Understanding and Preventing Elder Abuse
It’s becoming increasingly apparent that financial elder abuse is a serious concern not only to seniors and their families, but to society at large. A new study by Metlife suggests that financial abuse costs elders almost $3 Billion every year. This money is lost in scams, power of attorney abuse, and, perhaps most worryingly, by the sale of financial products that are supposed to help protect senior’ savings. Annuities, life insurance policies, and the numerous exotic variations available on the market are often sold to seniors who don’t know exactly what they’re paying for by brokers who may not fully understand the product themselves. Ultimately, these policies are designed to make the company money, and brokers earn their living by convincing clients to pay for them, but it’s important for consumers to make sure they aren’t agreeing to practices that will hurt their finances in the long term. Many policies include surrender penalties, liquidity charges, and sizable commissions for brokers.
Financial Elder Abuse
Financial abuse can come from many different directions, and it’s important to be aware of risks for yourself and your loved ones. Our San Francisco elder abuse attorneys have compiled a list of some of the most common varieties of financial abuse, which we’ll discuss here:
This is probably what most people think of when they think of financial elder abuse. A phone call or email to get bank account information, a charming salesperson at the door, a young woman moving in with a widower; these often constitute outright theft and trickery, and are best avoided by preventative measures. Seniors are most vulnerable when they are isolated, and having a person in their lives, particularly when they may be suffering from memory loss, can make all the difference. Not only are you more likely to hear about the scam before it gets far, but the presence of friends and family can make a senior less likely to seek companionship and involvement in the wrong places.
Power of Attorney Abuse
This is a sadly common form of financial elder abuse, most often carried out by close family and friends of a senior. The abuser convinces a senior to assign them power of attorney ( and often other powers such as making them a trustee and healthcare contact) and proceeds to isolate the senior from other family and friends. They may sell the senior’s property, drain their bank account, and transfer assets to themselves. Again, it’s important to stay involved in a senior’s life and to keep an eye out for this type of behavior, and also to sit down with your elderly loved ones and have a serious discussion about their wishes long before they start showing signs of memory loss or dementia. It’s also important to get a medical diagnosis of incapacity, so that subsequent documents that a senior may be tricked into signing aren’t valid.
Unsuitable Financial Products
This is perhaps the largest vector for financial abuse, in addition to being one of the least discussed. Purchasing policies such as annuities and life insurance is widely considered to be a necessity for sound retirement planning, but far too often the policies end up turning against their owners. Important information may be undisclosed of hidden, surrender penalties may penalize seniors who need access to their money, and sizeable commissions, which are presented as part of the cost of the policy, may drain retirees finances as soon as they sign their name. Products such as indexed annuities and life insurance promise higher returns, but statistically tend to underperform traditional products. The cash value of the policy is often less than the premiums, and sometimes seniors are sold policies that won’t mature until they’re well over 100 years old.
It’s hard for seniors to spot the risks of this type of abuse, and it’s also hard for family and friends to identify when abuse is occurring. Because many policies intentionally front-weight the returns for the first few months, it is often only after the legally mandated 30-day “waiting period” that policyholders start to see the flaws of their contracts, by which point they have to pay steep fees to get out. Before buying a policy, it’s important to get a second opinion from a financial advisor who doesn’t have a vested interest in the sale. Also, ask the broker how the plan fits your specific financial plans and requirements. If they don’t know or can’t answer, they may be more interested in the sale than in your financial future.
Some of the major annuity and life insurance providers are:
- Aviva/Athene/Accordia Life Insurance Company
- Transamerica Life Insurance Company
- John Hancock Life Insurance Company
- Bankers Life Insurance and Casualty company
- Massachusetts Mutual Life Insurance Company
- Midland Life Insurance Company
- North American Company for Life and Health Insurance
- Pacific Life Insurance Company
- Prudential Life Insurance Company
- Genworth Life Insurance Company
- ING USA Annuity and Life Insurance Company
- Lincoln Benefit Life Company
- Metlife/Metropolitan Life Insurance Company
- Unum Life Insurance Company of America
- Voya/Reliastar Life Insurance Company
While they are certainly ways to prevent elder abuse, sometimes you don’t see something until it’s too late, and you have to get involved with the legal side of things. There are a number of powerful tools that have been put in place to prevent elder abuse, both physical and financial.
There are a number of codes in California that specifically lay out what constitutes elder abuse, and imposes strict penalties for violating the rules. These include doubling and tripling awards in cases where elder abuse is found, automatically awarding attorney’s fees and costs, as well as other fines. Elder abuse can be added to other causes of action for any victim over 65
Conservatorships are perhaps the most powerful tool for protecting senior citizens, and in many cases are worth the cost to set up. Essentially, a conservatorship is for a senior citizen what guardianship is for children: it puts a conservator, who a senior may select in advance, in charge of their financial, healthcare, and legal decisions. It overrides previous powers of attorney and must be established in court by a judge. It is essentially the last word, and is rarely revoked. It is important that the right person is selected to be conservator, and often a professional fiduciary is selected to look after a senior’s finances. Since the court is involved, it ceases to be a private matter like a power of attorney, and there is a chance for wrongdoing to be uncovered.
Evans Law Firm helps families and victims of elder abuse navigate the problems and solutions of elder law. We are well acquainted with the many risks facing senior citizens, as well as the appropriate legal measures to ensure that they are protected from financial abuse. We handle estate planning, powers of attorney, healthcare directives, and conservatorships, as well as helping plaintiffs seek justice and recompense in court for abuse by relatives, scammers, and unscrupulous companies and brokers. Our San Francisco elder abuse attorneys have handled cases against major financial companies, helped families craft a framework to provide for their aging loved ones, and recovered funds for victims of financial elder abuse.