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Here’s an experience tax professionals may find familiar — and worrying — during tax season: A longtime client, usually very organized when it comes to tax-preparation paperwork, forgets or loses key documents or becomes confused when asked for more material. The formerly independent, methodical client, now a senior, has clearly changed and seems to have lost control of his or her finances.
These warning signs, which could indicate simply increased forgetfulness or a more serious condition such as the onset of dementia, are not only health-related red flags— they could also have severe financial consequences.
Recently an elderly couple who are clients of ours returned minimal information with their requested tax package. It was a red flag, as this couple in the past was fairly organized. Because this seemed odd, we got in touch with the clients’ adult children. We learned that the senior couple had charges in the six figures on a line of credit on a house that had been paid for, even though they had a six-figure income from pensions, Social Security and IRA distributions, as well as other assets. The couple’s children are now aware that they have to take a greater role in their parents’ finances.
Financial professionals who work with seniors have — or should have — a moral obligation to look out for these warning signs. Where was the banker who had known this couple for more than 20 years while they were writing all these checks off of an equity line?
The best people to identify these warning signs, of course, are family members who have the most interaction with seniors. Keep an eye out for these signals in your elderly parents:
Missed payments
When you visit your elderly parents, try to monitor their mail or bills. Missed-payment notices are a sign of potential issues and could have significant financial consequences. For example, forgetting to pay the homeowners insurance bill could lead to reinstatement costs or worse, policy cancellation and potential financial catastrophe.
Lack of recall about important matters
I’m not talking about simple issues like where the keys are, but important items such as having a signed withdrawal slip from a bank and no memory of withdrawing the money or where it went. This could be a sign that someone has the senior’s ear and is persuading him or her to withdraw money and hand it over with no paper trail.
Odd phone interactions
Younger people hardly ever answer their home telephones anymore (if they even have landlines), making seniors the obvious targets of phone-based scammers. In Connecticut, where I live, a common scam involves someone purportedly from the IRS calling and threatening legal ramifications unless some supposed late payment or penalty is paid. A variation on this scam is the phone call from supposed lottery or sweepstakes officials congratulating the person on winning $3 million and asking for the client’s credit card number so the caller can verify his or her identity.
If your elderly parents mention these kinds of calls, delve deeper to make sure that they haven’t given financial or personal information over the phone.
If you suspect elder financial abuse, call your local district attorney. If the issues involve shady investment schemes, contact the Financial Industry Regulatory Authority at the new toll-free number, 844-574-3577, set up specifically for matters involving seniors.
Professionals should know and care enough about their clients to take action if things don’t seem right. Their interactions may not be frequent enough to catch problems in time, however, which makes it extra important that family members and friends look out for health-related warning signs that can have major financial consequences.
Daniel Friedman is the CEO of wealth management firm WMGNA in Farmington, Connecticut.
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