Scam Alert: How To Avoid Care­giver Fi­nan­cial Abuse

ForbesWeekly - - NEWS - BY JOHN WASIK, FORBES CON­TRIB­U­TOR FOL­LOW JOHN WASIK AT www.forbes.com/sites/john­wasik

As some­one man­ag­ing care for an el­derly rel­a­tive, I can tell you that there are so many op­por­tu­ni­ties for scams. I have to keep my eyes open all the time. The sum­mer is a good time to check for prob­lems.

First, there was the win­dow sales­man who wanted to sell $10,000 worth of win­dows. Then there was the stock­bro­ker who sold scam mu­tual funds. There was also a woman who wanted to “move in” and pro­vide care. It’s been one thing af­ter an­other.

Preda­tors are tar­get­ing se­niors ev­ery day, be­cause older peo­ple are of­ten iso­lated, ex­ceed­ingly trust­ing, love com­pany and willing to part with their money.

When care­givers are in­volved in daily care, there are of­ten prob­lems, par­tic­u­larly when it comes to money. Fam­ily mem­bers have fleeced el­derly rel­a­tives. In­de­pen­dent care­givers have also en­gaged in fi­nan­cial abuse, of­ten us­ing the ex­cuse that they are “owed” money while pro­vid­ing chal­leng­ing care. They may even spot or try to pre­vent abu­sive sit­u­a­tions.

Pro­vid­ing in-home care has be­come even more dif­fi­cult since there is no so­cial safety net that pro­vides fi­nan­cial as­sis­tance. Medi­care doesn’t cover most long-term care and you need to be fairly im­pov­er­ished to qual­ify for Med­i­caid. Most in-home care is paid for out of pocket or pro­vided by fam­ily mem­bers.

Yet care­givers see myr­iad prob­lems when an elder can no longer man­age their fi­nances. Some of it is un­var­nished abuse, most of which is un­re­ported.

Ac­cord­ing to a study by Al­lianz Life, an in­sur­ance com­pany:

Care­givers spend more than $7,000 per year and pro­vide more than 10 hours per week in non­cash sup­port for their elder—this is when no fi­nan­cial abuse oc­curs.

If their elder was fi­nan­cially abused, the av­er­age cost to care­givers was $36,000 as they try to help them re­cover their losses. The av­er­age care­giver spends more than $8,400 each year in cash and non-cash sup­port when car­ing for past vic­tims (56% higher than those car­ing for el­ders with no history of fi­nan­cial abuse).

Most of the abuse I’ve seen comes when rel­a­tives or care­givers ob­tain ac­cess to el­ders’ funds. They may be­come sig­na­to­ries on check­ing or sav­ings ac­counts or ob­tain pow­ers of (fi­nan­cial) at­tor­ney. These are al­ways red flags.

How do you safe­guard an elder from fi­nan­cial abuse? Here are some steps I’ve found to be use­ful:

When draft­ing fi­nan­cial pow­ers of at­tor­ney, which give oth­ers the abil­ity to make fi­nan­cial de­ci­sion in the event of men­tal or phys­i­cal in­ca­pac­ity, it should be a fam­ily af­fair. There should be some over­sight over those gain­ing the power of at­tor­ney by other fam­ily mem­bers.

Ex­penses for the elder should be openly dis­cussed be­tween care­givers and other fam­ily mem­bers. How much does in­sti­tu­tional care cost? Does the elder have re­sources to pay for it? What about the in-home care?

Al­ways plan ahead. Ev­ery­one should have an es­tate plan that in­cludes pow­ers of at­tor­ney. These doc­u­ments should be pre­pared when an elder is well.

Al­ways avoid cash trans­ac­tions. Ev­ery­thing should have a pa­per trail—from a home health care agency to out-of-pocket bills. No one should be paid cash “un­der the ta­ble.”

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