Protecting Our Aging Population: Recognizing and Preventing Elder Financial Abuse

The American public is aging at an unprecedented rate. Back in 1985, adults aged 65 and older made up just 11% of the population. Today, this figure is closer to 20%. (Source: Institute on Aging) With an average of 10,000 Americans turning 65 every day, this rapid increase in our elderly population is expected to continue until around 2030. This trend also means that more Americans will live beyond age 85, a milestone after which vulnerabilities often increase, particularly in terms of financial exploitation.

Cognitive and physical changes naturally accompany aging, which can, unfortunately, put elderly individuals at higher risk for elder financial abuse. Experts report that more than 7 million people age 65 or older have dementia, and suggest that number is increasing. (Source: Population Reference Bureau Fact Sheet: U.S. Dementia Trends) The challenges that come with diminished mental capacity can make financial management and decision-making difficult.

What Is Elder Financial Abuse?

Elder financial abuse is the illegal or improper use of an elder’s funds, property, or assets. This abuse can happen due to declining physical or cognitive abilities, and it may involve other individuals or even self-imposed financial harm when judgment becomes impaired.

Signs of Diminished Capacity

Being aware of the signs of diminished capacity is essential for families, friends, and advisors working to protect elderly individuals. Here are common indicators:

• Memory loss, disorientation, or frequently misplacing items
• Difficulty with communication, abstract thinking, or completing simple tasks
• Noticeable changes in personality or increased mood swings
• Greater passiveness or poor judgment in decision-making

Red Flags of Elder Financial Abuse

Recognizing red flags can help you and your loved ones stay alert to potential issues. Common warning signs include:

• Sudden or unusual behavioral changes
• Suspicious signatures or abrupt changes in signing style
• Uncharacteristic cash flows, transfers, withdrawals, or new debt
• Unexpected changes in legal documents, like a Power of Attorney
• Sudden shifts in professional advisors (e.g., CPA, attorney, or physician)

Coldstream’s Commitment to Protecting Elderly Clients

Coldstream Wealth Management is dedicated to identifying the signs of elder financial abuse and diminished capacity to protect our clients. Our team is trained to recognize these red flags, report suspected abuse as required and keep an eye out for signs that may signal a client is at risk. We are also committed to documenting interactions that may suggest mental capacity issues and ensuring that client interests are safeguarded.

Coldstream’s Senior Client Protocols

If a Coldstream employee identifies potential signs of diminished capacity or elder financial abuse involving a client, our Compliance team is immediately informed. This communication allows us to document the situation and take suitable steps, which may include increased monitoring, involving a trusted contact, or even alerting local authorities when necessary.

Coldstream’s Best Practices

To provide clients and their families with an additional layer of protection, we recommend the following practices:

• Complete a Trusted Contact Form at Age 65 or Sooner
  Clients can sign a Trusted Contact Form to guide how we handle their accounts if signs of diminished capacity arise. We also recommend completing a similar form with the custodian of their accounts, such as Charles Schwab or Fidelity.
• Update Your Trusted Contact
  If your designated Trusted Contact changes, notify us so we can keep our records current and paperwork updated.
• Power of Attorney Considerations
  A Trusted Contact can’t transact in financial accounts without Power of Attorney. We encourage clients to review their estate plan regularly, including Power of Attorney documents. Coldstream may request copies of these documents to assist in safeguarding your wishes.

Additional Resources for Families and Caregivers

For those interested in planning ahead and learning more about elder care, here are some resources that may be helpful:

• Dementia Support Recommendations
  Coldstream’s resources guide can be helpful for those impacted by dementia.
• “Dementia Beyond Disease” by Dr. G. Allen Power
  A highly recommended read for families and clients, with insights into dementia.
• “Being Mortal” by Atul Gawande
  This book offers a compassionate look at aging, health, and family decision-making.

Our commitment at Coldstream is to support clients in all stages of life, ensuring their financial security and protection from exploitation. By staying vigilant and taking a proactive approach, we can all play a part in protecting the rights and well-being of the elderly in our lives.

*All of Coldstream’s staff shall attain the required licenses and designations necessary for his/her position. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP® and Certified Financial Planner™ in the U.S.