A simple transaction, like writing out a check or accepting cash for groceries for a senior, even if it’s for your very own mother, doesn’t seem like a bad thing to do. However, the potential for a simple act of kindness to be perceived as criminal activity against a senior is very real.
Bankrate’s article, “Be cautious before helping seniors with their finances,” warns that unless you’re an only child helping your parent, when you start writing checks, suspicions may arise, with or without justification.
At Cottrell & Jacobs, we hear of financial elder abuse suspicions and actual abuse on a regular basis. Therefore, just because a senior asks for your help, doesn't mean you should help. This is because things can get complicated.
Once you get involved, you may see that there are many moving parts. There could be an already-troubled senior who’s paying some bills twice and some not at all, or donating money to questionable organizations. Their finances may be in disrepair. Remember, if you don't have the time and aren’t ready to take on a complex process with legal implications, just say no.
Power of Attorney. A power of attorney gives the holder authority to execute certain transactions. While you don't need an estate planning attorney to create up a power of attorney (POA), you're taking a chance if you choose the do-it-yourself route. If you need to obtain a guardianship (or conservatorship) for the senior, you’ll need an elder law attorney. A guardianship gives you the authority to take control of the senior’s finances. There will be a court hearing, and you’ll have to present medical records and be represented by an attorney.
Minimize Risks. It is important to try to minimize the risks for the senior and maximize financial accountability. Monthly bills, like utilities, can be directly debited from the senior's bank account. You should never sign the senior’s name on checks or credit card purchases. They may insist that it is okay, but they would be wrong.
Record-keeping. Regardless of the amount of authority you have been given to help a senior or control their finances, it's crucial that you keep meticulous records to protect yourself. POAs should hang on to receipts for everything and never combine their money with the senior's money. You should never borrow money from them, and don’t fall into the trap of believing you’re entitled to money because their family is never involved. That’s financial exploitation, and it is a criminal act.
Talk with family members regularly. Even if the senior tells you that their family does not care or isn’t interested, protect yourself with ongoing communication with more than one family member. There may be factions, vendettas and private agendas within the family that you are not privy to. It is essential that you document everything and have regular meetings. You can also share reports with these family members.
As an extra layer of protection for yourself, you may want to have a conversation with the family‘s estate planning attorney. If there is no attorney involved, be extra cautious, since you may be wading into a swamp of litigation and accusations.
Reference: Bankrate (February 15, 2017) “Be cautious before helping seniors with their finances”