Financial fraud against seniors on the rise, bank says 0
LINDSAY - Financial fraud against seniors by their power of attorneys is on the rise, according to a local bank, but there are steps to help prevent it and act when it is suspected.
"We're seeing more abuse than ever before," said Nancy Sullivan, manager of client care at RBC Royal Bank in Lindsay.
She used the example of a senior's son who was power of attorney (POA) for finances, using the senior's account to pay for his own son's auto insurance. She said trips are purchased on a senior's credit card, when the senior is an invalid.
Sullivan said another sibling or close friend can come to the bank if they think the POA, often an adult child, is using the senior's money in a fraudulent way.
"For privacy reasons, we can't tell them anything (about the account) but we can look at the account activity." She said if there is suspicious activity, the bank can stop the POA from accessing it and they could contact the police.
A tip of suspected misappropriation "puts the wheels in motion at the bank. We have a legal department and will get their advice."
"We're a bank at the forefront of protection," she added.
Sullivan said the bank does a lot of talking with a senior about the ramifications of allowing a POA access to their finances. "We highly recommend they go to a lawyer" to draw up a POA document.
After her interview with The Lindsay Post, Sullivan took part in a seminar on POA banking fraud held during the senior information fair at Adelaide Place Retirement Community on June 15. She was joined by Claude Smart, an iinvestment and retirement planner at RBC for the past 32 years. He echoed her warning that "financial abuse is on the rise." He added that "most of it is by your near and dear who were given a financial responsibility."
"It's human nature at its worst."
He reminded seniors in the audience to not give their banking card and PIN to their POA and to not allow them to take over receiving their bank statements. If they don't watch their statements, they won't see if money is transferred out of their account.
Smart noted that there are three ways to get a POA document for bank accounts. One is through the bank itself, but he said the risk is people might take them home and the bank doesn't see if the senior was pressured into signing, or didn't understand them, or were coaxed into signing them despite already having a POA document through a lawyer.
A second way to set up a POA is the free government kit, but he warned they are vague and often invalid because family members signed them as witnesses, and again might be signed at a time when the senior is in ill health or isolated from independent advice.
He strongly recommended that the client make the investment and see a lawyer to draw up a POA document.
Both Smart and Sullivan warned against the common practice of making a senior's account into a joint account with an adult child. They said there is no reason to do so, particularly if a POA is already in place. Sullivan said some children might use the scare tactic that if the accounts aren't joint, the government will get a big chunk of the senior's estate upon their death through probate fees, but she said that simply isn't true.
They provided a handout that discusses "seven reasons NOT to make your bank accounts joint." It notes that if the adult child divorces while having a joint account with their parent, the ex-spouse can claim the account as marital assets. As well, if the adult child gets into debt, their creditors can seize the joint account for payment. It also warns, "Even though the senior would not like to think so and even if the new joint account holder appears to be well established, the joint account holder may take the senior's funds to feed their addictions: alcohol, gambling, drugs or just to 'keep up with Jones' kind of shopping for themselves."
The handout and the two bankers warn that when a senior dies, the other joint bank account holder gets 'right of survivorship' which means they get all the money in the account "and anyone else expecting an inheritance won't," the handout says.
That issue, however, is seen differently from a legal point of view, which focuses on the intention of the parties at the time the joint account is created. For example, if the intent of the joint account was only to allow the child to assist the parent with paying bills, then the surviving child has a legal obligation to hold the account in trust for the benefit of the parent's estate after their death, says Heather Richardson, a lawyer with Staples and Swain in Lindsay. In that scenario, the account does not, in the eyes of the law, belong to the surviving joint account holder. But banks go by 'right of survivorship' and will release the money to the surviving joint account holder, who may take it all. It is then up to other beneficiaries to challenge that in court.
To understand the different types of POAs and how to protect their estates, the bankers concluded by urging seniors to see a lawyer and put the POA documents in place before any potential decline in health or mental capacity make them vulnerable.