It’s a common problem these days, with nearly one in seven older people diagnosed with some kind of dementia. These folks lose their financial judgment early in the process of cognitive decline. Caring family members get alarmed, and try to reason with their impaired elder. That leads to conflict, as reason fails. Is there a solution?
Here at AgingParents.com, we hear about this most often when the elder is in their 80s. The adult child seeks advice after discovering that Mom or Dad is getting ripped off by someone, or an institution, or they are wildly spending beyond their means. Financial abuse is a recurring issue. The elder falls for an internet scam or one of the notorious romance scams. The predators on the internet know exactly what they’re doing. They cleverly seek out the vulnerable person, and seduce them into believing that they are for real.
Case Study
The Reckless Dad
In one case at AgingParents.com, the Dad, who is 82, had already been taken advantage of by a person he met through social media. The person, posing as a woman, kept expressing interest in Dad, and he loved the attention. He gave “her” money when she pretended to need it. He felt important. $250,000 dollars later, his kids found out and were furious with him. Fortunately, he had been responsible enough earlier to do his estate planning and had appointed his two adult children as his agents with authority on his Durable Power of Attorney and made them successors on his trust. The siblings always got along and were able to block him from his investment accounts and bank accounts. Except one. Dad himself had been a professional financial manager and it was very awkward to get him to give up his own financial management. They and Dad fought about this for some time.
A Life Changing Move
Dad’s loneliness was a huge problem and why he fell for romance scams. The kids were able to get him into a very good assisted living home where his social life vastly improved. He got attention from ladies. He got his medications and nourishing meals there, took outings and was stable and seemingly okay. But then, he wanted to take a trip alone to the coast where he still had a condo the kids had not yet sold. That was a dangerous idea. He could easily be scammed again if out on his own. They had not closed the remaining bank account to which Dad had full access and a high limit credit card. “What is stopping you from finishing the task of protecting him?” we asked. They didn’t want to make him mad, they said.
The Solution
Our advice was to close that bank account, even if he got mad, and open another with both adult children’s names on it. They could put a limited amount in it for Dad to spend, but not enough to go off on unattended travel which was clearly a setup for any fraudster. Dad was impulsive and picked up women in restaurants and bars. Anyone could easily seize on his being alone and vulnerable and get money from him.
The adult children had to stop him from freely using his credit card too. A limited one, Truelink, allows spending on a debit card with all transactions visible in real time to the family, but only authorizes use in named, specific places. The kids got instruction in how get and use the card to permit some freedom but still keep him financially safer.
Dad Got Mad
Of course, Dad did not like any of these restrictions. He railed against them, but with the legal authority the kids had, they could take these steps. He had been evaluated by a clinical psychologist who determined that he did not have financial capacity to make safe decisions about money. With that report in his kids’ hands, he could not legally get rid of the Power of Attorney. Further, he would not have the money available to find an attorney to try to fight them, even if he was convincing in his story that he was perfectly fine and needed to change the document. No lawyer would work for him for free. The Truelink card would not work at a lawyer’s office. His estate planning and doctor’s report did what they were supposed to do: protect him from harm.
The Takeaways
It seems to be a common problem that adult children do not want to make the aging parent mad. Consider that the impaired the elder who has already been blatantly defrauded is at continuing risk. We suggest that upsetting a reckless spending, formerly abused aging parent should be cut off from free access to unlimited funds and it’s worth it. Their anger is a better risk than the family’s anger when their parent experiences financial abuse. One can work out anger over time and sometimes with help. But generally, one cannot recover money stolen by fraud against an elder.
Finally, when the fear of upsetting the elder boils down to “what if Dad disinherits us?”, remember that a family’s legal authority can also stop them from changing wills and trusts. An estate plan involves financial assets. The impaired elder should not be making financial decisions after it is documented that their ability to do this safely is lost. There is more to say on this but for this piece, we’ll stick to what we see most often.
If this scenario reminds you of your aging loved one, and they are showing signs of reckless spending, look now for what legal authority you have. A Durable Power of Attorney without restrictions in it can be your saving grace. Most of these documents allow broad authority for the appointed person to take financial decision-making authority away from the impaired person. Find out what your aging parent has done with their documents. The time to create, update or revise any legal documents they need and you will need is before they become cognitively impaired around money.