News & Resources: Blog

Financial Abuse of Elders Reporting Laws

Published: June 8, 2023

On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act was signed into law. The Act contains a section that was once a stand-alone bill designed to encourage the reporting of elder (age 65 and older) financial abuse witnessed by financial institutions. The Act doesn’t mandate institutions to report financial abuse but gives them an incentive to do so. The Act provides immunity from any lawsuit alleging elder financial abuse if the financial institution reports it to state or federal law enforcement agents. To qualify for immunity, a financial institution has to create and administer a training program for employees to teach them how to spot elder financial abuse. This Act focuses on financial institutions because they are often the first to witness elderly clients making unusual transactions that may be linked to a scam.

Previous Legislation to Prevent Elder Fraud

The Act was inspired by the Senior$afe program in Maine. Senior$afe encourages state regulators, financial institutions, and legal organizations to work together on educating banking and credit union workers to spot and stop elder financial abuse. When elders have a trusted third party to talk to about their finances, they are less likely to fall victim to elder financial abuse, and this program has found success in reducing the number of elders who fall victim to these scams.

However, this isn’t an entirely new idea. In 2016, the Consumer Financial Protection Bureau (CFPB) issued a report on elder financial abuse, finding it was the norm in hundreds of counties around the country. Through voluntary community-based partnerships, they were able to prevent, detect, and respond to elder financial abuse situations. These partnerships often include entities such as financial institutions, adult protective services, and law enforcement.

The CFPB found that these partnerships can be incredibly effective in protecting their elderly citizens. What’s more, in states without elder financial abuse protection laws, these community efforts have created a sense of responsibility to protect their most vulnerable from financial scams without reward or threat of prosecution against financial institutions.

Resources, Best Practices, and Elder Law Attorneys

Following the CFPB report, a resource guide was released containing best practices to help and encourage other counties across the US to adopt their own protection partnerships. Among other recommendations, the CFPB encourages communities to directly include law enforcement and financial institutions in these partnerships. Financial institutions are often the first to spot these cases, and law enforcement has an obligation to investigate once a claim is made. Also, the CFPB recommends that partnerships that serve diverse areas engage with groups that are already entrenched in the community, such as service groups or faith-based organizations.

Protecting our vulnerable aging population is important to providing a safe and prosperous society for all citizens. These community-based partnerships and the Economic Growth, Regulatory Relief, and Consumer Protection Act help safeguard those who aren’t able to protect themselves. Elder law attorneys also offer resources and guidance on ways to protect you or your aging parents from financial abuse.

If you have questions or would like to discuss your legal matters, please do not hesitate to contact our office at 215-364-1111 to schedule a consultation.

CLIENT Testimonial

This question is asked all the time: “Wouldn't it be easier to get a will off the internet, transfer my land when I die, and put my children on my bank account?” It’s just not a good idea. For the plan to work as you would want it to, it should account for plenty of complications. A good plan should protect your spouse and your children from the loss of valuable government benefits if anybody is or becomes disabled. The plan should avoid the delay and expense of probate court. The plan should protect money from children’s creditors or divorce or remarriage. It should be crafted to serve family harmony and to avoid disputes between children as joint owners. Even a relatively simple situation is made up of many moving parts. Internet documents and joint-ownership devices just won’t do the job.

Also, assembling the moving parts so they work smoothly is just the first step. Your estate plan needs maintenance too, just like your car has a “check engine” light. Major family events like serious illness or death, marriage, birth, or financial reversals are alerts that you should tune up your plan to reflect those changes. Your plan shouldn’t be “one and done.”

It takes expertise to coordinate the various strategies available. Don’t risk a result that will cause your family problems and unnecessary expense. Call us to create a plan that harmonizes the moving parts, so the gears will work together and you will leave the legacy you intended. We hope you found this article helpful. If you have questions or would like to discuss your legal matters, please do not hesitate to contact our office at 215-364-1111 to schedule a consultation.

- Creating an Estate Plan On Your Own: Think Twice

JOIN Our Newsletter

Schedule Your Free Consultation

At Scott Bloom Law, we strive to provide excellent client service and will contact you as soon as possible. Send us an email, or call us to speak to someone directly.

