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CPA Financial Planners Say Elder Financial Abuse is on the Rise

Jul 1st 2015
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Scams against the elderly, particularly financial fraud, are on the rise.

Nearly half of CPA financial planners (47 percent) say they have seen an increase in elder financial fraud or abuse over the past five years, according to a recent survey from the American Institute of CPAs (AICPA).

“For elderly individuals, being a victim of financial fraud or abuse can be emotionally devastating,” Ted Sarenski, CPA/PFS, a member of the AICPA Personal Financial Planning (PFP) Conference Planning Committee, said in a statement. “The impact is compounded when the perpetrator is a member of their own family or a friend. One of the unique challenges for CPA financial planners working with elderly clients is balancing their desire to help their family members financially with the need to ensure that they have the means to continue to meet their own expenses.”

The survey revealed that the emotional toll from falling victim to fraud is greater than the actual financial impact. Thirty-seven percent of the 266 CPAs surveyed cited this factor as being more significant than the financial toll (5 percent).

The most common types of elder financial abuse or fraud are phone or Internet scams (79 percent), the inability to say “no” to relatives (72 percent), and support for nondisabled adult children (57 percent).

A contributing factor to the emotional impact of elder financial abuse is how often this situation involves family members. The survey found that family members are often involved in elder planning, with spouses taking part 77 percent of the time and adult children 37 percent of the time.

Others involved in the planning process include attorneys (39 percent), trustees (23 percent), and outside investment managers (19 percent).

“In elder care and planning issues, particularly those that involve dementia, the CPA financial planner serves as the quarterback – calling the plays and making sure that everyone involved is playing the role that they are supposed to,” said Jean-Luc Bourdon, CPA/PFS, a member of the AICPA PFP Executive Committee. “Whether it is decisions regarding estate planning, long-term care, or housing, it's crucial that CPA financial planners coordinate with other professionals employed by their elderly clients.”

One of the most emotional aspects of eldercare planning is housing, including helping elderly clients make the decision to relocate to a continuing-care facility. The survey found that CPA financial planners had assisted 15 percent of their elderly clients with decisions relating to housing options or nursing home due diligence in the past year. In addition, 44 percent of respondents reported they're providing this service for their elderly clients more frequently than they were five years ago.

To help safeguard elderly clients from financial fraud and abuse, CPA financial planners suggest the following strategies:

  • Put their assets in a revocable living trust and assign a co-trustee.
  • Ensure that all checks – or checks over a certain amount – require two signatures.
  • Establish a financial plan and review the plan every six months to make sure there are enough assets to match the plan – or make adjustments.
  • Identify the members of the client's support team, including professionals, designees, and loved ones. For a check and balance, team members should know each other and be formally authorized to communicate with one another.
  • Tell clients to use their CPA financial planner as a gatekeeper – or “the bad guy.” Get them in the habit of saying: “I run everything by my CPA financial planner; I'll get back to you,” before committing to any financial decisions. This can work to prevent scams targeted at taking advantage of elderly clients.

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