Financial Elder Abuse – Protecting Yourself
Updated: May 17, 2020
There has been much discussion over the past several years concerning the biggest demographic shift that Canada is experiencing and how this shift will inevitably change the numerous programs and services offered to Canadians, in particular those offered to seniors. By the year 2030 it is estimated that 23.6% of Canadians will be over the age of 65 compared to 15.3% in 2013, and by 2063 over five million Canadians will be 80 years of age and over. While this has spurred conversations around the increased need for long-term care, retirement residences and various social services, awareness surrounding elder abuse, is still in its infancy.
Financial abuse is the illegal or unauthorized use of another individual’s money or property, with seniors being the most common victim. While this definition is pretty clear it is often difficult to recognize, given that it usually occurs over a period of time and is not limited to a single event. In addition statistics on this form of abuse are often difficult to analyze given that the majority of the data is grouped together with all forms of elder abuse (physical, verbal and sexual abuse), coupled with the fact that most instances go unreported, either because of embarrassment, or simply because the victim is not even aware it has taken place. One thing that our government has noted is financial abuse is the most common form of elder abuse in Canada and predominantly impacts those that have experienced a major life event, such as the loss of a family member, or those suffering from dementia or a cognitive impairment, typically with the abuser being someone close to the victim, such as a family member or care taker. The risk of dementia doubles every five years after the age of 60, with 20% of seniors over 80 being afflicted. Another 30% suffer from cognitive impairment, not dementia (CNID), which means half of people over the age of 80 have lost their ability to make significant financial decisions (according to an article published from the Canadian Foundation for Advancement of Investor Rights (FAIR) newsletter in July 2014).
As the change in demographics noted above continues to unfold, this problem will only get worse amongst seniors. While there are initiatives and programs being developed to detect, identify and mitigate elder financial abuse, there are many preventative measures that can be implemented to protect yourself immediately.
Financial literacy and ongoing education are very important first steps. While I was working in a previous role at a bank, I encountered a couple of situations where I recognized that one of the parties was not fully aware of what they were signing - both situations involved children and their elderly parents. Recognizing their confusion and lack of financial knowledge, I went through the paperwork in a way that encouraged them to ask questions, educate themselves, and would not allow them to sign until they fully understood the information. It may seem embarrassing to ask questions but remember there is no bad question when it comes to YOUR money. If you are unsure ask a professional such as your financial advisor or attorney for help. Also, make sure that your financial and personal information is kept in a safe place together with a record of any monies given away as either a gift or a loan. This can be a very simple, yet devastating, transaction when one party believes the funds are a gift and the other a loan.
Another safeguard that is often overlooked is ensuring that you have the proper legal documents in place before you are no longer able to make sound financial decisions. Having an enduring or continuing power of attorney prepared, and appointing someone whom you can trust is very important, so if you are ill or unable to make your financial decisions, your finances will be protected from anyone who may try and take advantage. I would highlight that this should also be done in tandem with the creation of your Will, as a Power of Attorney (POA) is no longer valid upon death, and documenting your wishes for your estate is just as important as doing so while you are alive. There are many different ways one can construct a POA or a Will and we at Northland Wealth encourage discussions to ensure that these are in place for all of our clients.