Truth about Elder Financial Abuse

Susman Insurance Agency Podcast, with Karl Susman

There are unscrupulous people in every industry. Insurance and financial planning is no exception. Join Karl Susman on this week's Susman Insurance Agency podcast as they discuss the truth about Elder Financial Abuse. Transcript to follow. JIM: Welcome everybody, and today we have a fantastic program for you. When people go into retirement there are many risks that they face. The American College I know listed a lot of different risks that people face like inflation and healthcare and all those things, but one of the things you don’t see too often is elder abuse. Joining us today is Carolyn Rosenblatt, who has over 45 years of experience in her combined professions of nursing and legal practice, and she spent a lot of time recently, as a matter of fact she’s written a couple books on the subject and that is elder abuse and how to protect people and protect ourselves as we age, and we’re looking forward to you sharing with us. Welcome Carolyn. 00:48 CAROLYN: Thank you so much Jim. 00:49 JIM: First of all, I’m always curious, what got you involved going from nursing to the legal profession and now helping with elder issues and retirement planning, how did you make that journey, what got you on that path? 1:03 CAROLYN: I’ve been asked that question so many times because it’s not usual for a nurse to become a lawyer. But really, nursing at the time, this is back in the 60s when I graduated, the end of the 60s, early 70s, when I graduated from nursing school, nurses were not well paid. We were doing a tremendous amount of work, and I was doing about the same as a checker at the grocery store, so I realized it was just unfair. I love nursing, Jim. I love taking care of patients. I was out in the community visiting people at home, thousands of home visits to many, many elders and their families and a lot of other people too, gives you a perspective, but with a bachelor of science in nursing, a public health nurse certificate, and being able to excel in my field, I was not being paid properly, we didn’t have benefits, it was terrible, so I started looking around and thinking what else can I do. I was always comfortable with words and speaking and writing and I thought well these are some of the tools of the trade of the law, so I put myself through law school while working as a nurse, and when I got out I worked a couple years for other firms and then started my own practice in my home town, and it turned out to be a great way to raise kids, to have my own business and work near my husband, Dr. Michel (SP?) Davis, who is a psychologist and is a now a geriatric psychologist. When the kids were done with all that and went through college and I looked at what I would do next, because litigation which I did for 27 years is being on the battle field, I didn’t want to stay there the rest of my life. I looked at what else I loved to do, and I created an encore career consulting with people who have aging parents or who are professionals with aging clients. That’s what I’ve been doing for about the last 10 years, I really enjoy it, and I am on a mission to see what we can do to thwart elder abuse. 2:46 JIM: You know and that’s a tough one. One of the things that as a financial myself, you’ve got this privacy issue, and then you see a situation where you think someone is being abused, and it is really a tight rope that you walk on as a professional as to whether or not you can even blow the whistle. Do you see that? 3:06 CAROLYN: I see that as a common refrain among financial professionals, and I say look folks, it doesn’t need to be this way. Financial advising historically started with families, and if you are engaged with the families of your clients, however flawed those families may be, you’ve got to have someone that your client, who is aging, can rely on to help with decision making in the event that the older person begins to lose the ability to safely make decisions. The first problem is a lack of connection from the get-go when you have a new client, to engaging their family members and getting the client’s permission to share that financial information with them. That privacy consideration can be dealt with immediately. It can be dealt with in many ways, but it is not and should not be a barrier to keeping the elder safe. 3:56 JIM: I’m in Wisconsin. I had a planning attorney that I work with design a document with the estate planning documents, where when everybody is of their sound mind they sign off a permission slip for me that if I feel that they’re in danger or something is happening that I have the right to go consult with some of their other family members, because I’ve had situations where clients just get very upset and say no you’re not to talk to anybody about this. It really puts you in a dilemma because of the privacy rules and everything else. Do you have something similar to that that you’ve seen out in California? 4:32 CAROLYN: Absolutely. We see it all over the country, because I speak across the country and I deal with financial advisors and clients all over the place. I’m speaking to a guy today from Brazil whose mother is in Ohio, so this is a universal problem, okay. I think that it takes a legally sufficient document for that privacy, let’s call it a privacy waiver. Because the rules are in place but you can get around those rules by getting permission. That’s the basic concept and it’s quite simple. However, a lot of people are not clear, a lot of people who are the client and a lot of people who are the advisor are not clear about how to make that document happen, what does it mean that it’s legally sufficient? If you have a lawyer drafting it for you Jim, great, but a lot of other people in your kind of profession don’t do that, and then they think that they’re just going to get some letter after the fact, hastily drafted by themselves, that’s easily questioned. It’s not uniform; it doesn’t have the right language. If you don’t know the law you might not know what to put in it, but it’s a very, very important step in keeping clients safe, because a lot of people don’t understand when they are losing their capacity to make safe financial decisions. 