W2191: Elder Financial Exploitation: Impact on Families

(Multistate Research Project)

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There is an increasing number of victims who suffer each year from financial exploitation by a family member holding Power of Attorney (POA), a problem destined to increase as the elderly population (over 60 years of age) worldwide is predicted to reach two billion by 2050 (Global Action on Aging, 2011). Financial exploitation, the third most frequent form of elder abuse, is defined as the illegal or improper use of an adult's resources for another's profit or advantage.

Characteristics of vulnerable elders: Exploitation occurs in different income classes, genders, ethnicities, and among vulnerable elders of different ages. Risk factors for elder financial exploitation include being the oldest of the old, especially those who are over age 70 and especially over 80; and/or those who have recently gone through a major life transition such as a sudden illness or loss of a loved one. They are more vulnerable if they are lonely, suffering from one or more cognitive and/or sensory impairments which can affect decision-making capacity, judgment, and memory, and/or experiencing limitations in daily living activities, all of which can create dependency on others (Moschis, Mosteller, and Choong, 2001; Rabiner, OKeeffe, and Brown, 2004). Those with visible and substantial assets (Rabiner, OKeefe, & Brown, 2006), such as their own homes, are more likely to suffer exploitation. Women make up the majority of elder victims of financial exploitation, perhaps because they live longer and are therefore, a larger proportion of the oldest of the old. They may be perceived as weak and vulnerable, they may be less familiar with their own finances, the decisions that need to be made, and the methods for handling financial transactions (including electronic banking), and thus may be more vulnerable to abuse. In addition, to complicate matters they may be even unaware that they are being exploited? (Rabiner, OKeefe, & Brown, 2006).

Characteristics of perpetrators: According to a MetLife study (2009), more than any other type of abuse, substantiated cases of financial abuse involve an adult child (60% of cases), grandchild (9.2%), or other relative (9.7%). Professionals (18%) and caregivers (20.2%) are also common perpetrators. Men and women commit exploitation at about the same rates, but mens abuses are more likely to be covered in the news media. Perpetrators are commonly 40-49 years old and may feel a sense of entitlement to the elders money and possessions belonging to a parent or elderly family member. Their sense of entitlement also may result from negative attitudes toward the older person. They may also assume consent to transfer assets that were not, in fact, given or they may take advantage of an elders vulnerabilities such as those described above to exert physical or emotional pressure or undue influence (that is, a deliberate effort to take control of the elders decision-making Rabiner et al, 2006, p. 54).

Conditions that create an environment for exploitation: Physical and social isolation such as living alone creates a vulnerable environment for an elder. A close relationship between the elder and the exploitive family member and previous abuse may lead an elder to think financial exploitation is normal and not a crime. Elders ignorance of who can help, embarrassment or shame, fear of retaliation or fear that exploitation may be seen as evidence of their own incompetence that could result in loss of independence through guardianship or institutionalization may also create reluctance about reporting exploitation and contribute to the perfect environment for financial exploitation (Dessin, 2003, p. 9; Rabiner et al, 2006, p. 54).

Consequences of elder financial exploitation:
Financial, cognitive, and physical status of elders can influence the size and scope of POA exploitation problems. The financial resources for wealthy elders may be sufficient for them to withstand the financial shock resulting from POA financial exploitation, whereas similar levels of abuse may leave others economically devastated. According to Rabiner, OKeeffe, and Brown (2004), losing assets that have been accumulated over a lifetime through hard work and deprivation can be devastating, with significant practical and psychological consequences to the victim (p. 57). Financial exploitation can also have physical and emotional consequences including a loss of a sense of security and trust. In sum, it can affect the overall quality and length of an elders life. Financial, cognitive, and physical status can influence the size and scope of POA exploitation problems. Along with the financial damage to the individual and the family, financial exploitation also increases the incidences of elders needing Medicaid and other forms of public support, thus creating direct costs to society. Additionally, such family betrayal often results in psychological trauma for family members, leaving those involved feeling that their world, family, sense of safety, and faith in life itself are permanently damaged (ASAAPS, 2005, p. 1). Other family members may be concerned about whom to trust when they need a financial representative after such an experience.
POA: Whats the Problem? Many financial planners recommend establishing a power of attorney (POA) document to assist in legal and financial transactions should individuals become incapacitated. POA can help the elderly manage their finances and maintain some level of independence. However, since Power of Attorney documents often give another person complete control over anothers finances, it can create a perfect storm for exploitation when an elder unwittingly gives powers of attorney to an untrustworthy individual. In addition, weak protective measures and limited oversight allow abuses to occur.
Prevalence. It is difficult to estimate incidences (number of new cases in a particular period of time) or prevalence (total number of cases at a given point in time) (Rabiner, OKeeffe, and Brown, 2004, p. 55) because there is no federal agency or reporting system that collects incidences and prevalence of elder financial exploitation. Within states, there are no agencies that compile data across all the state agencies that handle different types of elder exploitation in all the settings in which they live (American Society of Adult Abuse Professionals and Survivors [ASAAPS], 2005, p. 4). There have been a few state-level studies that have tried to identify the extent of the problem. There is no system that gathers data directly from elders and their families. In relation to prevalence of elder financial exploitation, several recent national studies of elder maltreatment (Acierno, Hernandez, Amstadter, Resnick, Steve, & Muzzy, 2010; Laumann, Leitsch, & Waite, 2008; Lowenstein, Eisikovits, Band-Winterstien, & Enosh, 2009) have found that while elder neglect is the most common form of elder maltreatment (with rates of neglect from 5.9% to 18%), financial exploitation (FE) is the next most common form of maltreatment. Rates in two U.S. national samples were 3.5% and 5.2%, and a similar rate of financial exploitation (6.4%) was reported in a national sample of Israeli elders (Lowenstein, et al, 2009).

Conceptual Framework: It is also difficult to know just how many elders are exploited because non-reporting of elder abuse may be as high as forty-four cases for every one reported (Lachs et al, 2011), preventing accurate data collection. Anecdotal evidence seems to indicate that underreporting stems from shame, close relationships with the perpetrator, fear of isolation, lack of awareness of exploitation and unfamiliarity with resources and remedies concerning which factors increase the likelihood of POA abuse.

Challenges: There are many challenges for researchers and practitioners who want to address this problem in addition to the privacy and secrecy issues mentioned above. Other challenges include lack of agreement (both in research and state laws) about what defines elder exploitation, which hinders the ability to understand this problem.

In addition, family systems are complex and varied in terms of such things as established patterns; meanings and assumptions about money, gifting and exchange patterns, relationships developed since childhood, values, financial management practices individually and within a family system, and cultural influences. These all affect perceptions (that may vary considerably across family members within a single family) about whether a particular situation constitutes financial exploitation.

The problem can be further exacerbated by the fact that many elder exploitation situations involve elders and relatives living in multiple states and elders moving to be nearer relatives during their vulnerable years.

Benefits of this research: There is little or no research published on the impact of and on families from this intensely painful phenomenon. Data gathered from this study will be helpful to policymakers, medical professionals, social workers and other social service practitioners, lawyers and law enforcement officials, clergy, counselors/therapist, and family members. By gaining clarity about 1) contributing factors, interactions and exchange patterns in family systems foundational to later exploitation, 2) intrafamilial perceptions and interpretations of what happened and 3) impact of the exploitation on family members and the family system, we could improve recognition and prevention of financial exploitation and facilitate more timely intervention and remediation after financial exploitation has occurred.
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