Scam Alert: How To Avoid Caregiver Financial Abuse
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.”