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Protecting Your Parents: Identifying and Preventing Elder Financial Abuse in 2021 Thumbnail

Protecting Your Parents: Identifying and Preventing Elder Financial Abuse in 2021

Nobody likes to think of their parents getting older and needing assistance, but it’s a reality many of us face. An important part of caring for your parents as they age is identifying and protecting them from elder financial abuse. Baby boomers and the Silent Generation are getting older and with their accumulated assets, they have a higher chance of being defrauded than those who are younger. According to one estimate, seniors collectively lose up to $30 billion a year to elder financial abuse.1 This abuse can come from total strangers, or even friends and family members.

As a concerned child, how can help you combat this? Here are seven ways to spot financial abuse and six ways to protect your parents and their financial futures.

7 Signs of Elder Financial Abuse

Protecting your parents from scammers is crucial, especially as they get older and have a harder time managing their finances.

Warning signs may include:2

  • Unusual activity in their bank accounts, such as large or unexplained withdrawals
  • Withdrawals from an inactive account
  • A newly opened joint account
  • New credit card balances
  • Bank and credit card statements sent somewhere other than your parents’ home
  • Suspicious signatures
  • Closing a Certificate of Deposit or savings accounts without worrying about penalties

Protecting Your Parents From Financial Abuse

Tip #1: Talk to Them About Money

Reach out to your parents and make sure that you are staying in touch with them regularly. Make sure they are paying their bills and, if applicable, find out who is doing it for them. Your parents may not want to share this information or admit that they need help, so you can ease them into it by asking them for advice or speaking about your own money worries. Once this becomes more comfortable, they may let you help with more as it becomes necessary. 

Tip #2: Automate Their Bills or Deposits

One way to go about helping them pay their bills is by automating the process. Automating your parents’ payments with direct debits from their account can help keep things organized while lessening the chance that they will become victim to a scam.

Similarly, you can automate transfers into their checking account, as they may have funds coming from various sources, such as social security, pensions, etc.

Tip #3: Have the Necessary Documents Ready

Are your parents’ legal documents in an accessible location?

This could include:

  • Wills
  • Healthcare Proxy
  • A HIPAA Release Form
  • Power of Attorney

Make sure your parents are careful when choosing a power of attorney, as this person will be responsible for managing finances once your family member is no longer able to do this.

Tip #4: Condense Your Parent’s Finances

Consolidate your parents’ finances when possible, as many older people have more than one account. Practice caution when consolidating and moving accounts to make sure that you don’t incur any penalties. Additionally, you need to respect beneficiary designations or you could face legal action. 

Tip #5: Encourage Credit Card Use Over Cash

If your parents sent cash to a scammer, then it would be much more difficult to trace than if they paid with a credit card.

If they were to make a purchase with a card, the credit card company can:

  • Protect against identity theft
  • Allow past transactions to be reviewed
  • Reimburse any money that was stolen

If you can establish a system of checks and balances by utilizing the above tips, your parents will be much more protected from fraud. Take a proactive approach so that you can get ahead of them before it becomes an issue rather than waiting until your parents become the victim of financial abuse.

  1. https://dfi.wa.gov/financial-education/information/warning-signs-elder-financial-abuse
  2. https://www.consumerreports.org/elder-fraud/ways-to-prevent-elder-financial-abuse/