Elderly population a 'very high risk' for financial fraud

Today, everyone knows not to trust an email from a "Nigerian prince" asking for financial assistance. Scams like this still exist, but may not be as blatant, and unfortunately, older adults are oftentimes the victims because criminals believe them to be easier targets.

"[Financial fraud] is a very high risk for 100 percent of the elderly population," said North Carolina Secretary of State Elaine Marshall. "Senior citizens have social security coming [in]. Maybe they have a pension [or] some savings. This is a magnet for crooks and people who want to take their golden years away from them and line their pockets with somebody else’s gold."

Scams that are usually just looking to make a quick dime and vanish may be easier to spot than the truly insidious abuse that hits harder and cuts deeper.

As we age, we tend to rely more on close family and friends for assistance, but it can be very easy to abuse that relationship. These types of activities usually target seniors who have diminished mental or physical capacities.

"It usually starts there and then [the senior] unfortunately finds out later they've put their trust in the wrong person," said Beth Donner, a chartered retirement planning counselor with Diversified Planning. "So who is this person that they find out later maybe took advantage of them? It's often a very close, trusted family member or the caregiver. Somebody who's very close physically or relationship wise."

Marshall said when she was a lawyer it was not uncommon for an elderly person to be persuaded to change their will to benefit a person they had developed a close relationship with, only to find out the person had selfish motives.

The idea that someone so close would betray your trust is a hard pill to swallow.

"Sadly, so much of the elder abuse is done by somebody in the family who is trusted, who is caring for this person, and then takes advantage of them," Marshall said.

This type of financial abuse or exploitation can also be difficult to notice at first. Families do not always see this type of exploitation, but there are a few signs to watch out for.

"To me, the biggest warning sign is absolutely when the older person gets into an isolated type situation," Donner said. "They may be homebound or bed bound. They're not in a position any longer to be out in the community and have access to speak to another human. That is exactly what leads to the situation of the 'trusted' family member, friend or professional caregiver taking control of everything."

Marshall agrees.

"A word of caution to families – as folks get isolated and lonely, it is very important that they have social contact in a positive nature, every day. Not just somebody coming in to see if they're walking around and eating," Marshall said. "They need socialization. And therein becomes an avenue for crooks to follow."

Other things seniors should look out for are invitations to sales pitches masked as "free lunches," charities that are not who they say they are and writing checks to unverified individuals.

"If it sounds too good to be true, take extreme caution before making a financial commitment," said Cameron Tribbett, co-founder of Summit Senior Solutions. "Developing a refusal script is crucial, because we are often caught off-guard by these attempts. If nothing else, remember to ask, 'Why would somebody be offering this to me?' "

Another tough reality of these situations is that there may be no way to legally reacquire any of the lost money or assets. If the senior entrusted an individual who mishandled finances, it could be hard to legally remedy the situation.

To prevent these types of situations, there are a few layers of protection available.

The first is to divvy up responsibility to more than one family member. If you have multiple children, giving each one access to the finances ensures that if any wrongdoing occurs, it will be detected quickly.

"It can be very helpful to have more than one person in your life looking over your financial matters," Donner said. "Whether you give that authority to an additional family member or an attorney, that has the potential to help. [If] you have at least two people, then you've got two people working collectively."

Two people handling finances mitigates the potential that someone can financially abuse a senior undetected.

Another option would be to set up a trust with the counsel of an elder law or estate-planning attorney.

A trust allows the designation of a trustee and requires a more thorough credentialing process to access any assets. An elder law attorney would be able to assist in the establishment of the trust and give advice on any other methods to protect your finances.

"It is far better to seek a bona fide professional, like a lawyer or certified public accountant, who may have a paralegal under their supervision who is willing to take over the day-to-day billing, paying and managing of money," Marshall advised. "So that grandson who has the tale of love for grandma doesn't play on her heartstrings and gets into the finances, and then somehow it's all frittered away."

Essentially, it all comes down to determining whom you can trust.

Finding credentialed individuals to help you manage and establish safeguards for your assets is imperative. If you need assistance, services are available to help you locate trustworthy partners.

"Certified geriatric care managers or certified senior advisors can assist you in identifying properly credentialed financial, legal or real estate professionals," Tribbett said. "I also recommend finding those professionals who specifically focus on working with older adults.”

Just a few hours of preparation can help prevent financial disaster for you or a loved one.

"It's a matter of human dignity," Marshall said. "It's criminal to rob and scam and abuse these people in any way. They deserve to be protected."