How To Identify and Fight Financial Abuse

Learn the warning signs of financial abuse towards the elderly, the disabled, and romantic partners. Get help with next steps and resources.

Everyone needs money to survive, but not everybody is in a position to properly handle their financial affairs.

Elderly people living on a pension may have more assets than the ability to manage them. The same is often true of incapacitated people subject to a guardianship.

Married or partnered people may also trust and depend on each other for their basic needs.

Unfortunately, sometimes the people we entrust with our financial well-being abuse that trust. This is known as financial abuse or economic abuse. This behavior can also include hiding information or even stealing money.

Financial abuse can be difficult to spot because it rarely looks the same in any two cases.

This article will examine some warning signs of financial abuse in different situations. Almost anyone can be a victim. The elderly, handicapped people, and victims of domestic violence can all be targets.

Powers of Attorney and Elder Abuse

Stressed elderly man holding his head

Elder abuse is a growing crisis in the United States. The term encompasses a variety of behaviors, including physical and mental abuse. A common component is financial abuse. Elderly people’s finances can be controlled by children or others who abuse that power.

Mistreatment and financial abuse of elderly people can be difficult to spot. One of the most common methods is to wrongfully get a power of attorney over an elderly person’s bank account.

Because many older people have savings and retirement funds, they can be prime targets for abuse.

This is especially true when the elder doesn’t manage their own finances. Powers of attorney are often used to manage the elderly person’s affairs.

A power of attorney is a letter that appoints a person as an agent for the elderly account holder. The agent has the ability to withdraw money, pay bills, and manage other financial matters. In this way, the agent controls the financial livelihood of the elderly person.

If the wrong person becomes the agent, they can steal and hide money. A rogue agent can also open up lines of credit or apply for credit cards without anyone else knowing. This can saddle an elderly person with debt. It can also wreck their credit score and leave them penniless.

Bank of America warns that you should only grant powers of attorney to trustworthy people. The bank points out that the “very broad power” the letter grants requires a lot of confidence in your agent.

Banks have trusted procedures for granting and revoking powers of attorney, but consumers must still be vigilant and responsible. You must always review bank statements for evidence of fraudulent activity.

If you suspect financial abuse of an elderly person, the first step is to find out whether there are any powers of attorney. Next, discover who was appointed as the agent. If you don’t have access to bank information, law enforcement may be able to help.

Your local police department or your state’s attorney general may have financial and elder abuse divisions that can help investigate credible allegations.

A great deal of legal information can be found online. Many law enforcement organizations and state attorneys general offer substantial resources. For example, Nevada’s attorney general has published a lengthy guide to legal resources and remedies for elder abuse.

Financial Abuse by Legal Guardians or Conservators

Man in suit pocketing money

Though a power of attorney may be one of the more common methods of financial abuse, it’s far from the only one. Another legal epidemic of financial abuse is happening with regard to guardianships. (In some states, these are called conservatorships.)

In a guardianship, a court-appointed person (often, but not always, a family member) manages the finances of someone who can’t do it themselves. A guardian can be appointed for a person who is elderly, handicapped, or incapacitated (e.g., in a long-term coma).

Because guardians have a lot of control over money, there’s a big risk of financial abuse. For example, guardians are often allowed by court order to pay themselves for their services. Some use this power as a way to “legally” take more money than they would otherwise be entitled to.

Fortunately, there’s a powerful and unique tool with which to fight guardian abuse. Guardians are overseen by courts. If you see warning signs of abuse by a guardian, you should report it to the court that set up the guardianship.

California courts have investigators that oversee guardians and report their findings to a court. If the judge suspects a crime, they will likely make a referral to local law enforcement. Of course, this does not stop you from contacting the police or the attorney general yourself if you believe it necessary.

Domestic Violence and Financial Abuse

Woman crying while a man sits on the couch

Domestic violence victims withstand all kinds of attacks: physical, verbal, and emotional abuse. According to the University of Wisconsin, financial abuse often goes hand-in-hand with domestic violence. Financial matters give a lot of control to abusers.

Often, abusive partners are the breadwinners of a household. They may also manage all the financial information and documents. They can keep their victims in an abusive situation by withholding financial resources. In this way, the victim loses all independence to their abuser.

Many forms of financial abuse involve stealing without the victim’s knowledge. Domestic financial abuse is different in both motive and manifestation. It’s almost purely a control mechanism of the abusive partner, designed to trap the abused victim into financial dependence.

Due to its secretive nature, financial abuse associated with domestic violence is perhaps the most difficult to spot and fight. Thankfully, the National Network to End Domestic Violence (NNEDV) has provided a comprehensive list of red flags.

For example, one partner monitoring all money spent by the other is a common form of abuse. Financial documents are often hoarded by one partner. The abuser withholds all financial information from their partner. The victim is then barred from engaging in even the most basic transactions.

The abused partner may not be allowed to work, or they might be forced to work for the abusive partner’s business. (Often that work is unpaid.) The victim may even be forced to file fraudulent tax returns. The fact of that crime is then used as blackmail to prolong abusive relationships.

The abuser can also assert control by withholding money that’s critical for the family, including child support.

There are resources to fight domestic violence and associated financial abuse. Law enforcement is the first option, though it may not be a good choice in some situations. Local law enforcement may know the people involved in the incident and make erroneous judgments about fault or credibility.

There are domestic violence programs, like the one run by The Allstate Foundation, that focus on ending financial abuse. These programs offer effective and discreet ways for victims to escape.

Finally, both victims and loved ones can contact the National Domestic Violence Hotline for more resources. The hotline has existed for over 25 years and helped countless victims. Among other things, the website offers information on safety planning and offering support to victims.

Get Control of Your Finances and Your Life

The popular notion that “money is the root of all evil” persists for a reason. We must protect our most vulnerable friends and family from financial abusers. The warning signs are not always obvious. The cost of missing them, though, can be devastating for victims and their families.

Financial abuse also costs a great deal to our society. Police, courts, and the social safety net often have to pick up the pieces after the fact. Even then, the damage can never be completely healed after it’s inflicted. So, it’s critical to find and address financial abuse as quickly as possible.

If you or a loved one has suffered financial abuse, the first priority must be to ensure your safety and theirs. After you see to that, part of your plan should be to consult a qualified attorney in your state as soon as possible.

Matthew Carter, Esq. has been a licensed attorney since 2004. He’s admitted to practice law in California and Nevada, where he was awarded the Martindale.com rating of AV – Preeminent. Matthew has successfully handled a variety of personal injury and wrongful death cases, as well as trials, appeals, and evidentiary hearings throughout state and federal... Read More >>

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