Financial Abuse of Elders: The Crime Of The 21st Century (Part 3)

Commonly Cited Reasons for Elder Financial Abuse.

1. The incidence of Alzheimer’s Disease, and other dementias that undermine judgment, increases with age. Approximately 5.1 million Americans have some kind of dementia, including 200,000 under the age of 65. Close to 50% of all people over age 85 have Alzheimer’s Disease or another kind of dementia. Research indicates that people with dementia are at greater risk of elder abuse than those without the condition.
2. Diminished financial capacity is more prevalent as one ages (i.e. the ability to manage money and financial assets to meet one’s needs effectively), according to various research studies.
3. Elders have become largely socially isolated. Extended multi-generational families are no longer common in our society. Thus, there are fewer persons in an elder’s life who can realistically detect suspected financial abuse, allowing perpetrators to more readily create an environment that facilitates their crimes.
4. Family members who become dependent on an elder for financial support increasingly live with their elders permanently. Once entrenched in the lives of elders, these people have myriad opportunities to engage in financial abuse and exploitation.
5. Research suggests that the area of the brain known as the “anterior insula” changes with age and adversely impacts “gut feelings” about the trustworthiness of potential predators.
6. Elders with clinical depression are statistically more likely to be victims of financial abuse or exploitation.
7. Financial illiteracy is pervasive among Americans in general, and is especially marked among elders, according to research studies.

Profile of Perpetrators of Elder Financial Abuse.

The 2011 MetLife Study reported that 51% of the cases considered involved elder financial abuse by strangers, including home repair scams, telemarketing scams, and strangers committing robbery and burglary. Other studies also include in this category of stranger abuse mail or internet scams and identity theft. The 2011 MetLife Study theorizes that stranger elder abuse is more likely to be reported than abuse by known perpetrators.

Family, friends, neighbors, in-home caregivers and other known persons (e.g. Agents acting under Powers of Attorney) accounted for 34% of the perpetrators included in the 2011 MetLife Study. Also included in this category by other studies are legal guardians appointed by state courts, and Representative Payees under the auspices of the Social Security Administration. There are numerous factors that materially increase the risk of a person known to the elder engaging in elder financial abuse. Those include (i) use of drugs or alcohol, (ii) high stress levels and low coping resources, (iii) lack of social support, including respite care options, (iv) high emotional or financial dependence on the elder, (v) lack of elder care training, and (vi) depression.

Business and financial service providers account for 12% of the perpetrators reported in the 2011 MetLife Study, including insurance advisors, bankers, attorneys, building contractors, and nursing home administrators. Other studies include securities brokers and dealers, financial advisors, and “others in the financial services industry.” These perpetrators were involved with predatory lending, identity theft, embezzlement, and the sale of fraudulent investments or financial products or services which were unsuitable for the elder’s circumstances (e.g. long-term annuities). “Free lunch” investment seminars are also included in this category.

Medicare and Medicaid fraud is a fourth category of financial abuse perpetrated upon elders. While only 4% of the total cases considered in the 2011 MetLife Study, this amounted to 58% of the total losses sustained.

Sixty-percent of the perpetrators of elder financial abuse considered by the 2011 MetLife Study were male.

Part 4 of this series will consider common indicators of elder financial abuse.

Kristen M. Lewis, Esq., Member of the Special Needs Alliance and Fellow of the American College of Trust and Estate Counsel.