Here are the rules that help prevent elder financial abuse in California

More than 200,000 cases of elder abuse are reported annually in California, and our state’s financial elder abuse laws are some of the strictest in the nation.

In honor of World Elder Abuse Awareness Day this month, our column has focused on how to prevent, identify, and report elder abuse.

More than 200,000 cases of elder abuse are reported annually in California, and our state’s financial elder abuse laws are some of the strictest in the nation.

Many are unaware that the financial exploitation of elders or disabled individuals is a criminal act and can be punishable by up to four years of jail. The law can also allow victims to receive civil awards for pain and suffering, attorney fees, and punitive damages.

According to the California State Welfare and Institutions Code, financial abuse is “a situation in which a person who stands in a position of trust of an elder, or who has care or custody of a dependent adult, takes, secretes, or appropriates their money or property to any wrongful use or with the intent to defraud.”

While some types of theft might be obvious, like friends or caregivers who take money without permission or fail to repay the money they owe, there are more subtle examples of financial abuse, often perpetrated by strangers. It was not until I saw it affect my family that I realized the extent of how simple it is for seniors to succumb to the will of others and how easily they could lose everything.

The muffin lady

One day, I noticed muffins and a Realtor’s business card on my grandfather’s kitchen table. When I asked about it, he said the “nice lady” visited him often, usually with sweets for them to share over coffee. He then remarked that her frequent, unannounced visits were becoming annoying, and she was “pushy” and trying to get him to sell his house for cash.

During their visits, they talked about his idyllic childhood on his family’s ranch and how great it would be for him to give up his home in the city to farm again. He had left the ranch 70 years ago for college, then served in WWII, went to law school, and had a career as a federal investigator. He was now well into his 80s, and although he was still in great shape and independent, he was not going to start a farm.

He showed me the paperwork she left with the scattered sign here stickers. I stayed calm, pulled out my iPad, and, with a quick Zillow search, showed him the possible listing price of his home. It was several hundreds of thousands of dollars more than her offer. He was miffed, noticeably upset, and a little embarrassed because, you see, my grandfather had no intention of ever selling, so he had no idea of how much his house had appreciated.

I took the business card and gave the muffin lady a call. I threatened to report her to the Department of Real Estate and the elder abuse hotline (1-877-4R-SENIORS) if she bothered him again. However, my grandpa no longer believed she was “nice” and said if she showed up again, he would tell her to “get lost.”

Being almost conned did not make my grandpa incompetent or a dupe, requiring a conservatorship or power of attorney. He was just behind on the cost of things; he didn’t know how to tell her to back off, and he liked having coffee with her.

I had previously helped several older clients with their finances, and there are definitive patterns. They made quick financial decisions out of boredom, loneliness, and feeling undervalued. It isn’t necessarily about age or competence. They were just more susceptible to scams than busy, working people.

What helped me with my grandfather, my other relatives, and some of my clients was to have some rules for “us” to follow when making financial decisions.

The rules

Financial rule No. 3 is simple: You and your loved ones need to know how much things cost. (We’ll get to Rules 2 and 1 shortly.)

When the contractor wanted $150,000 for work on the house, I gave Grandpa the info for two other companies with (much lower) competing quotes. Comparison shopping for large expenditures is part of the rule. When he wanted to buy a car, I offered to go with him to negotiate so he did not pay the sticker price or pay for extras he did not need or want.

He trusted my help, and it was something we could do together. Better than a stranger or going alone. This leads us to Rule No. 2.

Before you or your loved ones make large political donations (that are not deductible), borrow to help a friend, gamble considerable sums, buy annuities, wire money to Nigeria, or start a farm, talk to your loved ones and professional advisers, about whatever it is.

Before we instituted Rule No. 2, I wonder if Grandpa would have eventually caved to the pressure, signed the paperwork, and lost his home had I not noticed the muffins.

Getting second, third, and even fourth opinions from your CPA, CFP, attorney, and each other about what is going on in your life is essential to avoid the dire consequences of more severe forms of elder financial abuse.

Officers and employees of financial institutions, like bankers and brokers, are considered mandated reporters and are required by law to report abuse. This is a good reason we should stop insisting that seniors give up in-person banking. It could be beneficial for them to know their bank manager and tellers to help safeguard against fraud.

This leads us to Rule No. 1. Dignity is a word thrown around a lot, but we must help our elders live as independently as possible for as long as possible.

In 2022, the state reduced the eligibility age for Adult Protective Services from 65 to 60. Six years from now, one-quarter of the population will be over age 60, including many of us.

While conservatorships and powers of attorney have their place as legal vehicles when someone is incapacitated, many of us who have full mental capacity, whether we are under or over age 60, can still be taken advantage of financially. We could all use some rules to prohibit that from happening. Feel free to add some of your own, and remember to discuss them with the seniors in your life.

Michelle C. Herting is a CPA, accredited in business valuations, and an accredited estate planner specializing in succession planning and estate, gift, and trust taxes.