Senior financial exploitation through wills, trusts, and guardianship: basics, red flags and prevention measures

Published date24 November 2021
Date24 November 2021
Subject MatterAccounting & finance,Financial risk/company failure,Financial crime
AuthorMartina Kirsten Schmidt,Nicole Forbes Stowell,Carl Pacini,Gary Patterson
Senior nancial exploitation
through wills, trusts, and
guardianship: basics, red ags and
prevention measures
Martina Kirsten Schmidt
Kate Tiedemann School of Business and Finance, Muma College of Business,
University of South Florida, St. Petersburg, Florida, USA
Nicole Forbes Stowell and Carl Pacini
Lynn Pippenger School of Accountancy, Muma College of Business,
University of South Florida, St. Petersburg, Florida, USA, and
Gary Patterson
Kate Tiedemann School of Business and Finance, Muma College of Business,
University of South Florida, St. Petersburg, Florida, USA
Purpose The purposeof this paper is to discuss nancial fraud and exploitationagainst seniors relating to
wills, trustsand guardianship. The paper describes how this fraudaffects its victims, points out red ags and
makes recommendationsthat may help control this pervasivetype of fraud.
Design/methodology/approach Information from a range of different sources, such as journal
publications, law textbooks, law enforcement websites and estate planning cases are used as a basis to
provide informationabout how fraudsters are committing this type of fraud,which red ags to watch out for
and how to prevent this fraud from occurring.
Findings Fraudrelating to wills,trusts and guardianshipis oftentimesdifcult todetect and continuesto be
a grave threatto its victims. Whilethis fraud will likelynever be eradicated,specic efforts havebeen put into
place to track nancial exploitation. Furthersteps presented in this papercan be deployed to help rein in these
Practical implications The paper provides useful information about frauds related to wills, trusts
and guardianship for stakeholders. This includes, but is not limited to, anyone whose work is related to
seniors, such as accountants, lawyers, regulators, bankers, nancial planners, law enforc ement personnel,
academics, medical professionals, caregivers, family members and ethicists. These stakeholders can use
this information to help combat this fraud and prevent not only nancial losses of seniors but physical
harm as well.
Social implications Decreasing nancial exploitationof seniors will not only improve their nancial
position andmay reduce their reliance on Medicaid but will also improvetheir mental and physical well-being
and save lives.
Originality/value Research in thearea of maltreatment and exploitation of older adults is stillin its early
stages, as knowledge of effective prevention,intervention and remediation practices are limited. This paper
adds to the research in this arenaby drawing on a unique set of resources that shed light on nancialfraud
commonly committedagainst seniors. This study also makes much needed recommendationsthat are aimed
to prevent thisthreat related to wills, trusts and guardianship.
Keywords Trusts, Seniors, Financial fraud, Guardianship, Estate planning, Wills
Paper type General review
Journalof Financial Crime
Vol.29 No. 4, 2022
pp. 1222-1240
© Emerald Publishing Limited
DOI 10.1108/JFC-10-2021-0225
The current issue and full text archive of this journal is available on Emerald Insight at:
1. Introduction
Financial exploitation targeting seniors is a signicant economic, health care and human
rights problem. This exploitation occurs when a person is in the position of trust and
condence with a vulnerable adult and knowingly obtains the use of the vulnerable adults
funds, assets or property with the intent to deprive that adult of the use, benet or possession
of those [1].
Unfortunately, researchin the area of the maltreatment and exploitation of older adults is
still in its early stages. The limited knowledge of effective prevention, intervention and
remediation practices of senior exploitation lags behind the understanding of either child
maltreatment or intimatepartner violence (Administration for Community Living,2021a).
Of all exploitation and fraud schemes, the ones targeting seniors are particularly tragic,
as seniors deserve to be treatedwith respect, compassion and dignity. Financial exploitation
of seniors not only results in direct and indirect nancialharm, such as the loss of the stolen
funds or misappropriation of fundsand property, lower credit scores and legal fees but also
emotional and physicalharm.
In 2017, the Federal Bureau of Investigation (FBI) opened more than 200 nancial crime
cases that involved senior victims causing losses of mor e than $600m (FBI, 2018). One study
nds that scammers stole tens of billions of dollars in 2019 alone from seniors and the
programs that serve them (Hedges, 2017). About 10% of seniors age 60 and older have
experienced some form of elder abuse, including nancial exploitation (Lachs and Pillemer,
2015). Shockingly, about two-thirds of the time the exploitation is committed by family
members (Polyak, 2018). Another study nds that senior victims of fraud often also experience
shortened survival, hospitalization and poor physical and mental health (Burnes et al., 2017).
Financial exploitation of older adults is not only widespread but also increasing in the
US. Between 2013 and 2017, Suspicious Activity Reports (SARs) targeting seniors
quadrupled. Because of the expected aging of the US population, nancial exploitation of
seniors and its effects will likely present an escalating problem in the years to come. For
example, one study estimates that the percentage of Americans over the age of 65 is
expected to increase from 15% between 2016 to 23% by 2060 (Vespa et al., 2020). That
means that the number of older adults will nearly double between 2016 and 2050 (United
States Government Accountability Ofce, 2016). In addition, the various exploitation
schemes are likely to become more complex over time as technology advances and the
economy becomes more digitized.
What makes this type of exploitation particularly difcult to analyze is that it often goes
undetected and is vastly underreported. Cases of nancialexploitation are often difcult to
prove, as there is often evidence thatvictims actually consented to the arrangement (Mathis,
1994). In addition, prosecutors often face the difculty that victims are unable to provide
testimony, when they are either deceased or mentally unable to testify (Mathis, 1994). The
National Ault Protective Services Association reports that only 1 in 44 cases of nancial
exploitation ever come to the attention of authorities (National Adult Protective Services
Association, 2021), whileMakaroun et al. (2020) nd that about 1 in 24 elder abuse cases are
reported to the appropriate authorities.As the US Government Accountability Ofce (GAO)
reports, the extent of elder abuse by guardians is unknown (United States Government
AccountabilityOfce, 2016).
The reasons for the prevalence of nancial exploitation targeting seniors include the
following: in general,older people:
Usually have accumulated more money, which is often invested in their homes and
retirement savings and they tend to have good credit.
Grew up in a more trusting time and are very polite.

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