Preventing Elder Abuse
In Canada today, older people are becoming victims of financial crime more and more frequently. Senior citizens make up 18% of the Canadian population today, but by the year 2033 it will rise to almost 30%, likely increasing the number of victims of financial crime as well.
It is estimated that 1 in 5 seniors have been financially exploited in some way, with women being victims twice as often as men. While it may come as a surprise, the majority of exploitation against seniors generally occurs at the hands of friends, caregivers and family members.
Studies we have seen indicate that financial exploitation involves larger sums of money when family members are the perpetrators, as opposed to strangers, with financial crimes by family accounting for over 70% of the cases. There have been high profile cases in the media where a son was sent to prison for mismanagement of his mother’s finances. The son was accused of fraud, grand larceny, conspiracy, and for leaving his mother in dreadful living conditions. Unfortunately, victims are often hesitant to speak about these crimes due to denial, shame or fear.
Given that over $750 billion remains in the hands of Canadian citizens aged 65 and up, the wealthy elderly are perfect targets for scam artists. This risk is further increased if cognitive impairment is a factor, common to over half of those who reach age 85.
Types of financial exploitation and scams vary, but the Internet creates more opportunities for non-family related crimes to occur. One of the most frequent scams is email phishing, where the writer will impersonate someone requesting money. Often the fraudster will pretend to be a family member asking for money for an emergency. Sometimes they request victims to transfer funds to settle a phony tax issue. The Canadian Revenue Agency has experienced many incidences where scam artists threaten to take legal measures or use other scare tactics in an attempt to steal funds.
Fraud that is committed by caregivers involves abusing trust and vulnerability of older people, which may result in identity, financial, or property theft, as well as forgery or embezzlement. Financial salespeople, who are not fiduciaries, may sometimes influence elderly clients to make investments that are not appropriate, charge high fees that are unreasonable, or commit financial fraud.
It is particularly important for the elderly to have documentation for personal matters and estate planning. Having a Power of Attorney for property in place allows a designated individual to handle financial affairs including bills, managing accounts and operating businesses if needed. A Power of Attorney for health can make medical decisions if the principal is no longer able to do so. Without these documents, the court could appoint a third party to make these important life decisions for older people.
Having ongoing conversations with family members and professional advisors, who have a fiduciary relationship with their clients, can help to protect those vulnerable to these potential threats. Educating people on frequency and types of financial scams that target the elderly is very important. Understanding who has access to funds, accounts, passwords, and estate planning documents should be part of such communication. Lastly, working with a trusted adviser such as Northland Wealth is a critical component of planning and protecting the future of your and your loved ones.