Fraud and Abuse

Protecting against financial fraud and abuse

Financial fraud and abuse in the elderly is rampant. The perpetrator can be a stranger, friend, or family member. Many times, financial fraud occurs because the elderly person has lost the ability to determine when financial activity is fraudulent. Fortunately, there are ways to reduce the chance of financial fraud and abuse.

Keep communication open

It is important to have a potential financial surrogate in place long in advance of cognitive decline. This surrogate can monitor your activity through account aggregation systems to make certain all the transactions in your accounts are appropriate. In addition to the financial surrogate, it is good to have a third set of eyes on your finances, such as another family member, a friend, or a professional such as an accountant or financial adviser.

An even better approach is to have open communication between all family members about the state of your finances. If everyone understands how your finances are handled, it is less likely those responsible will take advantage of the situation.

Simplify assets

Keeping things simple makes it easier to track your finances and reduces the potential of items being overlooked or lost. This also reduces recordkeeping and tax preparation costs.

Gradually share financial caretaking responsibility

In addition to using financial account aggregation software, have your future financial caretaker review how you pay bills, manage your assets, and file your taxes. Perfect practice makes perfect, and once your caretakers understand your system, they can more readily step in when the need occurs.

Consider cognitive testing

An elder's risk for financial mishaps often occurs because he or she has declining cognitive ability to deal with their finances. In addition to the steps above, consider undergoing periodic tests to determine if you are maintaining the ability to manage your finances. Often, elderly people do not realize they are experiencing cognitive decline until a fraudulent event occurs (if then). Family members may not recognize that a problem exists or may be in denial that their loved one is no longer able to manage on their own. Cognitive tests alone are not the answer, but can be a great tool to open the conversation if there is evidence of decline.

Denial of aging and losing our capabilities is our biggest danger to ourselves. By addressing these issues in advance while you are fully capable, you may reduce the risk of fraud and abuse in the future when you are least able to defend yourself.