Financial exploitation: what it is and how to prevent it

Financial exploitation is the improper use of an adult’s funds, property or resources by another individual, including but not limited to, fraud, false pretenses, embezzlement, conspiracy, forgery, falsifying records, coerced property transfers or denial of access to assets. NY CLS Soc Serv § 473 (2020).

Financial exploitation is usually committed against a vulnerable person, generally the elderly or incapacitated. In New York, it is not criminalized unless it has been committed against a vulnerable elderly, incompetent or physically disabled person, and it involves physical injury or sexual contact. However, even without physical injury or sexual contact, the usual crimes of embezzlement and forgery, to name a few, apply in prosecuting financial exploitation. All suspicions of elderly abuse should be immediately reported to the police and your county’s Adult Protective Services (APS).

Factors considered

Generally, in order to determine whether there is financial exploitation, the following factors are considered: (a) cognitive impairment, due to illness such as Alzheimer’s, or taking medicines that can lead to temporary cognitive impairment; (b) memory problems; (c) loneliness and isolation; and (d) poor physical health, needing assistance in daily tasks.

Examples of financial exploitation

Financial exploitation can occur in many ways, and you must always look out for your elders because this could happen at any time to anyone, even if you feel your elder relative is mentally strong and sharp.

Here are some examples of financial exploitation:

An insurance agent convinces several older clients, after cultivating social relationships with them, to reinvest the proceeds of the matured annuities with her, knowing that there was possibility that the older clients would not have been alive anymore to see its maturity and/or that the older clients could have already used the proceeds for their retirement;

Within a week from meeting, a woman in her 50’s gets married to a man in his 70’s with Alzheimer’s and terminal cancer, and subsequently gets full sole control and access to the man’s bank account and pension fund;

Senior homeowners get a contractor and receive shoddy or incomplete work, or make a deposit and the contractor never shows up;

An 80-year old widow lends several amounts to a person who is a “new friend” who promises to pay her back, but never does, and as a result, the widow loses her home;

A 70-year old man, due to physical limitations, executes a financial power of attorney in favor of his son in order for the son to help him manage his daily needs, and yet the son uses the financial power of attorney to access his father’s funds for his own personal benefit.

Above are some ways of committing financial exploitation. Sometimes, it can be a gray area. For example, if one’s sister, who lives near the father, is made a joint owner of the bank account to help the father manage his daily needs, and makes withdrawals from the bank account supposedly for expenses used in assisting the father, is there financial exploitation? In the case of an older woman who got recently married late in life and sent large sums of money to the new husband’s adult child, is this exploitation or the right of the older woman to exercise autonomy in giving her money to whoever she pleases?

Preventing financial exploitation through guardianship

The best way to prevent financial exploitation is to talk to your older or disabled loved one and know what is going on in their life. As far as legal remedies, the most effective one is guardianship.

The best way to fight financial exploitation is to hire an attorney to petition the court for you to become your loved one’s guardian. While no one wants to think about their mother, father or other loved one not being able to make decisions for themselves, this can be the best way to secure that loved one’s finances. Becoming a guardian is the best way to stop someone who is taking advantage of a loved one financially, even if they are using a power of attorney.

Your attorney may recommend one or both types of guardianship. First, you can set up a guardianship over the elder’s financial affairs, such as paying bills or managing financial accounts. Second, you can set up a guardianship of a person for the elder. This type of guardianship would mean the petitioner would be getting the ability to make health care decisions for the person who is subject to the guardianship. The courts aim towards giving a person the ability to make decisions on their own as much as possible. For example, this can mean that if your parent is not able to handle his or her financial affairs but still can make their own medical decisions, only decisions about financial issues can be made.

Through petitioning for guardianship with the assistance of an attorney, you can help your elder gain control over his or her money. The first step is to have an emergency guardian appointed so that accounts can be frozen. This will keep your brother or sister or other relative or the elder’s caretaker from gaining access to your loved one’s money while the guardianship proceedings are going on. Once a guardian is appointed, the accounts can be under the guardian’s control, meaning that it would not be possible for a financial abuser to take any more money. You can also petition for a full accounting if the suspected abuser has been given power of attorney over your relative. This way, there is a better chance that you will find out where your loved one stands financially.

If you are far away and have an elder relative in need of help and you would like to ensure that the elder relative would not be susceptible to financial exploitation, consult with a lawyer. We at the Law Offices of Albert Goodwin are here for you. You can call us at 1-800-600-8267 or send us an email at [email protected].