Beware of Financial Guardians Taking Advantage of Their Clients

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Accountants who work with financial guardians should be aware of key signs that these stewards could be abusing their clients.

According to a recent warning released by the North American Securities Administrators Association (NASAA), guardians often are given extensive access to and control over the assets owned by a person who no longer can manage finances on their own.

Guardians can be public figures funded by state or local governments, professional private guardians, family members, neighbors, attorneys, accountants, investment advisers, insurance producers or other financial professionals.

These folks tend to get wide latitude. Appointed by a court order to exercise some or all authority over a person and/or estate, they can make decisions related to the health and safety of their wards.

But financial abuse enters the picture when the guardian improperly uses the protected person’s financial accounts.

The following are red flags that should alert accountants to likely wrongdoing:

  • Guardians use their authority to transfer property for their own benefit.
  • They receive money from the protected person without court permission.
  • They approve frequent cash withdrawals from the protected person’s accounts without explanation.
  • Property is used or borrowed for their own benefit without court approval.
  • There’s a great deal of secrecy about the protected person’s finances.
  • They depend on the protected person’s finances.
  • They make unexplained decisions that aren’t in the protected person’s best interest.
  • The protected person is kept isolated.

Aside from these warning signs, the protected person likely will exhibit strange behavior. For example, his or her appearance and hygiene may deteriorate, and they may exhibit unusual fear, anxiety, submissiveness or deference to the guardian. They also may completely depend on the guardian and be socially isolated — and know nothing about large account withdrawals, the guardian’s financial decisions, or large loans or gifts made without regard for financial security.

Got a strong hunch that things aren’t right? NASAA recommends talking to the police, Adult Protective Services, financial services regulators or other government agencies with the authority to stop guardian financial abuse.

About Terry Sheridan

Terry Sheridan

Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.

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Nov 30th 2017 00:15

This is a real problem, as we know in New Mexico. Here are links to two cases in the last few months of guardians stealing millions from their clients.

http://krqe.com/2017/07/20/albuquerque-guardianship-firm-facing-of-embez...

https://www.abqjournal.com/1098421/desert-life-ceo-pleads-guilty-to-frau...

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