Elder abuse and changes in retiree accounts

What should plan sponsors know about financial elder abuse and requests to withdraw, close or make sudden changes to retired employee’s accounts?

Many retirees are choosing to live in their own homes, rather than move into nursing homes. This decision could be driven by comfort or cost. Reports indicate that almost 10 million adults age 65 and older receive care at home or in residential care settings. And, reports also show that 1 in 10 Americans aged 60 or older have experienced some form of elder abuse. What is Elder Abuse? The definition adopted by the World Health Organization states that it is “a single, or repeated act, or lack of appropriate action, occurring within any relationship where there is an expectation of trust, which causes harm or distress to an older person.” Some authorities recognize this as domestic violence, as the harm may come from a family member.  Warning signs of elder abuse include: Broken bones or bruising and cuts; Poor Physical Appearance; Changes in mental status; Frequent infections; weight loss; and dehydration. Generally, those in a position to abuse an elder are those held in a position of trust, control or authority.


Aside from the physical abuse, much of elder abuse also involves control or diminution of resources.  Some states, like Delaware, call a person with control, either physical or emotional, over a vulnerable person like an elderly individual a “designing person.”  Some designing persons may be family members, whereas others may be people who seek out vulnerable individuals to obtain their resources. Older people living alone who have no adult children living nearby are particularly vulnerable to these designing persons.  Many think that financial elder abuse involves only emails from princes in Nigeria or phone scams. Yet, according to the AARP, 90% of those engaging in financial elder abuse are family members or are well known to the elder such as neighbors, friends or caregivers.

How does the abuse happen? Many adults with dementia may not know or recall that they are being abused. Other elders worry that they will end up in a nursing home, out of their familiar surroundings or neighborhood. Many elders have family members that live too far away to monitor the caregivers. For those who hire outside help, the home health care industry is virtually unregulated though growing by leaps and bounds. Its growing so fast, in fact, that only 16% of the companies providing home health care test their workers for basic knowledge about providing care in the home.


What are warning signs for financial elder abuse? The AARP identifies three warning signs about financial elder abuse. These include lack of knowledge, where an elder cannot recall writing a check or wiring money out of their account, especially where that elder is normally confident and capable with their finances.  AARP also cites physical frailty as a warning sign for elder abuse, noting that the elder may be less able to finish chores and become vulnerable to fraudulent home repair people. Unusual behavior of a relative taking care of an elderly family member, especially if that relative has a history of substance abuse, is another warning sign. Experts suggest confronting the relative when they make purchases outside of their normal lifestyle, such as expensive cars or other luxury goods.


Yet, these warning signs might not be ones a plan sponsor can identify. Instead, a plan sponsor may be alerted to elder abuse when multiple withdrawals occur in an account or other out of the ordinary account activity happens. Additionally, multiple withdrawals directed to new or different checking accounts may be cause for investigation.


Many financial advisors will ensure that their clients have end of life documents, including living wills and health care directives. In addition to health care rights, financial advisors should consider having their clients find a trusted family member or business associate who can take over financial matters through a financial power of attorney. This can allow a trusted advisor to intervene when the elder appears to be under the influence of that “designing person.” Why is a financial power of attorney necessary? To otherwise take over financial and caregiving matters for an older person, that person must be declared incompetent by a court or judicial officer. Incompetency is a high bar, involving, in some states, failure to recognize the date and time.


What can a plan sponsor do? Reaching out to state elder abuse hotlines or government agencies on the aging is a good first step. If a plan sponsor cannot find contact information, they can turn to the National Center on Elder Abuse (ncea.aoa.gov).

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