Litigation + Valuation Perspectives

Demystifying Valuation, Economic Damages + Forensic Accounting

Financial abuse of the elderly

The National Center on Elder Abuse has identified seven different types of elder abuse. These include physical abuse, emotional abuse, sexual abuse, financial/material exploitation, neglect, abandonment and self-neglect

While I think we can all agree that physical, sexual, or emotional abuse of anyone, especially the elderly is horrific, any form of abuse can be devastating to the elderly. While some forms of abuse may be obvious and easily proved, financial abuse or exploitation is not always so easily recognized or proved.

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Financial/material exploitation is the illegal or improper use of an elder’s funds, property or assets and is often committed by someone with a trusting and oftentimes familial relationship with the victim. While the elderly can become the prey of random fraudsters, it is more likely that they are the victim of a trusted individual. Studies have shown that as much as 60% of financial abuse of an elder is by a family member, often an adult child.

Some perpetrators may justify their actions with such justifications as:

  • I am helping Mom, so I deserve a little compensation
  • It is just an advance on my inheritance
  • It was a loan. I was going to pay it back.

Forensic accountants are often called in to review the financial records of the elder to determine to what extent the financial abuse has occurred. While we can go through bank accounts and other financial records to determine where their money has gone, the occurrence of abuse is sometimes not quite so clear cut.

Take for example a recent case involving a family in which Mom’s eldest son helped to manage Mom’s money and provided care while she lived in his house. Let’s call the son Jim (names are obviously changed) and his sister Tina. Tina believed Jim was financially abusing Mom after she found out Mom bought Jim a new car. We were hired by Tina to review the financial accounts of Mom and determine what if anything Jim had taken from Mom.

Upon reviewing the accounts, we found no transfers of money to accounts in Jim’s name nor in the names of Jim’s wife or children. What we did find was spending of Mom’s money that could very well have been considered excess by some. In addition to the purchase of the car, Mom would pay for Jim’s wife, daughter and herself to have a spa day every so often. Or Mom would give Jim some cash for “dinner” or “gas”. Mom also paid monthly rent to Jim of $500.  We prepared a schedule of all the spending from Mom’s account that in some way benefited Jim or his immediate family. The number was not large compared to Mom’s total spending or financial resources but in Tina’s mind, Jim was taking advantage of Mom.

It is our understanding that the parties met with a private mediator. Tina’s goal was to take over as Mom’s guardian in all aspects, financially and physically. Tina also wanted Jim to pay Mom back for all spending we had identified as benefitting Jim.

While we were not present at the mediation, it has been relayed to us that the mediator interviewed Mom who insisted that she did indeed approve of all the spending which benefitted Jim. She told the mediator that she just wanted to thank Jim and his family for taking care of her. The family agreed that Tina would take over as Mom’s guardian, but Jim would not pay back any money.

Was Mom unduly influenced by Jim? Maybe. Will Jim and Tina ever have a good relationship again?  Probably not.

This may or may not have been a clear-cut case of elder financial exploitation, but you can be sure that there are plenty of people who have and continue to financially exploit the elderly. If you suspect that your family member is being taken advantage of, act now. Contact Adult Protective Services or a local attorney to discuss guardianship options.  The National Center on Elder Abuse (ncea.acl.gov) is also a good source for information on the subject and can assist with resources for reporting abuse.

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Melissa E. Loughlin-Sines, CPA, CFE, CVA, CFF, ABV, Director, Litigation+Valuation Services