Elder Law: “Financial Abuse of Elders On the Rise”

Elder Financial Abuse (EFA) includes illegal or improper use of either an elderly person’s income and/or assets (theft, misappropriation, deception, duress, coercion, undue influence, and intentional or negligent failure to use the elder’s income or assets properly – meaning, for support and maintenance).  It affects all social classes, and economic strata. The best way to combat this issue is with education of both the general public and professionals who deal with the elderly. Kristen M. Lewis: Financial Abuse of Elders, Probate and Property, Trust and Estate Law Section of the American Bar Association, July/August 2014, offers great insights.

Here’s a link to the author’s law firm PDF of the article:

http://www.sgrlaw.com/site/assets/files/3421/financial_abuse_of_elders_and_other_at-risk_adults.pdf

The article has a lot of great information and much detail.  Although I think many may find the entire article a bit daunting, I thought to include it for my readers because it highlights the choices my clients and I discuss when issues of capacity are addressed. Many people don’t realize, for example, that it’s not just strangers that can perpetrate EFA – family members, friends, caregivers, agents, guardians, conservators, and other professionals can also perpetrate EFA. Most significantly, in my opinion, is how often an elder will not speak up for fear of a family member’s punishment, embarrassment, pride, or for fear of the report causing further harm by the perpetrator, or the elder’s placement in a nursing home. Further, third parties who suspect or witness EFA often are concerned about negatively affecting their professional relationships, or just don’t know if they are required to report, what to do if they are required, or where to go to report such activity. (FYI, here’s the link to Minnesota’s Adult Protective Services site):

http://www.dhs.state.mn.us/main/idcplg?IdcService=GET_DYNAMIC_CONVERSION&RevisionSelectionMethod=LatestReleased&dDocName=id_005710

Minnesota has both criminal and civil remedies for EFA. Criminal charges may include theft, fraud, deception, larceny, forgery, and embezzlement, etc., but only by a successful showing of the highest burden of proof (which can be problematic because incapacity or death of the victim makes it difficult to gather evidence, the refusal of the victim to cooperate, and/or limited resources).  Civil remedies are outlined in the Vulnerable Adult Act (link below), Minn. Stat. § 626.557:

https://www.revisor.mn.gov/statutes/?id=626.557

Although Ms. Lewis’ article, linked above, covers a number of important issues, I wanted to underline two things in the article that can never be discussed too many times:  1) Powers of Attorney (POA), and 2) Elder Law Mediation (ELM).

Powers of Attorney (POA)

Many of my clients pick an agent or two with extreme caution and only after careful consideration. It’s a good reminder that an agent, named in your POA, has the same financial power that you have – immediately, upon your signature (not only when you can’t handle your own finances anymore). Additionally, you have a number of important choices to make: Do you want your agent’s power to continue upon your incapacity (this is what makes it “durable”), or do you want your agent’s power to stop upon your incapacity? Which powers will you extend to your agent? Will you allow your agent to make gifts to themselves? As you can see, careful consideration is required to decide whether you need a POA, under what circumstances you will require a POA, who should have this power, and under what circumstances it can be exercised. If these choices are made well, you will go a long way in preventing EFA.

Elder Law Mediation (ELM)

ELM is often a good preventative tool to EFA, and, in many cases, is considerably less expensive than court remedies, and can be decidedly more dignified and inclusive to all involved. I am often surprised by how few of my clients are aware of ELM and how valuable a tool it may be to them. If family dynamics create escalating conflict, the chances of EFA tend to increase.  ELM is a voluntary dispute resolution (instead of a court imposed resolution or court-supervised management of the elder’s situation). ELM can assist in identifying alternatives, appropriate persons to serve in important fiduciary and other types of roles, resolving disagreements between parties, identifying professionals who can assist the elder with their needs, assessing financial ramifications of certain living situations for the elder and their family, and strategizing about diminishing capacity in certain areas, just to name the most obvious.

Elder Financial Abuse (EFA) is a growing problem for everyone, no matter your socio-economic background.  We all need to educate ourselves as to the signs of EFA, how to avoid it, and what to do if we discover a victim of this often hidden problem. Careful planning with professionals like financial planners and attorneys can reduce the risk dramatically.  Plan now while you can carefully consider what should happen and how you would like your loved ones to be able to assist you if your ability diminishes to manage your own financial affairs.