I really do get tired of posting about how seniors are abused, financially, physically and emotionally. It is just sickening.
Fortunately, there are some common sense steps to take to reduce the financial (and resulting emotional) abuse from occurring in the first place.
You may recall the case of New York socialite Brooke Astor?
To refresh your recollection:
Brooke Astor was an heir to the Astor family fortune that started back in the 18th century. She passed away in 2007 at age 105, and had a $200 million estate. Most of this was earmarked for charities. Unfortunately, her son Anthony Marshall exploited part of her estate that was to be used for her personal expenses. He paid himself roughly $1 million for managing her affairs in 2006, as was revealed in a court proceeding.
Anthony Marshall was eventually convicted.
Because Brooke Astor had dementia, she was totally unaware that her son was paying himself handsomely from her assets.
According to a recent Reuters article titled “Protecting dementia sufferers from scammers gains ground in U.S,,” states are now trying to provide greater protection for elderly investors.
Three states have enacted laws that permit retail brokers to help deter scams against people with dementia.
The laws, which are being examined by other state legislatures, allow brokerages to halt an older client’s request to transfer money to others (at least temporarily) if a wealth manager suspects that his or her customer may have dementia and may be the victim of a scam.
More than five million Americans over the age of 65 have Alzheimer's disease, which is the most common form of dementia. Citing the Alzheimer's Association, the original article notes that this figure accounts for roughly 1.5% of the U.S. population.
Experts say this could grow to 7.1 million by 2025.
Seniors are often easy marks for con artists and unscrupulous family members.
In fact, U.S. seniors lose approximately $2.6 billion annually to financial exploitation. And more than half of this financial exploitation is committed by friends, family members, or caregivers.
Elder financial abuse is frequently hard to detect.
However, requests for large, "questionable" sums of money can often be a clear sign.
Philip Marshall (Anthony's son and Astor's grandson) commented that these new laws might have helped protect his grandmother and her wealth.
The younger Marshall is a professor of historic preservation in Rhode Island who recently went on sabbatical to devote more time to elder protection issues.
Nevertheless, these new state laws are not without some serious concerns.
For example, some believe the government could be empowering wealth managers to interfere with legitimate transactions and keep elderly people from their investments.
FINRA, an industry watchdog, is also developing guidance on the issue, with input from the SEC, as brokerages have asked for clarity on this because of rules that require them to execute a customer’s transaction.
Roughly half of the states already have laws on the books requiring employees of financial institutions to contact state agencies if they suspect an elder customer is being financially exploited.
However, many of these laws do not include retail brokerage employees or allow those institution to delay withdrawals.
Consequently, brokerages are often put in a tough position when this situation arises.
Contacting concerned family members to question an elderly client's instructions could run afoul of laws about protecting privacy, as well as rules that require processing transactions on time.
On the other hand, following the client's instructions can help the customer who otherwise may fall victim to a con or abusive caretaker. As it stands in most states, brokers could be liable for taking action or honoring such a transaction.
Note: Consider creating a trust and appointing yourself and a trusted family member as co-trustees.
If assets are held in trust and two signatures are required to transact business on trust accounts, then a trustworthy son or daughter can provide a valuable "check" so a scammer does not make off with your account "balances" as easily.
Contact an experienced estate planning attorney for guidance on how trusts may be used to help curb this abuse.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: Reuters (July 1, 2015) “Protecting dementia sufferers from scammers gains ground in U.S”