Court disputes are not always about a person’s physical and mental well-being. Often they are also necessary to help a loved one from losing assets. This can happen in many different ways, some overt and some more difficult to spot. The easier ones include theft or exploitation by a greedy family member or caregiver. Taking money, convincing the elderly person to sign over deeds or bank accounts, or other clear signs of financial abuse can be revealed just by reading over the person’s financial documents such as bank statements.
Sometimes more challenging to spot is the mismanagement of affairs due to disability or reduced competence, including forgetting to pay bills or buying expensive things that are not needed. This may not seem too alarming, but these seniors are the ones targeted most often by those looking for opportunities to exploit.
The most difficult one to spot is the sale of unsuitable investments by an unsavory annuity salesman or tricky reverse mortgages. These are discussed in more detail below. Knowing when to intervene or not is not always easy. Many seniors suffering from Alzheimer’s, dementia or other conditions do not want to admit they need help with their financial decisions. Often, their children do not want to insult them by asking too many questions. But when you have a loved one diagnosed with dementia or Alzheimer’s, or who otherwise exhibits signs of confusion or memory loss, you owe it to them to probe. Make sure their investments are secure and appropriate, and their assets are protected.
In doing so, pay attention to the warning signs. The National Center on Elder Abuse lists many warning signs of exploitation, including:
- Sudden changes in bank account or banking practice, including an unexplained withdrawal of large sums of money;
- The inclusion of additional names on a bank signature card; unauthorized withdrawal of the elder’s funds using the elder’s ATM card;
- Abrupt changes in a will or other financial documents;
- Unexplained disappearance of funds or valuable possessions;
- Substandard care being provided or bills unpaid despite the availability of adequate financial resources;
- Discovery of an elder’s signature being forged for financial transactions or for the titles of his/her possessions;
- Sudden appearance of previously uninvolved relatives claiming their rights to an elder’s affairs and possessions;
- Unexplained sudden transfer of assets to a family member or someone outside the family;
- The provision of services that are not necessary; and
- An elder’s report of financial exploitation.
If you discover any of these warning signs, talk to an elder law attorney knowledgeable in financial matters immediately. Often, children or other trusted family members are the ones exploiting or even stealing money from someone suffering from Alzheimer’s or dementia. In other cases, there are greedy financial planners or mortgage brokers who target vulnerable adults with high-commission, inappropriate investments or mortgages.
Be especially careful of annuities and similar risky investments. This is not to say that all annuities are risky or inappropriate. Quite the contrary, there are many fixed-rate annuities that are very safe. In fact, even more aggressive investments are suitable in the right circumstances.
But there are many annuity salespeople who love to target older adults with confusing equity indexed annuities that sound great at first blush, but when examined closely, have no business being in an elderly person’s portfolio except in rare cases. In fact, the NASD and SEC have both issued warning bulletins of these exact investments due to concerns that they are being marketed to seniors who do not need or understand them.
These types of annuities are usually sold through promises that they are safe, but also have the ability to share in the market when it goes up. Sounds great, right? Enjoy the market upswings but have no danger of losing money in the downswings.
The problem is that equity-indexed annuities do not live up to these lofty promises. In fact, they are considered long-term investments. How many senior citizens have a need for long-term investments? Some do, if they have other significant assets and want to leave a portion of their funds for beneficiaries down the road. Sadly, many who buy these annuities do not have other assets.
The catch with these annuities is that they are very complex and difficult to understand, carry hidden costs and charges, and typically have large surrender fees that last for 15 to 20 years or more. These surrender fees mean that the investor cannot take their money out, even in case of emergency, without paying a large penalty.
If the elderly investor has placed substantially all of her savings into such an annuity, she often realizes that she is trapped between a rock and a hard place. If his happens to you or someone you care about, call an experienced attorney immediately.
Reverse mortgages can also be tricky. Sometimes they are a legitimate and appropriate way for a senior to receive cash for equity in their home. But sometimes, these are merely scams targeted at depriving a senior citizen of their most valuable asset. Other times, the elderly person simply did not understand what they signed.
In more overt cases of theft, adult protective services can sometimes be of benefit. But exercise caution – the caseworkers are sometimes able to help, and sometimes not. And other times, calling in adult protective services can result in court proceedings that are not wanted.
Criminal charges can also be brought against someone who steals or exploits money from a vulnerable adult. Michigan has a law in place for exactly that purpose. The problem is that convincing police or prosecutors to pursue someone criminally for financial abuse of an elderly person is often very difficult for a variety of reasons, including lack of resources and difficulty in establishing proof when the primary witness has poor memory.
The best way to stop financial elder abuse is awareness and prevention. By speaking with your loved ones about their finances, offering assistance, and probing when you become concerned, you can usually prevent theft, financial abuse, and unsuitable annuities and reverse mortgages.
The Center for Probate Litigation, along with The Center for Elder Law and The Center for Special Needs Planning, are divisions of Barron, Rosenberg, Mayoras & Mayoras, P.C., a full service law firm located in Troy, Michigan. The firm’s attorneys offer a free initial consultation.