Fighting back: CPAs on the lookout for Elder Abuse

In 2000, more than 10 percent of the population in California was over the age of 65. And that percentage is expected to grow significantly during the coming decades as Baby Boomers enter their golden years.

As many seniors choose to remain independent, living in the homes they've been in for years, they represent a vulnerable segment of society, especially if physical or cognitive disabilities develop with age.

State laws designed to protect seniors from elder abuse have been in place for years, though many incidences of abuse--whether physical, psychological or financial--go unreported. To protect the best interest of their aging clients, CPAs should know the warning signs of financial elder abuse, as well as how to report suspected abuse.

DISABILITIES AND VULNERABILITY

While many seniors enjoy a high quality of life due to good health and financial security, at some point, frailty may set in and seniors could begin to need various forms of assistance.

According to the U.S. Census Bureau, 42 percent of the population over age 65 reports having some sort of disability or long-lasting condition. For those in the oldest age category--over age 85--the disability rate increases to 72 percent. Seniors also are likely to experience difficulty leaving their home to go to the store or to the doctor alone.

The probability of developing dementia, or progressive brain dysfunction, increases with age. Even mild dementia can pose a particularly dangerous situation for the elderly, as a family member or caregiver may seek to exert undue influence to change a will, extract money or other assets.

Seniors living independently may be reluctant to seek help from relatives or friends, fearing that asking for assistance might be construed as an indicator that they are no longer able to care for themselves. In some cases, the seniors may have no relatives or friends to turn to, or their relatives may live far away. These seniors are thus particularly vulnerable to financial abuse, especially from strangers.

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Losing a spouse or other caregiver also significantly increases the vulnerability to abuse. Estranged relatives may show up looking to exploit the senior's financial assets. Strangers may try to take advantage of lonely seniors through telemarketing scams. If the senior remarries, a new spouse may take control of assets and use coercion to change the senior's will.

Many seniors have accumulated savings to provide for their retirement or supplement a fixed income. More than three-quarters of seniors 65 and older are homeowners and nearly two-thirds of those 85 and older own their own homes, so there's a lot at stake when it comes to elder abuse.

The loss of financial assets is particularly devastating to seniors, who do not have the years to recover their financial health.

TYPES OF ABUSE

Various types of elder abuse include neglect, physical abuse, emotional abuse and financial exploitation, which can encompass theft (of money or property); exploitation (identity theft); and fiduciary abuse (misuse of a power of attorney).

Sadly, in more than two-thirds of reported cases, the abusers are family members, according to the National Research Center on Elder Abuse. Adult children and new spouses are the most common abusers. However, caregivers, fiduciaries and professional swindlers also can abuse seniors. Often, abused seniors are reluctant to seek help.

Some specific examples of financial elder abuse are:

* Altering of estate plans by adult children or new spouses.

* Predatory lending, where seniors are pressured into high-interest loans, often with excessive fees and costs.

* Isolating a senior to pressure into signing estate planning documents, including powers of attorney, in that person's favor.

* Transferring property from the senior's name into the name of an adult child or caregiver.

* Convincing a senior to add that person as an authorized signer on a bank or financial account, then making withdrawals without permission.

* Telemarketing scams where the senior is told that he or she has won a prize, but must pay the taxes on it first.

WARNING SIGNS

There are some indicators, however, that CPAs can be on the lookout for to determine whether elder abuse is taking place:

* Unusual bank account activity: large cash withdrawals, frequent ATM withdrawals when the senior is homebound, frequent checks written to cash.

* Change in beneficiaries of bank or investment accounts.

* Addition of new authorized signers to bank or investment accounts.

* Change in ownership of real property.

* Loans against equity in property or refinancing of home mortgage.

* Unpaid bills despite adequate resources.

* Changes to a will or trust.

* Inadequate documentation of financial assets, such as for stocks, bonds, mutual funds or CDs.

* The senior shows signs of dementia, confusion about financial situation or is unaware of recent transactions.

* Missing personal property, such as jewelry, art or heirlooms.

* Decline in personal grooming or appropriate clothing.

* Lack of medical care.

* New significant relationships, particularly those where the new acquaintance moves in with the senior.

* Estranged children or other relatives who come back into the senior's life, especially after the death of a spouse or primary caregiver.

* The senior is isolated from family and friends by caregiver.

* Preoccupation by caregiver with amount of money spent on care.

HOW TO PREVENT FINANCIAL ELDER ABUSE

Of course, the best way to handle financial elder abuse is to take steps to prevent it. According to Mitch Freedman, CPA/PFS, a member of the AICPA's ElderCare/Prime Plus task force since its inception, services a CPA can offer elderly clients include:

* Reviewing loans made by the elderly person to another individual to ensure that a promissory note was signed and that payments are made on time.

* Verifying caregiver references and checking to ensure that the caregiver is providing appropriate services and is not trying to isolate the elderly person from others.

* Recommending that clients have two rather than one trustee or agent sign off on significant actions to mitigate the possibility for financial abuse.

* Working with banks to isolate unusual or erratic financial behavior.

* Advising the elderly person's attorney to be aware of and consider the possibility of financial abuse.

* Acting as a fiduciary for the elderly person.

* Orchestrating a multi-disciplinary team of doctors and nurses who can assess an elderly person's capabilities.

* Contacting social services and government agencies that provide services to the elderly, including monitoring for elder abuse, whether physical or financial.

HOW TO REPORT ABUSE

If a CPA believes that their elder clients have been abused, how to report the abuse depends on where it occurred.

If the suspected abuse occurs anywhere outside a long-term care facility, local law enforcement or the Adult Protective Services Agency for the county should be notified.

Abuse that occurs in a long-term care facility should be reported to the local Long-Term Care Ombudsman, local law enforcement or the Bureau of MediCal Fraud.

OTHER WAYS CPAs CAN HELP

CPAs with clients facing health or mobility issues due to advancing age may want to consider whether those clients may benefit from the services of an elder care practitioner. CPAs practicing elder care can assist in identifying options for care; making arrangements for care; setting goals for care and determining if those goals are met; and monitoring finances.

CPAs can learn more about financial elder abuse and volunteer to teach financial literacy to senior groups. Financial literacy materials targeted toward seniors are available through the 360 Degrees of Financial Literacy program, a joint effort of CalCPA and the AICPA. There is a wide range of topics available for retired persons, including "Preventing Financial Abuse of the Elderly" and "Facing the Possibility of Incapacity."

Information also is available through the CalCPA Financial Planning

Committee, www.calcpa.org/PFP/elder.resource/index.html, where everything from care management and hospital services to forensic-elder abuse issues to real estate assistance services is covered.

The resources are divided by geographic region to help CPAs locate local eldercare resources for clients.

CONCLUSION

As CPAs, protecting our senior clients and their future generations, while respecting their independence, is important to our communities. We can use our financial knowledge to help ensure that seniors enjoy their retirement years free from the perils of financial abuse.

BY VANESSA J. HILL, CPA

Vanessa J. Hill, CPA is a director at San Francisco-based Hemming Morse and co-chair of the San Francisco Chapter's Financial Literacy Committee. You can reach her at hillv@hemming.com.

COPYRIGHT 2005 California Society of Certified Public Accountants
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