Gradual loss of control in the elderly

A pair of articles were published recently about a subtle threat to the financial well-being of older clients.

At a website called Seeking Alpha - The Biggest Threat to Your Retirement Portfolio: Mild Dementia
In the New York Times - As Cognition Slips, Financial Skills Are Often the First to Go

The articles recommend that adult children, agents, or other protectors of elderly parents help with monitoring their accounts and transactions to look for early signs of mismanagement of funds, sending money to inappropriate recipients, and the like.

"People are able to make these disastrous investing decisions in the earliest stages of dementia because their loved ones, who assume dementia announces itself with forgetfulness, don't realize there are quite a few syndromes that develop into dementia whose first symptoms are not forgetfulness, but are instead loss of judgment, impulse control, and emotional balance."

Recommendations include:

• Sign authorization forms, well in advance, to allow your doctors to discuss your medical issues with your children or other selected agents.
• Include language in powers of attorney, trust agreements, and other substitution documents to permit a doctor to use "signs of poor judgment" or loss of emotional control to justify a declaration that you should not be handling your own finances.
• Share information about your portfolio and investment patterns with your agent, and give him or her access to be able to monitor activity within those accounts. 
• Place a credit freeze on the parent's accounts.
• Set up automated bill payments. 
• Ask that insurance companies and other regular payees send duplicate notices to your agent so that he or she can be notified of a missed premium payment or other similar lapse.
• Give early authorization to your attorneys and financial advisers to contact your agent if they see anything that gives cause for concern.

Each of these, of course, requires a careful balance between maintaining control and privacy and enabling a substitute decision-maker to effectively protect your interests.

Scams targeting the elderly

Local news is reporting another upswing in scams targeting elderly victims, particularly the "Grandma scam". In this one, the victim receives an e-mail, purportedly from a grandchild somewhere in Europe or Mexico, saying that he has been arrested or robbed, and asking for money to be sent by wire to help him get home. The message also conveys a sense of urgency - the money has to be sent right away.

A call to a local police department or the state police can help to confirm that these requests are not legitimate.

Another precaution: If the e-mail message says that it's from Johnny, call Johnny directly, or call his parents to ask them to contact him. In many cases, this step will help to reveal that the request is a scam.

The Marquette Mining Journal reported in its Police Log in the February 2 edition:

9:54 a.m. - Client wiring money to relative in Mexico claiming to be in trouble; believed to be a scam; advised client it is a scam, but they refused to believe it; officer warned them as well, but they sent the money anyway. 600 block of West Washington Street.  

Even with intervention from an astute clerk (kudos to Check and Cash for being alert) and the local police department, it is not always possible to prevent this kind of victimization.

And the Marquette Monthly published this in its February 2012 edition:

Marquette County Sheriff’s office warns of sweepstakes scam - 
An unknown caller from a 1-888 number recently advised a Republic Township resident that she had won a million-dollar sweepstakes contest. The caller identified himself as being a representative of Publisher’s Clearing House, in Las Vegas (Nevada). He advised the resident she had won a million dollars and wanted to set a date and time for an individual to appear at her residence to be awarded the prize; all she needed was a “Money Pack” or “Money Order” for approximately $400.00.
 Publisher’s Clearing House does not notify winners via telephone and will never request payment from a winner to claim any prize. Residents are reminded to use caution when dealing with unfamiliar telephone numbers and unsolicited contacts.

Update: See and listen to Stepping Up and Stepping In for an Aging Parent on American Public Media's Marketplace (played on Saturday, February 4).