​July 15th Review: Understanding and Protecting our Aging Clients from Financial Abuse-Responding to Elder Financial Exploitation

Submitted by
Earl Cohen - Committee Member

As planners of both our client’s finances and estates we have spent much of our time and effort on behalf of our clients in addressing their tax, investment, retirement and educational funding issues. As our clients have matured so have our practices, forcing us to recognize that the best laid plans may face serious challenges that may range from medical and emotional issues to divorce and the unplanned emergencies facing children and other family members. This month’s presentation by Iris Freeman and Cathryn Reher provides emphasis and an important reminder of another often behind the scenes issue facing our clients as they age, financial abuse and exploitation.

In the first hour of this important two hour program, Ms. Freeman provided an overview of the issues facing our elder clients, its prevalence (over $2.9 billion according to a 2011 MetLife study) and some of the community resources available to victims. She noted that the problem isn’t one dimensional and includes exploitation by family members (possibly as much as 72% of the cases in one study) as well as stranger scams and outright fraud. Most of us are probably not surprised to learn that most cases in Minnesota go unreported. The good news is that in recent years the legislature has responded with tougher laws and penalties, recognizing that the losses suffered result from criminal acts and not just private, intrafamily interaction. Ms. Freeman went on to help us understand the role that aging and dementia play leaving the elderly more vulnerable over time. She pointed out the obvious and not so obvious issues of why perpetrators do what they do, who is at risk, who these perpetrators are or might be, the warning signs and how we all can play a role in helping prevent financial abuse and exploitation.

In the second hour, Cathryn Reher, provided a further overview of the reporting issues and the growth of the problem. She again highlighted the fact that many cases still go unreported. Statistics show that the common perpetrators tend to be caregivers or other responsible parties, trusted financial advisors or complete strangers. Ms. Reher provided an overview of Minnesota’s laws regarding vulnerable adults including what appear to be gaps in the definitions. She carefully demonstrated with case examples how the legal planning tools we normally use for our clients, including powers of attorney, trusts, conservatorships, multiparty accounts and representative payee status can be used to both prevent and commit these crimes. Ms. Reher went on to provide other warning signs, tips on identifying exploiters, our ethical and legal duties to our clients including the issues we may have to consider when thinking about reporting abuse, the need to trust our “gut” in reviewing client’s affairs and some of the resources available to us as advisors.

While each of the speakers provided their insight from a slightly different prospective, they provided important ideas on how we as planners can be part of the front line of defense helping prevent our clients from becoming victims.