Money Matters

Control over money is often a fraught issue within families. No one likes to cede control over their money and most elder abuse is committed by an older person’s own family members. Nonetheless, there usually comes a time when an older person needs to cede some control over his or her financial accounts to a trusted family member. The need may arise gradually due to mental deterioration or suddenly if someone is hospitalized or the victim of a scam or fraud. At the very least, someone should have a Power of Attorney granting authority to manage financial matters in the event of incapacity. However, a POA is of limited use without details on financial accounts and what bills need paying.

Taking Control Gradually:

When an older person resists ceding control, one should try a graduated approach, starting with disclosure, moving up to account alerts, then online access and monitoring, limited control of investments/savings and finally full control.

Documenting Accounts

A non-threatening start is to request and document account details for all bank and investment accounts, including contact information, “just in case”. Also determine how accounts are funded. Are Social Security checks directly deposited? Are there other sources of income such as automatic monthly transfers from a brokerage to a bank account? It’s very helpful to get copies of a couple months of bank statements to get a sense of inflows and outflows.

Next, one should compile details on all required bill payments. Again, monthly bank statements are a good place to start. It may be easiest to get copies of all monthly billing statements showing account details and contact numbers and store them in a file. Or, one can create a document or Note with account details. Especially important is to have health insurance policy and contact numbers readily accessible.

We recommend you also move as much of your loved one’s finances online as possible. Go paperless and consider setting up direct debit auto-pay for recurring bills. Ask your loved one if it’s okay for e-bills to be sent to you so they will not have to worry about them. We recently moved a relative to e-statements from his bank. He was initially skeptical and pointed to a file cabinet full of old statements and checks. Once he saw that his bank had everything online, he happily shredded all his old bank statements and checks.

Setting Account Alerts

The next step up the ladder of control is setting up account alerts. Bank accounts will need to be enabled for online banking, however, your loved one need not share his or her password for you to set up account alerts (though it this would be a good time to ask if you can share online access). Once logged into an account, most online banking portals allow one to set up account alerts and have these directed to your email address and/or cell number. We recommend the following alerts at a minimum:

1.     Account balance falling below some threshold (to prevent account being overdrawn)

2.     Insufficient funds (to minimize returned check and overdraft fees)

3.     Any wire transfer to an external account (potential fraud)

4.     External transfer exceeding some threshold (potential fraud)

5.     Email or phone number change (potential identity theft)

Other useful alerts include:

1.     Withdrawal/payment above some threshold

2.     Credit or debit card payment without card being present (potential fraud)

3.     Debit card transaction exceeding some threshold

4.     ATM withdrawal exceeding some threshold

Segregating Accounts

An observant bank teller recently stopped a relative from wiring most of his life savings to a fraudster. The relative had liquidated his retirement account and transferred the proceeds to his bank account. To protect against this happening in the future, we split the relative’s funds between a savings account and a checking/debit account. The relative retains full control over the checking/debit account which he uses for purchases and ATM withdrawals. However, the bulk of his funds reside in the savings account to which he does not have direct access. Alerts have been set up and the checking/debit account is funded when needed by transfers from the savings account. As a further protection, transfers from the savings account can only be made to the related checking account. Most banks should be able to establish similar arrangements, though we found it easiest working with a community bank that provided personal service.

For brokerage accounts and larger bank accounts, it should be possible to protect assets by requiring two signatures for any transaction above an agreed limit. This limits the discretionary authority of the loved one while also constraining the second signatory.

Assuming Full Control

Eventually, someone may need to assume full control over a loved one’s finances. If one has completed the graduated steps detailed above, this should be a simple process. If the loved one is willing/able to disclose his or her online account login credentials and one has a valid Power of Attorney, one can quickly assume effective control by logging on and changing passwords. For good form sake, one should also contact banks and brokerages and provide a copy of the Power of Attorney and supply any requested documentation. If you haven’t already, you should establish access to all other accounts (especially Social Security and health insurance providers) and direct all account statements and bills to your email address

Protecting Against Scams and Fraud

Seniors are disproportionately victims of scams and fraud, as detailed in recordsfinder’s article Senior Financial Scams: How are the Elderly Targeted? Seniors are more likely to be at home, answer their phones and read their mail. They are also more likely to talk to strangers. Even those on their guard can be duped. A relative was very good not responding to offers and not clicking on attachments to emails - until he wasn’t. One offer seemed too good to pass up. Fortunately, a bank teller intervened, limiting his loss. But, it took several weeks and hours on the phone to set things straight. We had to change his phone number, email address, bank accounts, and redirect numerous direct deposit and bill payments. Many lessons learned.

Some good resources for fraud prevention are the National Council on Aging’s 8 Tips for How Seniors Can Protect Themselves Against Money Scams; SafetyDetectives’ The Ultimate Internet Safety Guide for Seniors, and aPlaceforMom’s article on Senior Fraud Prevention. However, as experienced with my relative, forewarned does not always mean forearmed. One should consider other preventative measures.