Tag Finances

Elder financial abuse is being called the fastest growing area of crime in America. And it may be happening in your family, if you aren’t paying attention to a caregiver — or a relative — who, under the guise of being helpful, is syphoning off an elderly person’s life savings.

According to a study by the Journal of General Internal Medicine, 60 percent of the adult protective services (APS) cases of financial abuse nationwide involved an adult child of the elderly person. Much of this theft is committed by their own family members under the guise of “helping them” — or simply rationalizing that the money would be theirs someday, so why not now.

Women are twice as likely to be victims as men. Most are between the age of 80 and 89, and are living alone, trying to maintain their independence. But elderly men are similarly abused, as the generation before the boomers lives longer thanks to medical science, and become more dependent on caregivers.

Who pays? We all do. It’s not just the humiliation when the senior realizes what has happened. Many are too frightened of their caregiver, or of being left alone, to even report this crime. But once the money is drained, these seniors become wards of the Mediaid system — shuffled off to nursing homes and receiving the least competent care — all paid for by the taxpayers.

A recent MetLife study estimates the cost of financial elder abuse at $2.9 billion a year – and rising.

The only good news is that Financial Elder Abuse is becoming a trending media topic. This past month saw National Senior Citizen’s Day. As part of that recognition there is more publicity about financial elder abuse.

The Consumer Financial Protection Bureau (CFPB) has just this month issued a report a guide to help assisted living and nursing facility staff better protect the people in their care by preventing and addressing financial abuse and scams. The guide helps staff recognize, record, and report financial mistreatment by family members or other trusted people handling the finances of an incapacitated adult.

And, in recognition that much of the abuse happens through the banking industry (which is where the money is), the American Bankers Association has just announced an alliance with AARP to focus on the issue of financial elder abuse. In the announcement the ABA president Frank Keating said: “Our planned alliance with AARP will help us provide bankers, older Americans, and their caregivers, with the tools they need to thwart financial crimes.”

Banks always have to tread carefully between the Federal regulators — who through legislation such as Gramm, Leach ,Bliley have mandated privacy for financial matters — and the various state legislation across the country (because this issue of elder abuse is primarily state-regulated), many of whom have mandated reporting of suspicious activity by the banks.

But according to the American Bankers Association there definitely is a basis for banks to legally report suspected elder financial abuse. The exceptions to the privacy rules allow a financial institution to disclose nonpublic personal information in order to “protect against or prevent actual or potential fraud, unauthorized transactions, claims, or other liability.”

In fact, on February 22, 2011, The Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury issued a report dealing with the issue, and saying: “Financial institutions can play a key role in addressing elder financial exploitation due to the nature of the client relationship. …. We emphasize that all filers should report all forms of elder abuse…” In the report, banks were encouraged to report elder abuse by using the SARS form — the suspicious activity report form, commonly used in suspected money laundering cases.

Surprisingly, and sadly, there is no national law against financial elder abuse. Protection and prosecution is left to the states. And only California and Florida have state laws mandating reporting of financial elder abuse (or abuse of any handicapped adult). Yet almost every state has a department on aging, and its own toll-free reporting number. But only in a few states is activity coordinated between law enforcement, the state attorney general, and the aging departments. As a result, much elder abuse goes unreported, or worse — uninvestigated!

What can you do? Search and publicize your state’s elder abuse hotline number. Remind your local elected police commissioners and public servants that elder abuse is a crime (under fraud statutes, even if there is no specific elder law applicable). And let’s all remember that one day we could be the abused elders! That’s the Savage Truth.

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Although no one wants to think about death, it’s important to be financially prepared for it, so that your money ends up in the right hands. But it can sometimes be confusing to figure out where your assets will go after death. Will there need to be a probate? Who will deal with settling your affairs? And how will your bank accounts pass after death?

What happens to your bank account upon death depends a lot on what you do with it during your life. A number of factors influence what happens with your money upon death, including whose name is on the bank account, whether it’s held in a living trust, and your state’s laws. Here’s a guide to help you figure out where the money from a bank account goes after death so that you can make an informed decision about what you want to do:

Joint account
Generally speaking, if you have a joint account with your spouse that is in both of your names, upon your death, your mate becomes the sole owner of the account. In most cases, you won’t need to go through probate (a.k.a the official proving of a will) before the account is transferred to you.

Payable-on-death beneficiary
If the bank account is in your name alone, but your spouse is named a “payable-on-death” beneficiary of the account, he or she can take over ownership of the account. All they have to do is show the bank your death certificate and the account will be given to him or her.

Trust
If you have created a living trust to avoid probate proceedings after your death, then your bank account is owned by that trust. The person you name to be your successor trustee will take over once you pass away and the funds will be transferred to the beneficiary you have named. Your spouse may have to fill out a few forms and show the bank your death certificate.

Power of attorney
Your bank account may be in your name only, but you can give your spouse the ability to access the account through power of attorney. However, as soon as you pass away, your spouse’s right to access those accounts go away. Banks will have different policies about how to handle the account after a person’s death.

The bank may have separate authority to give you access to the account (if it’s a joint account), allow access if you can present a death certificate along with a notarized affidavit of assumption of duties, or allow the executor of a will to access it. If you can’t access the account, you may have to get permission from a probate court judge.

Solo account
If you have an account in your own name, but don’t designate a payable-on-death beneficiary, the account will likely have to go through probate before money can be transferred. Depending on your state’s law and the value of your assets, you might be able to go through simpler, less expensive options. Check to see what probate options are available in your state.

Keep in mind that money in the bank account could be subject to taxes — federal estate, state inheritance, or even state tax depending on your state’s laws.

If the deceased person’s account isn’t one that’s joint or in a trust, be sure not to write any checks or pay any bills using the account. It is off limits until the estate is settled in court.

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