Elder Financial Abuse by Family Caregivers

As life expectancy increases and the global population of seniors is projected to surpass 1.5 billion by 2050, the need to protect older adults will become increasingly vital. Older adults lose an estimated $20 billion annually due to financial abuse by family, friends, and caregivers. Often, the perpetrators are not strangers but trusted individuals, frequently family members. When victims uncover exploitation, they face the complex task of navigating strained interpersonal relationships.

Posted on August 26, 2024

A recent webinar hosted by the National Center on Law and Elder Rights (NCLER) highlighted the financial exploitation perpetrated by family caregivers, exploring the causes and possible solutions. NCLER provides legal services and resources to aging and disability communities.

Financial Exploitation of Older Adults

Elder financial abuse occurs when an older adult loses money or property due to another person’s improper actions. Exploitation by a loved one can take many forms. For instance, a caregiver with access to accounts might withdraw money for personal use, a family member might pressure a senior to give a large gift, such as a car, or a trusted person could unduly influence an elder to sign over the title to a residence.

How Financial Abuse Begins

Financial exploitation often starts following a major life event that threatens a senior’s independence, such as the loss of a spouse, a fall, or a new diagnosis of a serious illness like cancer or dementia. If a family member is the abuser, the exploitation may not initially be intentional. For example, when an older adult needs assistance, it can seem mutually beneficial for a family member to move in and help with household tasks, transportation to medical appointments, and bill payments. The senior may also benefit from the companionship and support of someone they know well.

However, a single overstep, such as taking a small amount of money, can lead to more significant abuses if no one notices. Family caregivers are more likely to commit financial abuse after experiencing hardships like breakups, financial problems, addiction, or mental health issues. These challenges can lead to desperation, and the abuse often escalates after both the older adult and the caregiver experience stressful life events.

Challenges of Family Financial Abuse

Seniors who suffer financial exploitation by family members face several challenges, which can make it harder to seek help. The involvement of family members in caregiving often makes older adults reluctant to use safeguards like formal contracts or rental agreements, which would protect all parties involved.

Additionally, older adults experiencing cognitive decline may not be fully aware of their financial situation. Research published by the National Library of Medicine indicates that two out of three older adults experience some cognitive decline by age 70. Seniors may also be unaware of how large financial gifts could affect their long-term care costs. For instance, giving substantial gifts might jeopardize their eligibility for Medicaid due to the program's five-year “lookback” period.

Dependence on caregivers and fear of losing contact can also prevent older adults from speaking up when abuse occurs. They may feel unable to say no when a caregiver pressures them for large gifts or steers them toward certain financial decisions. Some victims may even prefer losing control of their money to the risk of being placed in a nursing home, fearing that their caregivers might otherwise institutionalize them. Often, these older adults also worry about damaging their relationship with the caregiver, especially when the abuser is a close loved one, such as a child.

Addressing Family Financial Exploitation

While many older adults are hesitant to seek remedies for family financial exploitation, several options are available to address the issue while potentially preserving family relationships.

Restorative justice focuses on repairing the harm caused. In this approach, all parties voluntarily participate, allowing the exploiter to take an active role in making amends. Mediation is another alternative to litigation, where a neutral third party helps the involved parties reach a resolution. For cases of financial abuse, mediation should include safeguards similar to those used in domestic violence situations, with the mediator being knowledgeable about elder financial abuse.

In more severe cases, criminal remedies may be necessary. This might involve seeking a temporary restraining order (TRO) to protect the elder from the abuser. When financial abuse jeopardizes a senior’s Medicaid eligibility, it may also be essential to file a police report to document the abuse. Although civil remedies are less common, litigation can sometimes help restore rights to real property. An attorney can assist with pursuing a lawsuit for undue influence. For those who cannot afford private attorneys, some legal service programs offer free or low-cost legal support to older adults facing financial exploitation.

Regardless of the remedy chosen, it is crucial to support the older adult's autonomy, allowing them to decide on the solution that best suits their needs. Advocates should aim for the least intrusive intervention that minimizes disruption to the person’s life.

Preventing Exploitation

Preventive measures can help protect older adults from financial exploitation. Education is a key tool, with resources like the Consumer Financial Protection Bureau (CFPB) providing informative brochures on money management. Involving a neutral, trusted advocate when a family member takes on a caregiving role can help monitor the situation and flag any signs of abuse. Account monitoring, whether by financial institutions, loved ones, or the seniors themselves, can also play a crucial role in identifying exploitation early.

Moreover, seniors can safeguard against abuse by creating a comprehensive estate plan.

Creating a Trust with Multiple Trustees and a Trust Protector

Establishing a trust with multiple trustees and/or a trust protector can be an effective way to plan for potential incapacity while safeguarding financial assets and ensuring that your preferences for long-term care and living arrangements are respected. A trust allows you to set parameters for your care and preserve your right to stay in your home, even if you become incapacitated.

By appointing multiple trustees, you distribute the responsibility of managing your assets among trusted individuals. This approach reduces the risk of financial exploitation by ensuring that decisions require the agreement of more than one person. It also adds a layer of oversight, as the trustees can monitor each other’s actions, further protecting your assets.

Incorporating a trust protector into your estate plan adds another level of security. A trust protector is an individual or entity granted specific powers to oversee the trustees and ensure they adhere to your wishes. The trust protector can intervene if the trustees are not acting in your best interest, providing a safeguard against misuse of the trust.

When setting up your trust, you can include detailed instructions on your preferences for long-term care and living arrangements. For example, you might specify that you wish to remain in your home for as long as possible, with provisions for in-home care if needed. You can also outline your preferences for the type of care you receive, the location of care facilities if a move becomes necessary, and how your financial resources should be allocated to cover these expenses.

Creating a trust with these safeguards in place helps ensure that your financial assets are protected and used according to your wishes, even if you are no longer able to make decisions on your own. It also provides peace of mind, knowing that your long-term care and living arrangements will be managed in a way that aligns with your preferences, preserving your dignity and quality of life.

Working with an Elder Law Attorney

An elder law attorney can offer vital protection against financial abuse and other forms of mistreatment. Beyond providing remedies after exploitation has occurred, an attorney can assist in creating an estate plan that proactively defends against financial abuse. For example, they can structure a power of attorney in a way that limits the caregiver’s powers, reducing the risk of misuse. The attorney should also explain the potential for abuse and guide clients in selecting responsible and ethical agents.

For further guidance, older adults are encouraged to consult with a local, qualified elder law attorney.

This article is intended for informational purposes only and does not constitute legal advice. Our law firm makes no representations, warranties, or guarantees about the accuracy, completeness, or adequacy of the information provided. The distribution or acceptance of this article does not establish an attorney-client relationship with our law firm.