Increasingly Sad, Costly Picture of Elder Financial Abuse
It used to be that Theresa Lyons, a single mother of three children, bartered with the elderly relatives in her family. "My aging mother and her sister were helping me pay the rent, gas and electricity bills, and I would take them out to eat and drive them around to where they needed to go."
That was until 2011 when Blanca Tozzo, Lyons's aunt, passed away and the Department of Children and Families placed her mother, Carmen Hernandez Tozzo, in a retirement home.
"I have no access to my mom's finances," Lyons told MainStreet. "The only way I can get any money is through a subpoena and blessings from the probate judge." Once Tozzo became a ward of the state under a professional guardian, Lyons said most of her mother's $100,000 in retirement savings was drained. "When I complained, my visitation was taken away," said Lyons, who is in her 50s.
Huge Losses Found
Lyons's mother is among the senior citizens losing some $36.48 billion each year to elder financial abuse, according to a True Link study called Friendly Grandparent Syndrome. "These numbers indicate how the guardianship industry destroys the legitimate inter-generational transfer of wealth and in the process irreparably damages entire generations of innocent families," said Dr. Sam Sugar, founder of the Americans Against Abusive Probate Guardianship in Miami.
"Elder financial abuse is probably the most unreported crime in the country," said Jack Halpern, CEO of My Elder Advocate, a franchise that works with families to solve elder care-related crises.
Some $16.9 billion of these losses a year comes from deceptive tactics designed to take advantage of older Americans, according to the 2015 True Link Report on Financial Elder Abuse. "This crime is shielded from public view because the criminal is most often a lawyer in probate court," said Kristi Hood, author of the new book "Probate Pirates." "The probate pirate attorney either directly or indirectly finds a way to pick the pockets of the elderly ward of the state, taking money that should be used to care for the person or charging their adult children exorbitant legal fees for help."
Uncannily similar to organized crime defined in the Racketeer Influenced and Corrupt Organizations Act of 1970, probate piracy can involve the involuntary redistribution of assets -- also known as property poaching -- with the elderly person becoming the enterprise that is defrauded.
'Potential Gold Mine'
"Unscrupulous charities, probate courts, home repair scammers, retirement homes, neighbors and even distant family members know that a friendly senior with cognitive issues is a potential gold mine," said Kai Stinchcombe, CEO and founder of True Link.
Baby boomers and Gen X-ers are reportedly expected to be the recipients of $41 trillion from their World War II generation parents as they pass away. "The transfer of wealth is going to last for the next 30 to 40 years," said Dan McElwee, certified financial planner and executive vice president with Ventura Wealth Management. And that money is tempting. "Those of us working in the field have long known that the United States is in the throes of an elder financial abuse epidemic," said Shawna Reeves, director of elder abuse prevention at the Institute of Aging.
Family members can report the fraud to their local district attorney's office, consumer protection agency, the state attorney general and even the local FBI office. "We are all affected by these scams," Halpern said. "When an elder loses their assets to scam and they need care, they will have to look to welfare and Medicaid."