5:39 JIM: There’s probably nobody better than a trusted financial professional that’s dealing with a lot of your planning, when they see something out of whack, you know all of a sudden extra money being drawn out or other issues that might affect it, making big changes that there was nothing discussed. Usually we can see the warning signs, and that’s a good person to have, but it’s always good to have a team. You want to have the attorneys, the accountants. You might want to have your financial planner, maybe any number of those folks, or if you have a trusted person at the bank, some different people that you give the right to that if the warning bell goes off they could do something. We’ve talked about this financial abuse of elders, which I unfortunately see way too often. How big of a problem is it? 6:23 CAROLYN: Enormous. The government studies this a long time ago, the National Center on Elder Abuse, and they came up with a statistic that it was $2.9 billion a year stolen from elders; however, much more recently a private company, which has some very good things in it, including a credit card that you can limit for anyone who is at risk, they did a study, a much more comprehensive study, with researchers from Stanford University on their team, they came up with a figure of $36.4 billion a year stolen from elders in this country. That’s every year, so indeed the problem is enormous. Some people call it the crime of the century. Everyone needs to be aware of it, and financial planners, as you say, are in a unique position because you know the client. You see what’s happening to their money. Very few other people have that kind of knowledge of the client, and it’s a very important relationship, and I think a unique opportunity for the financial professional to sound the alarm as you say, but no everybody knows how to look for those warning signs in the same way. We do have a tool for advisors or for anybody to use, and it’s a diminished capacity checklist. It’s on my website at aginginvestor.com, it’s free, and I recommend that families, as well as advisors use that so that you have a uniform way of describing the problem and that you can then justify making that call to the third party, because you have evidence that it was necessary. 7:51 JIM: So who have you found to be the most common financial abusers of elders? 7:56 CAROLYN: There’s no question, and all of the research data is the same, that by far the most common abusers are family members. Typically the adult children of the elder, adult children know the elder, know their vulnerabilities, have a relationship of trust, and it’s easy for them to exercise what we call undue influence over the elder and take things from them. Some of them feel entitled, some of them are resentful because they don’t have a good relationship with the parent and it’s payback, sometimes they’re just greedy, Jim. I mean there are a lot of reasons. No one has really identified to all of them, but I say it all boils down to greed and opportunity, because older people are trusting and vulnerable, they need the help, they’re victimized readily, and they’re too embarrassed to report it. 8:42 JIM: Well let’s take a short break and when we come back, let’s talk about some of the solutions that families can implement. Please stay tuned. 8:49 [BREAK] 9:48 JIM: Welcome back as we continue to visit with Carolyn Rosenblatt; nurse, attorney, and now advisor around the country to help families avoid elder abuse, especially when it comes to financial elder abuse, which is a much bigger problem, I think, than what most people realize. One thing I found a while back, I had a client, she just had Medicare supplement insurance with me. You know I tried to talk to her about investing money with me and she was really content with where she was at. She was pretty much stubborn, she didn’t want to consider anything I talked about having, family members to look at it, because I really felt I could improve her situation. I was just shocked to find out that she was taken for about $15,000 with some scam saying that there was some kind of fraud at the bank with social security checks and we want you to withdraw some cash to see and then bring it out and all that, and somehow she fell for this scam. It went around the town that I was in and quite a few people got taken for this. Now she actually admitted that this happened, but I think a lot of them are too embarrassed to admit that it’s happening. Do you find that a lot? 10:56 CAROLYN: Yes, very much so. When it’s a family member the aging parent feels guilty. This is the son I raised, this is the daughter I raised, how could they do this. I remember, Jim, looking a 93-year-old woman in the eye, saying to her after I learned what had happened. She had already been ripped off by somebody else before, but now her son, who was her designated agent on the power of attorney, a son that she loved and trusted very much, he had taken money out of her account, and it was over $10,000, and that was just the beginning. He had designs on getting her house too. I looked her in the eye and I said look, your son has stolen money from your account. You told me he did that without your permission. I said that is a crime, it could be reported. She looked me in the eye and said I don’t want my son prosecuted. Okay, so we have a willing victim, and that is often the case with elders. They say that only one out of eleven, or four out of fifty, I mean you can look at different statistics, are actually reported to authorities and even fewer of those are prosecuted. People are getting away with this crime because of the population