It can be difficult to give up independence over daily life management, particularly when tasks deal with personal finance. There is an extraordinary amount of trust inherent in handing over a checkbook or monetary account, and current legal protections aren’t always enough to keep seniors safe from fraud. There are things individuals can do to protect their interests while giving up some independence.

Regardless of age, it’s a good idea to imbue a trusted friend or family member with a limited power of attorney. Such a designation allows that person to act on behalf of an impaired individual. In one case, the friend and attorney of a 103-year-old man was able to stop fraud being enacted by the man’s live-in caregiver.

According to reports, the caregiver was stealing over $3,000 each week from the man’s accounts. The caregiver was abusing the power to write checks from that account and padding her salary. Seeing the unusual activity, a broker phoned the executor of the man’s estate to question the activity, which led to the caregiver’s termination.

Statistics from a MetLife study indicate over $2.9 billion was lost in 2010 due to elder financial abuse. Abusers can even be friends or family members. To reduce the chance of fraud, individuals should select caregivers and estate administrators from among close, trusted individuals early on. Early planning can make a difference in end-of-life financial situations.

There is also a big responsibility placed on those who are administering funds for seniors. Those individuals become fiduciaries – people who are obligated to manage finances in the best interest of the senior. Fiduciaries should keep excellent records and make careful decisions to avoid allegations of financial abuse.

Source: DallasNews, “Steps caregivers can take to prevent senior financial abuse” Gordon Studer, Nov. 29, 2013