Powers of attorney help combat elder abuse


People in California may have seen a recent article in The Wall Street Journal about how many financial firms are now stepping up their efforts to identify and protect senior citizens against financial abuse, when their clients seem to be losing their mental and cognitive abilities. When clients start to exhibit warning signs of dementia or memory loss, some firms are taking steps to provide extra protections to ensure that these clients do not squander their money or fall prey to financial predators.

Many of these prevention initiatives are still in the early stages of development, but some financial firms are adopting policies, which an advisor who notices a client with memory loss or comprehension issues may reach out to the client's designated contact to alert them of what is happening. In addition, firms are taking steps to flag suspected incidents of elder financial abuse, so that they can notify them before the damage becomes too great.

It is admirable that financial firms are taking notice and trying to protect their clients' assets. All in all, though, there is very little that a bank or financial institution can do to prevent financial abuse, when a client wants to spend their money as they see fit. Even clients with dementia are still clients and are entitled to spend their money any way they would like. Financial firms can take note of questionable incidences, but they may be somewhat powerless to actually stop questionable financial transactions that constitute elder abuse.

The answer to this problem is a power of attorney, or POA. The power of attorney allows a person to select a trusted designated representative to handle their financial issues, in the event they become fully or partially incapacitated, or if they just want to have someone else "protect them from themselves" in the increasingly common case of dementia. An experienced estates and trusts attorney can help a person set up a POA to provide protection from elder financial abuse, as well as the many other ways a POA can be a useful legal tool.

Source: The Wall Street Journal, "Brokerage Firms Step Up Efforts to Combat Elderly Financial Abuse -- Practice Management," Matthias Rieker, April 29, 2014

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