she’d like to thank her and offers to pay tuition for her grandson, Graham. If Denise refuses the offer, it’s clear that she has done nothing wrong. Here Denise had the opportunity to use funds for her own benefit but refused. Perhaps Denise’s sense of duty prevented her from stroking the check, perhaps she knew that she lacked the legal authority, or perhaps she simply wanted to avoid a fight with her brother after her mother’s death.
Assume that several months pass and Denise moves Molly into Denise’s home because Molly started wandering the neighborhood. Although there are times that Molly sounds like herself, at others she’s elsewhere. The next time Molly mentions Graham’s tuition, Denise writes the check immediately. Here, it’s a little less clear whether Molly really intended for Denise to use the funds and whether Denise had the authority to write the check. That depends upon whether Denise was listed as a co-owner on the account or was acting pursuant to authority granted under a property power of attorney or as successor trustee under a trust. Even if Denise were acting under a property power of attorney or trust agreement, in most states, Denise has a duty to act in the best interests of Molly. In paying Graham’s tuition, Molly likely breached that duty.
Now let’s assume that Denise has been experiencing financial trouble and decides to write the check without any direction from Molly or completes the payee on a pre-signed check. Even though Molly had previously expressed her gratitude to Denise, Denise likely lacked proper legal authority to make that expenditure and could find herself facing charges of elder abuse. If Denise made an equal distribution to her brother, Sonny, or if Denise quit her job to provide full-time care to Molly, she still likely exceeded the scope of her authority in making distributions from Molly’s account. The foregoing example demonstrates the difficulty in drawing a bright line regarding the behavior, how easily even a well-meaning individual could misstep, and the importance of protecting the elderly against this type of exploitation.
The simplest, most effective way to prevent elder abuse begins with a well-drafted estate plan. The plan should include specific powers exercisable by the fiduciary, as the attorney-in-fact, or as successor trustee. A well-drafted estate plan that specifically prohibits or provides express powers gives instructions to the fiduciary, financial institutions, and third parties about the principal’s expectations, even when the principal loses the ability to express those preferences. These clear directions mean that more people know what should happen thereby decreasing the potential for abuse.
Most states have enacted laws with significant punishments designed to prevent elder abuse. Many also have agencies designed to receive reports of abuse and intervene, if warranted. If a family member has concerns about whether dad’s new friend has nefarious intent, consult an attorney to discuss options and make sure to keep communication open and non-judgmental. Some of these scams bring feelings of shame which makes it difficult for the victim to admit what happened. An experienced estate planning or elder law attorney can help discern signs of abuse and suggest controls, checks, and balances to protect against it.
It’s important for us to look out for one another. As we continue to navigate the ongoing pandemic, we need to encourage interactions and connections with family and friends. Periodically review estate planning documents to ensure that the fiduciary appointments serve the best interests of the principal. If one of the fiduciaries has experienced a change in circumstances, consider whether naming a co-fiduciary or another fiduciary altogether provides comfort. These safeguards will help protect our most vulnerable – the elderly. An experienced estate planning attorney can ensure that safeguards exist to prevent unauthorized access to sensitive information and hopefully prevent a scam.
Tereina Stidd, J.D., LL.M. (Tax)
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128