According to Philip Brown, founder and partner at Egerman & Brown, LLP, there are many ways seniors are cheated out of money.
"One thing that could happen is the abuser could lie to the senior," Brown says. "For example, he could tell the senior he will take $500,000 of the senior's money and put it in treasury bills in the senior's name, when the abuser does not intend to do so."
Brown gives a second example: "Another way to cheat a senior is to tell the senior that his or her financial situation is so precarious that the senior should take out an annuity when it is not appropriate or necessary." The salesman who makes such a pitch takes advantage of the senior's worries and makes a profit on commission from the annuity's sale. In some situations an annuity can be a good idea but it is wrong when a salesman uses the senior's anxiety about his or her financial future for the salesman's financial benefit.
Brown says he has seen all kinds of financial abuse in his career. One such case involved a grandmother who was 87 years old and was told by her doctor that she needed more exercise. The senior wound up in a gym, where one of the gym's employees convinced her to purchase an unnecessary lifetime membership. The price for a lifetime membership was the same for this woman as for a 30 year old.
In another situation, an elderly woman's husband died. This particular woman had a substantial amount of money, but felt she needed someone to take care of her. The woman's long-time housekeeper said she would take care of the woman, if the woman paid her $500,000. Otherwise the housekeeper would seek other employment. The woman, knowing that she needed help and fearing the prospect of losing someone she knew well, agreed to pay.
Brown says this is financial elder abuse because competent help could be obtained for the woman for much less than $500,000. The housekeeper knew the woman was vulnerable and knew she needed help. Essentially, the housekeeper exploited her relationship with the senior. This type of coercion by a trusted person comes under the heading of "undue influence" and is simply wrong. The law looks unkindly on those who take unfair advantage of seniors.
According to Brown, there is a distinct line between a senior's generosity and financial elder abuse. That line is undue influence. "The question is whether there so much influence and control over the senior that the senior cannot resist. It's not necessarily fraud, but it is someone is taking unfair advantage of an elderly person's vulnerability." In the case of the housekeeper, the undue influence was that the housekeeper recognized the woman was fearful both of losing a long-standing employee and of the process of finding someone else.
While the senior was alive, her children had no legal basis to stop their mother from entering the agreement. After she passed away, the son and daughter had every right to claim their mother was the victim of financial elder abuse.
"As soon as that person dies, the person who has the right to the funds has the right to take action," Brown says. "Whoever takes over or has the right to the assets also inherits the right of action to recover money that was improperly taken from the senior. In California, that right lasts 3 years from the time of the wrongful event."
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"There are basic rules to financial elder abuse," Brown says. "Someone has abused someone else. Someone has taken advantage of an elderly person because they are an especially vulnerable class. How and when financial elder abuse occurs is so varied, it is impossible to generalize the situations. It is, unfortunately, an all too common occurrence."