Elderly Scams: When You Need to Take Control

What to do when a parent shows signs of falling for “scams” — and seems unable to take the appropriate actions to avoid them?

While it is often appropriate to let older adults worry about their own “scam-proofing” (see the entire series on Scams and Older Adults), there are some situations in which an intervention is appropriate.

At the first signs of trouble, you need to sit down with your loved one and discuss setting you up as their power of attorney with joint ownership of their financial accounts — so that when the time comes you can step in to manage their finances and pay their bills.

Fortunately, a great many elderly people independently create a limited power of attorney or a trusteeship of their estate while they are still lucid.

For those who have put off thinking about their mortality, such a conversation might not be so pleasant. That is because as we age, it is very painful to give up our independence.

But, things like blindness, deafness, and walking can result from a single heart attack or stroke. Thus, it is important to organize your, and/or, your loved-one’s life so that others can step in. Otherwise, if you must step in after the fact, it can be the snipe hunt of the century.

If you get resistance, it might help to reassure them that their money will still be their money, but you would be there to backstop them from getting scammed. You could even read them some of my stories here to help them better appreciate their vulnerability.

A Real Life Story

I tried to get my late mom to make me joint on her financial accounts after my twice-widowed mom married for the 3rd time in her mid-80s.

She did have a trust to keep her estate separate from her husband’s and she had a limited power of attorney drawn up.

At about 87, I suggested again that she let me manage her finances and investments when I noticed that she had about $80,000 in her checking account – money that should have been invested. Her reaction suggested that she thought I might start spending her money on myself given that I was her sole heir. Otherwise lucid, I could not shake that notion.

It was not until I retired and relocated an hour and a half drive from her retirement community and had her and the family over to our house on the beach to celebrate her birthday, that she realized I was very well-off and did not need her inheritance. Finally, she let me lend a hand.

You might experience something similar. Be patient and persistent.

Gaining Power of Attorney.

In preparation, you want to find a calm setting free of distractions, like their apartment or your living room.

You might start the conversation with “Just to be safe….” And suggest that they have their or your lawyer set up a power of attorney so that if they have a stroke or something, you can step in and manage their affairs while they get better.

If recent incidents suggest that their judgment is already impaired, it might be more difficult to convince them of the prudence of such a move. They might even become hostile.

It is best to stand your ground and remain calm. If you react, it will only escalate emotions and risk ending in failure. That is why this is a good thing to undertake during the first year of retirement while everyone is relatively healthy, lucid, and calm.

Ideally, you want powers of attorney to:

• Make medical decisions on their behalf when incapacitated. You might wish to add a medical power of attorney to execute things like disconnection from life supports and organ donation.
• Manage their finances and estate. This should include joint access to their financial account(s) including investments. If they refuse to make you a join owner, once incapacitated, their bank will cede account control to you as power of attorney.

For more on this topic, see this “exploration” by our Longevity Explorers on the topic of “End of Life Planning“.

Trusteeships.

Some wealthy people create limited trusts with you as trustee.

These usually can give you control of your loved-one’s finances in the event they are incapacitated and include a clear definition of incapacitation (e.g., bedridden for more than 14 days or designated by a physician as not mentally competent).

Usually coincident with a trust is creating a last will and testament.

Trusts are more involved, than powers of attorney and will drive you up the wall as trustee.

There are huge downsides to trusts depending on the extent of the estate, the number of heirs, and state laws. Being a trustee is a significant burden on your time, and if there are multiple heirs, you are likely to alienate some or all of them as you make decisions in accordance with the will to divvy up the spoils.

In some states, like Florida, trustees must manage their estate for one or two years after the person who established the trust dies in order to pay any outstanding claims on the estate.

I had to continue to file taxes on the estate. So, keep in mind the need to pay CPAs and lawyers postmortem. In my case, I executed the will and withheld $50,000 in mom’s checking account just in case. After 2 years, there were no claims and I closed the account. I had mom’s attorney submit the dissolution of the trust and 2 years in the grave, mom was finally dead to the IRS and the state of Florida.

As trustee, if you have to execute your trusteeship while your loved-one is still alive, you can work with your loved-one’s banker, broker, etc. to set limits on transactions if they retain enough competence to run their daily lives.

As mentioned in a prior installment of this series on Scams (How to Avoid Scams and Defend Against Them), banks can help alert you to possible scams and even allow you to approve purchases or withdrawals above a certain amount per transaction or per week.

Most financial institutions today offer phone apps that will alert you to all sorts of things from credit card transactions to ATM withdrawals so you can call mom or grandpa and ask why they want to draw $1000 from their ATM, or charge $3,500 on their VISA card to The Save the Snails Foundation.

As trustee you can authorize transactions once you judge their legitimacy, and stop or reverse transactions that they would later regret.

Taking Control of “On-line” Life.

If your loved-one is over 70, I can almost guarantee that they have not thought about how incapacitation or even death could mess up the lives of their friends and survivors.

Specifically, finding the postal and online addresses, passwords, etc. for every medical specialist, service provider, and utility postmortem can be a snipe hunt.

Then there are social media such as Facebook, and email accounts that will enable you to get the word out to friends of the death, funeral, etc.

Finally, there are professional organizations and clubs for which your loved-one might remain active or be a lifetime member. People with professional licenses, military retirees, and doctoral degrees are likely to fall into this last category.

The majority of people over 75 today still rely mainly on paper, as opposed to online, invoices and billing statements. But many of the “elderly” do have a meaningful online presence.

Clearly, you need to learn how they manage their accounts and their lives and get a list of all email, social media, etc. online accounts along with passwords and any PINs. They do not have to share them with you, just show you where they are kept in case of an emergency.

More: The “Scams & Older Adults” Series

This is part 4 of the “Scams & Older Adults” series. See the entire series below.

1. Start here: Read “Scams & Older Adults: What to Do?”

2. Forewarning involves learning how scammers and crooks try to rob you. Read “How Scams Work“.

3. Forearming includes a variety of actions you can take to reduce your or your loved-one’s vulnerability to being scammed. Read “How to Avoid Scams and Defend Against Them“.

4. When to Step In and Take Control discusses situations when you need to be more proactive. Read “Elderly Scams: When You Need to Take Control“.