30 Apr 2018
We’ve all heard the horror stories of seniors losing everything because they relied on, and were duped by, people in trusted positions. This blog looks at the warning signs that something may not be right.
The amount of wealth that is soon to be passed from one generation to the next is significant. The concern is whether the testamentary wishes of those who own this wealth are being met. According to Vancouver’s Rennie Intelligence Division, $355 billion of free equity in homes is currently owned in Greater Vancouver, for example, which will be passed to the next generation in the foreseeable future. That doesn’t include the other assets a person may have accumulated over time. An unwary elderly person with significant wealth can attract the interest of people with nefarious intentions, some of whom may be “trusted” confidantes or even family members. The potential for elder financial abuse is significant.
HOW IT CAN START
A trusted person (child, caregiver, advisor, family member, tradesperson, phishing scammer) becomes close to the elderly person, who often needs some form of assistance with the conduct of his/her daily life. That trusted person, in time, then begins to ask to “help” the elderly person with his/her personal financial matters.
The consequences of any of the signs listed below could result in financial loss if entered into without the full understanding of the elderly person. Ultimately, some of the elderly person's assets may go to someone whom they had inappropriately trusted with their finances, contrary to their testamentary wishes.
Families with elderly members should be aware of the clues that there may be elder financial abuse going on, and they should investigate anything that seems suspicious. A few of the ways in which a trusted person may gain access to the elderly person’s assets include:
- adding joint tenancy on residences, investment and bank accounts
- providing power of attorney or signing rights over assets
- signing over assets or control of assets to others
- co-signing on loans, often for family members
Some ways to protect the elderly person and their family from elder financial abuse are to:
- understand the assets owned by the elderly person and the ownership structure
- document what his/her testamentary wishes are intended to be (usually defined in a will)
- seek qualified (legal) advice before signing over assets, adding a joint tenant or providing co-signing authority
Ensure that, if any of the above arrangements are intended to be used for assets, the intent of ownership structure (including beneficial ownership and who will receive beneficial ownership upon death), is thoroughly documented. If needed, seek a trusted representative such as a professional trust company.
Michael Louie, CPA, CA