How to Fraud-Proof your Elderly Parents

We have all heard the stories about elderly parents being scammed online. I have seen many of these problems first-hand, happening to single parents, both parents, even financially savvy parents. The losses have run into the hundreds of thousands of dollars. Here are some actions that children can take to reduce the risks for one or both parents.

Have open discussions, if you can

If your family is fortunate enough to be able to communicate, then talk to your parents about how these scams occur and how seniors are targeted. If your siblings can’t be part of the conversation, then report out to them regularly on what has been discussed. Some scammers prey on lonely singles, some prey on promises of investment returns. All of them, sooner or later, ask for money. Any request for money is the instant red flag! Asking for passwords, banking information, etc. should also be considered a red flag. Ask your parents to check with you if they have any doubts. Make it an easy and positive experience to ask you. Explain that the reason for this concern is that you care about them, and don’t want anyone to take advantage of them. You might need to build a new habit of open communication, which will in turn make everything else easier.

Look out for cracks

Look for early warning signs:  are small slips occurring, like signing up for unneeded services, losing track of financial information, a few small scams that cost a hundred here or there? Is your parent suddenly lonely, and thus more vulnerable to the romantic fraudster? If you see any signs, have some deeper conversations. These conversations might take some tact, since parents can be sensitive about feelings of decline and losing control.

What is an advanced care plan and do your parents need one?

Get your planning tools in place

If your parents are on board, here’s some basic planning you can do together.

• Review wills, powers of attorney and other documents on a regular basis (maybe once or twice a year), and ideally share these documents with siblings. This way everyone has the same information. Power of attorney should probably name the spouse and a local person a generation younger, such as a child. If parents are comfortable sharing financial details such as net worth and assets, share this across the family also.
• If you want to do banking by power of attorney, the bank may require their own power of attorney.
• Consolidate all your parents’ banking at one or two locations, and get to know the managers.
• Consider look-only access to accounts, and consider joint ownership on accounts if appropriate.

Learn more about what a power of attorney is.

Fence off the big pieces

If you want to take more serious protective steps, review all the financial assets:

• Structure the “easy access” accounts like chequing and savings to have only modest amounts of cash. Larger assets like investment accounts can have more protections, such as joint ownership or standing bank instructions, so that another person is alerted before major withdrawals can occur.
• Interest-bearing investments can have locked in terms, so they cannot be withdrawn on a whim.
• Consider closing any lines of credit, whether secured or unsecured, or at least reducing their limits. Consider cancelling any mortgage that may be on title, if it is there only to secure an unused line of credit.
• Consider changing the ownership of major assets and real estate to joint, so that another signature is required, and also as part of overall estate planning.

Be humble, be proactive, and seek professional advice

Each family has their own unique dynamics around financial issues. As children, we should try our best to treat our family with respect, while seeking to be wise. That means admitting we don’t have all the answers, but we are going to work on this together. We should model in our own lives that we need the input and advice of others, and avoid our own habits of being overly secretive or protective, and share the planning, information and discussions across the whole family. Admittedly this is an ideal – you may have some difficult dynamics that make this open model impossible so you will have to use your own judgement. Finally, while we have laid out some legal and practical ideas here, this is only general advice. Be sure to seek out professional legal and accounting advice for your own situation.

Learn some of the most common questions about power of attorney.

© Linley Welwood LLP. The contents of this article do not constitute legal advice. Readers should seek legal advice in relation to their own specific circumstances.