CLIENT Testimonial

It is important to plan your estate to ensure that your assets, interests, and those you love will be protected after your death. However, without proper guidance and advice from a qualified estate planning attorney, many individuals make costly mistakes. Beyond undermining your intent and diminishing your financial legacy, poor planning can create additional stress to your heirs in their time of grief.

Six common errors frequently happen during the estate planning process. These mistakes often occur because the complete financial picture was not fully considered. It is easiest to avoid estate planning mishaps by knowing what they are before you begin or looking for these errors when reviewing and updating your plan.

Financial procrastination causes problems. While examining your mortality and making end-of-life preparations is not a particularly fun activity, try viewing it as helping and enhancing your loved ones' future lives while creating a sense of peace during your own. 

The need to protect your finances using wills, trusts, and power of attorney (POA) documents is not solely the domain of the elderly. Putting off the drafting of legal documents necessary to protect yourself and your inheritors can lead to disastrous outcomes.

By far, failing to create an estate plan is the most common mistake. Even if you do not have a lot of money, you need a will to protect any minor children you have by naming their guardians. Your will also ensures your asset distribution to heirs is carried out according to your intentions when you die and names a representative to handle debt obligations, final taxes, and other estate administrative duties. Dying without a will or "intestate" can lead to dire consequences.

Outdated wills, forms, and POAs create problems. If you made a will twenty years ago and have not reviewed and updated its contents, chances are many of the details no longer reflect current assets or beneficiaries. Estate planning is not a "set it and forget it" proposition. Reviewing estate planning documents and beneficiary forms every two years is generally adequate, barring a major life change such as divorce, birth, death, remarriage, or relocation to another state.

Beneficiaries without coordination can create expensive oversight. Beneficiary forms for retirement accounts like 401(k)s and IRAs, annuities, and life insurance policies may constitute a significant portion of your estate's assets. These beneficiary forms are legally binding and will supersede the contents of your will. Failure to update beneficiary forms can lead to an ex-spouse receiving assets that preferably would go to your heirs. Routine checks of all beneficiary designations are best practices for estate planning.

Failing to title trust assets properly can lead to probate. While not everyone requires a trust, those who do must carefully retitle their assets into the name of the trust. Forgetting to add more recently purchased property or opening a new account requires you to title them into the trust to receive trust benefits. Whether real estate, cash, mutual funds, or stocks, if you fail to move the asset into the trust, they become subject to the probate court, possible tax consequences (depending on the trust type), and a public record of these assets.

Life insurance can trigger estate tax. Life insurance can provide heirs with liquidity without the sale of assets and tax consequences when handled correctly. However, if a wealthy individual dies while maintaining ownership of their life insurance policy, they may inadvertently create a tax event for their heirs. Although life insurance death benefits are not subject to state or federal income taxes, any "incident" of ownership by the decedent can create an inheritance tax.

An estate planning attorney can help shelter life insurance proceeds from high-value estates by gifting the policy to an Irrevocable Life Insurance Trust (ILIT) or draft a new trust to purchase a new policy where the trust is the owner and beneficiary. A policy owned by the trust does not create a taxable situation to death benefits. Your attorney's careful structuring of this trust type is complex but can provide proper protection.

Joint ownership of assets with your children can lead to disastrous consequences. Naming your children as co-owners of assets, even digital, permits their creditors to access your money. The better way to address the situation is to give your adult child power of attorney and assign them as a beneficiary to a payable on death bank or brokerage account. This tactic permits them to access your funds if required during your lifetime. However, it keeps your assets from your child's estate and away from their potential creditors.

Ultimately the biggest error you can make is not finding the right estate planning attorney to guide you. This specialized attorney receives training on avoiding probate, tax implications, and asset protection if you require long-term care. Proper planning with the right guidance will help you avoid costly estate planning mistakes and protect your family's future financial well-being.

If you have questions or would like to discuss your legal matters, please do not hesitate to contact our office at 215-364-1111 to schedule a consultation.

- Estate Planning Mistakes to Avoid

JOIN Our Newsletter