The American Institute of Certified Public Accountants revealed that diminished capacity can contribute to elderly residents becoming victims of fraud. A survey of CPA financial planners also found that a swindle influences a senior citizen’s stress levels and emotions more than it does his or her financial circumstances.
As reported by CPA Practice Advisor, 68% of survey respondents stated that fraud substantially affected their older clients and had a significant impact on their emotional health. Only 32% claimed that fraud influenced their clients’ finances more negatively than their emotions. Respondents also stated 20% of their clients have ignored the issue of diminished capacity.
Many older Americans begin to develop a close relationship with a CPA or financial planner before showing signs of cognitive decline. Families who establish a network with an elderly relative’s professional advisors and caretakers may have an opportunity to recognize the risks of fraud quickly enough to prevent it.
How the scammers operate
According to the AICPA, the internet and the telephone played a role in the highest number of scams. Online dating has given perpetrators a platform to target lonely senior citizens. By using false photographs and stories of financial hardship, individuals foster intimate relationships. Some have lured unsuspecting elders into emailing them money. The funds often go to an individual overseas.
Other common fraud schemes elderly clients may fall victim to include identity theft, stolen credit cards and abuse by an in-home caretaker. Senior citizens may have a difficult time telling their relatives “no” when they ask for money. Giving away small sums of money over time, however, can add up to an overall amount that could significantly affect an elderly relative’s financial stability.
Powers of attorney to curtail financial abuse
Assigning powers of attorney to a trusted relative may help families curtail fraud and abuse. The financial planners surveyed by the AICPA helped create vital and detailed legal instructions for 92% of their clients. A POA grants a trusted individual the authority to take control of an elderly relative’s health care, financial and legal matters when he or she shows signs of diminished capacity.