they’re stealing from and that’s why they keep doing it, it’s so easy. 12:07 JIM: I come from a German heritage, and the community that we’re from, for years it was everything was held close to the vest. Parents did not talk to their kids, everything was private, you didn’t find out what they had until the reading of the will, and we’re a very conservative community so we have people living in rags with millions of dollars sometimes and it’s very common. We get very involved in the estate planning process with the client’s attorney, we work with their CPA, we go through all this as kind of a team, and we implemented a process a while back of family meetings, so there’s open communication, the whole family gets to hear what’s going on, because I look at those as the soldiers, the eyes and ears on the ground so to speak. I think that’s one way that you can help prevent maybe somewhat of theft by having some communication with all the family members so everybody knows what’s going on. What are some of the other things? You talk about a checklist and having their financial professional maybe step in if they see some kind of warning sign. What are some of the other steps that you see that families can use to protect themselves? 13:13 CAROLYN: Well first let me comment on your concept of family meetings, which is excellent. Not everyone does that. A lot of people don’t do that; don’t know how to do it. At aginginvestor.com we have a video course on how to do a successful family meeting, so I encourage any advisors or families who have advisors listening to get on with that, and it’s a great thing you’re doing and I appreciate hearing it. To the question of what other people can do, I think a lot of people in our society have a kind of denial going on about the aging process. It’s unfortunate, but we have a very negative bias about aging in all part of our media. Everything is about turn back the clock, defeat aging, defy aging, on and on and on as if aging itself were so terrible. It’s not. It’s a natural part of life, it can be very enriched and enriching for the families of people who are older, but because of this sort of negative mindset, we are in denial ourselves, the adult children and family members of elders, about the fact that they may be declining, so we treat them at 85 as if they were 65 or 55 and they’re not. Even if they do not suffer from cognitive impairment, if their brains are not suffering from the beginnings of dementia, they still need more close watching by us. I have a 94 year old mother-in-law. Fortunately for my husband, a psychologist, and me, she’s very open, but she has been taken advantage of before by her own financial advisor. We stopped that, got rid of the advisor, got the money back, but we pay attention. My husband looks at her statements every month online, and even if your parent does not have computer skills or isn’t comfortable going online, the adult child can gain access to the account and watch it every week to see what’s going on. That’s something I strongly encourage families to do because it is just another way to keeping your parents safe. They don’t have to give you access to the money, but giving you access to the information is usually something that they’re willing to accept, because first of all they don’t understand how that works if they use a computer, but if they do they may be comfortable letting you kind of watch over them. If you have a less than ideal relationship with your aging parent, I think the approach to allowing access is really best pitched by saying look, I know you don’t want to be a burden to me mom, dad, grandma, and it would be a burden to me if you were harmed and I had to try to fix that after the fact. If you let me see what’s there at least I can try to protect you and that’s not making a burden for me. That pitch sometimes is much more successful than saying hey what if you get dementia, gee, you know, people don’t want to hear that. 15:54 JIM: Yeah, amen to that. I know it’s always a difficult situation, but I find if people care enough, you got to be persistent maybe a little bit, but I found with clients, and when I engage with them, I said look I’m going to let you know right now there’s going to be a family meeting. It may not be right away but at some point in time when we feel the timing’s right we’ll discuss just how much detail we get into, whatever you feel comfortable with and we’re going to do this. We’ve been doing that for a number of years now and it’s really paid big dividends. The best part about it is I do have those eyes and ears on the ground, and I’ll have some of the kids come hey I think this is happening or that’s happening, and we can get together with the parents and kind of talk through things and figure it out, and a lot of times thwart what could have been a serious offense against them of someone taking advantage of their situation. 16:45 CAROLYN: Yes, that’s very, very good. I think it’s important that there be, as you say, a team approach because sometimes the abuser is the favored child, the beloved daughter or son, the nephew, the cousin, somebody who has access, and the other family members are suspicious of that person but they need to be empowered with information so that they can stop the elder from getting ripped off. I mean there’ve been daughters who have taken money and bought a house for cash and the elder is going to need more healthcare and more homecare, and there is no more money because it’s been tied up by this unscrupulous child who’s greedily taking it and making themselves rich. No, I mean other family members need to know what’s there so that they can protect this person from any no so upstanding family member who might try to help themselves to the wealth. 