Senior financial exploitation through wills, trusts, and guardianship: basics, red flags and prevention measures
| DOI | https://doi.org/10.1108/JFC-10-2021-0225 |
| Published date | 24 November 2021 |
| Date | 24 November 2021 |
| Pages | 1222-1240 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial crime |
| Author | Martina Kirsten Schmidt,Nicole Forbes Stowell,Carl Pacini,Gary Patterson |
Senior financial exploitation
through wills, trusts, and
guardianship: basics, red flags 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
Abstract
Purpose –The purposeof this paper is to discuss financial fraud and exploitationagainst seniors relating to
wills, trustsand guardianship. The paper describes how this fraudaffects its victims, points out red flags 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 flags to watch out for
and how to prevent this fraud from occurring.
Findings –Fraudrelating to wills,trusts and guardianshipis oftentimesdifficult todetect and continuesto be
a grave threatto its victims. Whilethis fraud will likelynever be eradicated,specific efforts havebeen put into
place to track financial exploitation. Furthersteps presented in this papercan be deployed to help rein in these
fraudschemes.
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, financial 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 financial losses of seniors but physical
harm as well.
Social implications –Decreasing financial exploitationof seniors will not only improve their financial
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 financialfraud
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
JFC
29,4
1222
Journalof Financial Crime
Vol.29 No. 4, 2022
pp. 1222-1240
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-10-2021-0225
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1359-0790.htm
1. Introduction
Financial exploitation targeting seniors is a significant economic, health care and human
rights problem. This exploitation occurs when a person is in the position of trust and
confidence with a vulnerable adult and knowingly obtains the use of the vulnerable adult’s
funds, assets or property with the intent to deprive that adult of the use, benefit 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 financialharm, 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 financial crime
cases that involved senior victims causing losses of mor e than $600m (FBI, 2018). One study
finds 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 financial exploitation (Lachs and Pillemer,
2015). Shockingly, about two-thirds of the time the exploitation is committed by family
members (Polyak, 2018). Another study finds 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, financial 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 Office, 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 difficult to analyze is that it often goes
undetected and is vastly underreported. Cases of financialexploitation are often difficult to
prove, as there is often evidence thatvictims actually consented to the arrangement (Mathis,
1994). In addition, prosecutors often face the difficulty 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 financial
exploitation ever come to the attention of authorities (National Adult Protective Services
Association, 2021), whileMakaroun et al. (2020) find that about 1 in 24 elder abuse cases are
reported to the appropriate authorities.As the US Government Accountability Office (GAO)
reports, the extent of elder abuse by guardians is unknown (United States Government
AccountabilityOffice, 2016).
The reasons for the prevalence of financial 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.
Senior
financial
exploitation
1223
To continue reading
Request your trial