Seniors are often the target of “Friendly Fraud.” Also referred to as “trusted abuse” or “undue influence," Friendly Fraud is when an acquaintance, family member or friend uses the trusting nature of the relationship to commit fraud. The fraudster aims to influence an older adult and obtain control of his or her money or assets. Fraudsters may scheme to obtain the deed to someone’s house, become designated as Power of Attorney, named as Trustee over a Trust, or as the Executor and/or beneficiary in a Last Will and Testament.
One way to prevent becoming a victim of Friendly Fraud is early estate planning. It is never too late to plan; however, planning earlier may allow you to express your wishes at a time when you are thinking clearly, communicating effectively and without the pressures of outside influences or unfortunate circumstances.
Always work with a trained professional, who has your best interest in mind when planning and making decisions about your possessions, money and estate. Planning fees for a simple estate plan tend to be inexpensive. Many counties and states also offer free assistance through a legal aid society and legal assistance programs for individuals who may not be able to afford an attorney.
Some key estate planning documents may include, but are not limited to:
- Power of Attorney
- Advanced Healthcare Directive
Always seek advice of an attorney to create these documents. Depending on the amount of assets of an estate, you may want to consult with a professional Wealth Management or Financial Advisor.
Here’s some additional information about documents you may need and what red flags to be mindful of:
Power of Attorney
Never sign a power of attorney before reading it and without knowing who prepared it. Depending on how a Power of Attorney (POA) document is written, this document may give another individual unlimited power to manage your financial, health and other personal affairs. It is extremely important that the POA only be granted to a well-known trusted individual, preferably someone with whom you have a long-term relationship, that will have your best interests in mind.
A POA may have access to your bank accounts, finances, property and all assets to make any decision with your money. Always seek professional, legal advice when designating and preparing a POA. As you consider who is best suited to serve as your POA, keep in mind that POA ends at death.
What to watch out for:
Senior adults can often be targets for a POA scam. It’s important to only enter into a POA agreement if you are involved with the process or trust the person who recommends it. If someone comes to you and pressures you to sign a POA without any prior knowledge or discussion about it, that’s a red flag.
A fraudster may start a relationship (romantic or friendly) with the senior adult in an attempt to gain their trust. Once the relationship has been established, the fraudster may convince the senior adult that he or she is showing signs of dementia or memory loss and offer to help as his or her POA. Make sure to ask a long-time family member or friend for help if you’re unsure of the person’s motives.
Remember, sometimes even people you know can take advantage, so be sure the person suggesting you need a Power of Attorney is a trusted individual.
Last Will and Testament
It is important to have your Last Will and Testament prepared before you become ill or incapacitated. A person must be of “sound mind” and capable of making decisions when they execute their Will. Requirements vary from state-to-state as to what constitutes a legally binding Will. Always seek professional, legal advice when having a Last Will and Testament prepared. Designating who will manage your affairs as your Personal Representative or Executor is an important decision.
As life goes on and your possessions change, so may your wishes. It’s important to review your Will from time-to-time. Depending on how the Will is written, it typically can be updated at any time.
Depending on the size of your estate, family and assets involved, your attorney may recommend a Trust.
Though a Will and a Trust are similar documents, there are key differences:
A Will is a legal document that states how you want your assets distributed after your death.
- A Trust is a legal document that allows a third-party (sometimes a bank) to hold assets on behalf of the beneficiary. A trust may allow for holding and managing your assets before and after your death.
What to watch out for:
Friendly Fraud may include a caregiver, new friend, new romance suggesting changes to your Last Will and Testament, Trust, Power of Attorney, Deed, or other legal documents. Beware of these friendly fraudsters who may try to pressure you to make changes. If you feel pressured to make changes that you are unsure about, talk to your financial planner, trusted friend, advisor or legal counsel, without that individual present.
Schedule a Money Safety for Seniors Workshop.
Learn how to detect, protect against and report the financial exploitation of seniors. Old National offers this course to community groups at no cost.
Donna is a Senior Loss Prevention Analyst, CFE and part of the Fraud Prevention and Investigations Department at Old National. This group is responsible for investigating and responding to bank-related fraud situations, as well as training and educating associates and clients about fraud.
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