17:32 JIM: Recently I read or was at a seminar, I can’t remember where I heard it, but they talked about the age on average where people start diminishing capacity for dealing with financial issues, and it’s like in the early to mid-60s, you know, and I know a lot of people that seem sharp as a whip even at 80 or 90, but if we know that this could be happening or would be happening, when would be the time to do this, probably as you’re getting into the 60s and the kids are now getting to the age where they at least have a good head on their shoulders. 18:03 CAROLYN: Yeah, and I say pick a date, pick a birthdate, pick an occasion. If you want to bring this subject up and say when will we have this family meeting, when we will have this discussion, when will we share the information about the assets that exist within the parents portfolios, say it’s at 60 on their birthday, or it’s the date that they retire, or it’s the date that they celebrate a certain anniversary, or the birth of a grandchild, some occasion it will serve as a handy excuse to do it, but it should be done consistently with all clients. Families ought to expect to do that by a certain time. It’s not that everybody is losing their marbles starting at 60. I’m in my late 60s myself, but what I will say is that we know that the risk of Alzheimer’s disease, which will destroy a person’s ability to make sound financial decisions, that risk begins to double about every five years starting at age 65. By the time we reach the age of 85 and many, many people are living past 85 these days, the risk of Alzheimer’s disease is one in three. Those are pretty high odds that something is wrong, and financial judgement, Jim, is eroded first. Of all the things that we have as capabilities of the intellect, financial ability goes first with this brain disease. We can just be more watchful, be more compassionate, be kinder, and be vigilant to try to protect the loved one from every nefarious person who’s out there trying to rip them off. 19:31 JIM: I had a grandmother pass away with Alzheimer’s, I had a grandfather on the other side pass away with Alzheimer’s, and here just a couple days ago we learned at the recording of this, we learned of Gene Wilder, who was from my home time, died of Alzheimer’s, President Regan died of Alzheimer’s, I mean if people think it’s not going to happen to them they need to wake up. The possibilities are there and you need to protect yourself. This has been great, Carolyn. Share with the audience before we wrap up the books that you’ve written as resources and how can people get them. 20:03 CAROLYN: Sure, thank you. For families I have a book called The Family Guide to Aging Parents, it’s published by Familius Press, it is available on my website. I have two sites, agingparents.com and aginginvestor.com, it’s also on Amazon, and the title is The Family Guide to Aging Parents. That covers the topic of how to approach the subject with your aging loved ones, what you need to talk about. It covers a lot of things including the care needs of elders and how much they cost and what we can do to protect everyone from abuse, so that’s a pretty comprehensive thing that is easy for people to get. It’s $29.95. Then we have for professionals, especially financially advisor, Succeed with Senior Clients, and it’s a financial advisors guide to best practices, and it talks about some of these same subjects from the professional’s point of view. What do we say to our clients? What do we need to do when we see abuse? How do we get around this privacy problem? What kind of document do I need if I’m trying to break past this problem of privacy? Then we deal with the other problem which is really everybody can get impaired, including financial professionals, so how do we address this among our own colleagues. That is also available at aginginvestor.com. That’s aginginvestor.com my website, and it’s available on Amazon as well. 21:25 JIM: Well Carolyn, this has been fantastic, and it’s a subject that none of us want to talk about. It’s the big elephant in the room, but it needs to be talked about, and when you see the staggering statistics of how many people are affected by this, and I think they’re probably even short on that. I’ve seen it so many times. I heard a story of a gentleman that was suffering from dementia when his wife died, the kids brought him home and closed all the bank accounts, you know they had ten different accounts, just closed them all, didn’t really look at the records, and then when he passed away they were going through cleaning his stuff and found out that he had $500,000 death benefit on his life insurance that lapsed because they terminated all the bank accounts, there was no forwarding address, and it was just timing that they weren’t made aware of that. That’s just another example. I had another client who two years before needing nursing insisted he was going to cancel his nursing home policy because he was healthy and he wasn’t going to live in a nursing home, and here he had paid premiums for 15 years and decided to quit and wouldn’t let me talk to his kids. I mean who knows if his mind was right or not, I don’t know, but man if I would have had a permission slip signed early I could have talked to his kids. His kids were all in a position they would have paid for it for him, and then to see how they dealt with it afterwards it just pulls on the heartstrings. It’s important for everybody listening out here, planning goes beyond just investing in an account and setting up your estate plan, you need to make sure that you’ve got a Plan B in place to help protect yourself when you’re not able to protect yourself. Thanks again, Carolyn. 23:02 CAROLYN: You are welcome. I’ll leave you with several watch words Jim. First of all for your audience, be watchful, be vigilant, our elders need protection. Next one, communicate more. The third saying, include the financial professional; it’s an invaluable help to all of you. 23:20 JIM: Thanks Carolyn, appreciate that, we’ll have to have you back again soon. 23:24 CAROLYN: Alright, take good care, bye bye now.