Elder Financial Abuse by Family Caregivers

Older adults lose an estimated $20 billion each year from financial abuse by family, friends, and caregivers. In many cases, the perpetrators of elder financial abuse are not strangers but trusted individuals, often family members. When victims discover exploitation, they can face challenges navigating complex interpersonal relationships.

A recent webinar hosted by the National Center on Law and Elder Rights (NCLER) shed light on financial exploitation involving family caregivers, including the drivers of this abuse and the options to address it. NCLER offers legal services and resources to aging and disability communities.

Financial Exploitation of Older Adults

Elder financial abuse occurs when an older adult loses money or property because of improper use by someone else. Exploitation by a loved one can happen in a variety of contexts, such as the following:

• A caregiver with account access takes money from ATMs or bank accounts for personal use.
• A family member pressures the senior to give a large gift, such as a car.
• A trusted person unduly influences an elder to sign over the title to a residence.

How Financial Abuse Starts

Financial exploitation often follows a major event in a senior’s life that threatens their ability to continue living on their own. These types of life events include the loss of a spouse, a fall, or a new diagnosis of an illness like cancer or dementia.

If a family member is the abuser, the financial abuse does not always begin with the intention to exploit. When an older adult living on their own needs assistance, it can be mutually beneficial for a family member to move in and help. The family caregiver may assist with household tasks, transportation to medical appointments, and bill payments. The senior may benefit from the companionship and support of someone they know well.

In some cases, a single overstep leads to more significant misuses. If no one notices a bit of missing money, an individual may feel emboldened to take more.

Family caregivers are more likely to commit financial abuse after experiencing hardships like breakups, financial problems, addiction, and mental health issues. These adverse life events can lead to a sense of desperation. Abuse is more likely to occur after an older adult and a young caregiver both experience stressful life events.

Challenges With Family Financial Abuse

Seniors who experience financial exploitation within their families can encounter several challenges, which make it harder to seek help.

Family members’ involvement in caregiving can make older adults reluctant to use safeguards like contracts or rental agreements to define the relationship formally. However, putting the arrangement in writing protects all parties.

Older adults with cognitive decline may not know their financial situation. Mental decline is common. According to research published by the National Library of Medicine, two out of three older adults experience some cognitive decline at age 70.

Those pressured to make large financial gifts may not understand how these gifts could affect their long-term care costs. For instance, giving significant gifts could compromise a senior’s ability to qualify for Medicaid. The Medicaid program has a five-year “lookback” period. So, making a gift to a family member could disqualify a senior from benefits for up to five years.

Feelings of dependence and fear of losing contact can prevent an older adult from speaking up when abuse occurs. Those who feel dependent may think they cannot say no when a family caregiver pressures them for large gifts like a vehicle or home or steers them toward certain financial decisions.

In some cases, victims may be reluctant to act for fear of moving to a nursing home. For these individuals, losing control of their money is preferable to having their caregivers place them in an institution. Older adults often also fear hurting their relationship with the caregiver, especially when the caregiver is a close loved one such as a child.

Options to Address Family Financial Exploitation

Many older adults who experience family financial exploitation are reluctant to seek remedies. However, several options can address the problem while preserving family relationships to different degrees.

• With restorative justice, the focus is on fixing the harm. All parties’ involvement is voluntary, allowing the exploiter to take an active role in making amends.
• Mediation is an alternative to litigation. A neutral third party, known as a mediator, helps the parties reach a resolution. For financial abuse, mediation should have the same safeguards as a domestic violence situation. The mediator should be familiar with elder financial abuse.
• Criminal remedies may be available. In certain cases, it may be necessary to seek a temporary restraining order (TRO) to separate the elder from the abuser. When financial abuse jeopardizes a senior’s Medicaid access, it may also be necessary to file a police report to document the abuse.
• While older adults rarely pursue civil remedies, litigation can help restore rights to real property. An attorney can help pursue a lawsuit for undue influence. If a private attorney is too expensive, some legal service programs for elder abuse, neglect, and exploitation offer free or low-cost legal support to older adults facing financial exploitation.

Remedies should support the older adult’s autonomy, and the older adult should decide what solution to pursue. Advocates look to the minimum amount of intervention that causes the least upset in the person’s life.

Preventing Exploitation

Older adults and their loved ones can take steps to prevent financial exploitation.

• Education can preclude oversteps. For instance, the Consumer Financial Protection Bureau (CFPB) offers brochures about money management.
• A neutral, trusted advocate can stay involved when a family member takes on a caregiving role. This second person can look out for the older adult and flag abuse.
• Account monitoring can also identify abuse. Financial institutions, loved ones, or older adults can monitor access to bank accounts, credit cards, and other financial resources.
• Seniors can create an estate plan that safeguards against abuse.

Working with an Elder Law Attorney

An elder law attorney can help protect an older adult from financial abuse and, potentially, other forms of abuse. In addition to pursuing legal remedies after exploitation is discovered, an attorney can help an older person create an estate plan that defends them from financial abuse.

For example, a skilled attorney may structure a power of attorney to prevent exploitation, limiting the caregiver’s powers. The attorney should also explain how a loved one might misuse a power of attorney and counsel you on selecting responsible and ethical agents.

Find a local, qualified elder law attorney today for further guidance.

For additional reading, be sure to check out the following articles:

• What Is Elder Abuse? Elder Law Q&A
• Financial Abuse: How an Elder Law Attorney Can Help
• The Best and Worst States for Protections Against Elder Abuse
• Always Put Caregiver Contracts in Writing