Financial abuse is the most common form of elder abuse. Consider these alarming statistics:
About 18.5 million family members serve as financial caregivers in the U.S. What is a financial caregiver? Simply put, it's an individual who takes on the responsibility of managing money or property for a loved one who is unable to make financial decisions on their own. It may involve paying bills, assisting with taxes or making decisions regarding investments. A financial caregiver may be a member of the "sandwich generation" - someone who is caring for their children and their parents, simultaneously. The job is especially tough if the caregiver has a demanding professional life or resides far away from their loved one. And according to the National Caregivers Library, the stakes are high. Poor investment decisions can diminish a loved one's assets, cause disputes amongst other family members, and lead to estrangement and even civil litigation8. There are tips and tools financial caregivers can use to ease the burden of managing their loved ones' assets. The Consumer Financial Protection Bureau has published several guides on managing someone else's money. They include:
Financial caregivers should consider discussing the use of automated bill-paying, the direct deposit of payments and the enlistment of trusted family members or other advocates to assist in monitoring finances.
Exploitation in later life devastates victims and their family members. The fallout can compromise victims' health care and cause a significant loss of independence. Research reveals that individuals who have faced a recent critical life event, such as a divorce or death of a spouse, are victimized at a rate that is more than twice as those who haven't, according to the Federal Trade Commission10. Seniors who exhibit signs of dementia, like Alzheimer's disease, are routinely targeted by scammers. And studies have found that the largest percentage of exploiters are family members and in-home caregivers. What can you do to protect older loved ones? One way to start is by having a family conversation about what to do if there is a crisis that affects their ability to manage their finances. Offer assistance in monitoring loved ones' financial transactions and credit reports, and keep relatives updated with respect to current scams. An ounce of prevention is worth a pound of cure.
Experts on aging and cognition agree that the ability to manage one's finances tends to erode with age. The term financial capacity has been defined as "the capacity to manage money and financial assets in ways that meet a person's needs and which are consistent with his/her values and self-interest.11" Examples include carrying out simple cash transactions, balancing one's checkbook, reviewing bank statements and evaluating the risks involved in making an investment. And while many people continue to handle their finances well into their golden years, even people with healthy brains tend to experience cognitive decline that affects financial decision-making. According to one study, which analyzed participants' propensity to make financial mistakes, a person's financial decision-making ability peaks at age 53, or, more generally, in their 50s.12
Why is it important for families to recognize that aging affects one's financial capacity? The answer is clear, and it involves planning. There are currently more than 41 million Americans who are 65 and older, and 1 in 9 suffers from Alzheimer's disease. Every 67 seconds, another person is diagnosed.13 Families need to have a plan in place for when their loved one no longer has the capacity to make financial decisions. They may wish to consider designating an advocate who can oversee their financial transactions and look for irregular activity, such as unpaid bills, repetitive charges or missing deposits.
9http://www.consumerfinance.gov/managing-someone-elses-money/
10https://www.consumer.ftc.gov/blog/fraud-affects-25-million-people-recognize-anyone-you-know
11http://www.asaging.org/blog/financial-capacity-aging-society-0
13http://www.cnn.com/2014/03/19/health/alzheimers-facts-infographic/index.html
