Financial exploitation

What it means

Financial exploitation covers theft, coercion, misuse of a power of attorney, transfers obtained by pressure, and scams run by strangers. Most reported cases involve a family member, a caregiver or a friend rather than a stranger.

The warning signs are patterns rather than events: a new person handling the money, sudden isolation from other relatives, changed beneficiary designations, unexplained withdrawals, a deed transferred for nothing.

Banks in most states may now delay a suspicious transaction and notify a trusted contact, and many are required to report suspected exploitation.

Why it matters

It is a frequent way an older person's savings disappear, and it is the hardest for a family to raise because the person taking the money is usually the person the older relative depends on.

It also sets up the argument after a death: a transfer or a will change obtained by pressure is attacked as undue influence, and the evidence for that has to have been noticed while it was happening.

When you are likely to meet it

• When money is leaving a parent's accounts unexplained.
• When one relative has isolated a parent from the others.
• When a deed or a designation changes without explanation.

How this varies by state

Who must report suspected exploitation, what a bank may do about it, and what a state's protective services can do without consent are all set by state law.

Related terms

• Adult Protective ServicesThe state agency that investigates suspected abuse, neglect or financial exploitation of vulnerable adults.
• Authorized signerSomebody a bank permits to transact on an account they do not own. It is access without ownership, and it ends at the account holder's death.
• CapacityWhether somebody is able to understand a decision and its consequences well enough to make it. It is decided decision by decision, not once and for all.
• ConservatorshipA court appointing somebody to manage the money and property of an adult who cannot manage it themselves.
• Durable power of attorneyA power of attorney that keeps working after the person who signed it loses the ability to make decisions — which is usually the whole point of signing one.
• Fiduciary dutyThe obligation to act for somebody else's benefit rather than your own — and to be able to show you did.
• Instrumental activities of daily livingThe harder-to-see tasks — money, medication, cooking, transport, the telephone. Difficulty here usually appears long before difficulty with bathing or dressing.
• Personal care agreementA written contract under which a family member is paid to provide care.
• Representative payeeSomebody appointed by Social Security to receive and manage benefits for a person who cannot manage them.
• Trusted contact personSomebody named on a financial account whom the firm may contact if it is worried — about the account holder's health, or about a transaction.
• Undue influencePressure that overcomes somebody's own wishes, so that a will, gift or transfer reflects the influencer's intentions rather than theirs.

Sahvelo guidance that uses this

• Financial exploitation
• Managing money for a parent