Understanding Financial Elder Abuse And Legal Remedies

Recent studies have placed a wide range of estimates on the prevalence of financial abuse, estimating the amount of theft upon our elderly between $2.9 billion to as high as $29 billion annually with many commentators suggesting that the actual number is somewhere in between. The effects of financial elder abuse could be devastating. It can mean the difference between enjoying a quality of life or a complete absence of quality care for individuals who count on their retirement savings to get them through their senior years. Recently published research suggests that approximately one of out of every five elderly citizens, age 60 and above will become a victim of financial exploitation during their lives.

Additional studies suggest that in any given year four to five percent of the entire elderly population, age 60 and above, will be a victim of financial abuse or exploitation.

Studies also suggest that contrary to popular notion, as high as 65 percent of the financial abuse against an elderly citizen is committed by a direct relative such as a spouse, child, or grandchild. Paid caregivers, often thought to be the main perpetrators of financial elder abuse, represent only 50 percent of all reported claims.

Studies have shown that nationally, about 60% of perpetrators of financial abuse are male in the age range of 30 to 59. Female perpetrators are slightly younger in the age range of 30 to 49.

In Hawaii, the informal anecdotal evidence suggests that the perpetrators are more equally balanced between males and females with only a slight majority being female perpetrators within an age range generally older than the national average: between 45 and 60 years of age.

Studies have shown through various documented research that the amount of unreported claims of financial elder abuse is as high as 44 times the amount of actual reported claims to such agencies as Adult Protective Services or other similar programs or authority. The implications for this are staggering. The public simply has little or no appreciation for the sheer magnitude of criminal conduct being committed against our elderly population.

As our population ages, the threat of financial elder abuse is even starker. Some studies have shown that for dementia patients, the rate of financial abuse committed against them ranges from two to three times that of the normal adult elderly population.

Given the fact that the prevalence of dementia in the elderly population age 75 to 85 is approximately one in every three, and almost one out of every two adults age 80 or greater, one can see that the pervasiveness of financial abuse committed against elderly individuals aged 75 and greater is breathtaking. In Hawaii there are approximately 277,000 adults age 60 or older. There 100,000 elderly individuals over the age of 75 and 30,000 adults at age 80 or higher. Given the dementia rates as cited above, and the incidence of financial abuse committed against dementia patients, we could expect to have not fewer than 3,000 cases of financial elder abuse per year and perhaps as high as 6,000 cases per year.

In 2015, the State of Hawaii Adult Protective Services Division reported a grand total of 265 reported cases of financial exploitation on elderly Hawaii citizens.

Although no known data is published for actual confirmed financial elder abuse cases, Adult Protective Services confirmed fewer than one out of every five cases of elder abuse and neglect in all forms in 2015. In fact, in 2015, only 194 reports of adult abuse and neglect were confirmed.

The implication of this data cannot be overdramatized. There are thousands of cases each year of financial abuse committed against elderly citizens in various forms, including but not limited to embezzlement, conversion, theft, fraudulent use of credit cards, improper home equity lines and mortgages, fraudulent deeds, improper use of joint bank and stock brokerage accounts, and fraudulent wills and trusts.

All our institutions within both the public and private sector, as well as social workers, courts, attorneys, and other individuals, need to become more vigilant than ever before as our elderly citizens become more vulnerable.

Most abuses are discovered when one family member realizes that another family member has been or is currently stealing from the elderly adult. The adult at that point is typically incapacitated and unable to handle his/her finances, requiring a conservatorship.

Oftentimes these battles are fought in the probate court and are difficult to obtain since allegations of wrongdoing and denials go back and forth and family members argue over who the conservator should be. Moreover, the perpetrator of the financial elder abuse has also given themselves a preferred position in the estate planning documents, such as larger post-death distributions, and have been named as trustee or personal representative of the incapacitated adult’s trust or will. The perpetrator may also be named as attorney-in-fact under the durable powers of attorney making it even more difficult to wrestle away control of the incapacitated adult’s finances from the perpetrator of financial elder abuse.

Alternatively, an interested person can seek the appoint of a guardian ad litem in probate or family court who then in turn brings a protective proceeding on behalf of the incapacitated adult. However, there is currently no direct statutory right for a child or other relative to directly bring a proceeding to stop financial elder abuse.

Hawaii Revised Statutes Section 346 contemplates that Adult Protective Services bring cases to stop financial elder abuse, however, this is rarely done.

In the case where a fraudulent will or trust has been procured while the incapacitated adult is alive, there is no clear authority on how to go about seeking an order from a court to invalidate these fraudulent estate planning documents.

There are many gaps in our statutory laws and, therefore, no quick and easy way for interested persons to stop and ameliorate financial elder abuse.