As we discussed last week, there is no shortage of trust and annuity peddlers out there ready to take advantage of seniors. There has been an epidemic of elder financial exploitation in our country.
It is reported that the number of known cases of financial exploitation of the elderly in Michigan has quadrupled in the last decade. However, this financial exploitation is not limited to strangers. According to law enforcement officials and others, the vast majority of financial exploitation is not by strangers, but by family members, caretakers, new best friends and other trusted individuals.
It is well known and studies have shown that as you grow older, your brain ages and declines just like the rest of your body. You are not as sharp at 80, as you were at 60, even if you think you are. Consequently, as you age, you become more vulnerable to financial exploitation. Oftentimes, you do not even know it is happening because it is so emotionally manipulative. Three types of trusted individuals who regularly engage in financial exploitation that we will talk about today are the dippers, the swoopers and the professional dependents.
The Dippers. The dippers are family members, typically children, who are always dipping into your financial bucket. The dippers usually have decent jobs, but they never seem to have enough money. They are always complaining about their lack of financial resources or their financial plight.
Often times with dippers, it is not the lack of money that is the issue, it is just how their money is spent. Typically, money management skills were not one of the gifts that God has given these financial exploiters. For example, they may have enough money to do major house renovations such as a new recreation room or hot tub, but not enough money to buy health insurance. Or they may have funds to go on regular vacations, even overseas, but not enough money to pay for their kids’ college education.
Because of their situation, you really want to help them out, so you give them money to fix little Suzie’s teeth, for a new computer or to pay their home’s real estate taxes. The dippers are usually the ones that always seem to end up with your old appliances or cars when you do not need them any more. Oftentimes, the dippers are the ones who volunteer to help you out to take care of your jewelry for safekeeping, cleaning or appraisal. When dippers take your jewelry, it is usually for good.
You may try to justify these gifts to dippers because they “never ask for money”. Although they may not have come out and said, “Can I have XXX dollars?”, they really did ask for the money. They are much more manipulative and take advantage of your good nature. They know that if you see any of your children in trouble, you will want to help out. So they just make sure that you see them in financial trouble.
The Swoopers. You may start making financial decisions that you would not have made when you were younger. Some family members may start questioning those decisions. When they start questioning those decisions, you may feel that they are trying to control you or take away your independence. You then may start cutting off contact with those family members doing the questioning.
Then a long lost relative, who had little to do with you in the last 20, 30 or more years, swoops in to help you out and lavishes all kinds of attention on you. This person is so supportive of you and your decisions and does not seem to want to control you at all. You then start rewarding this relative for being so encouraging and assisting you when you “needed” it most. You give away cash, jewelry or even automobiles. You may even ask this relative to take you to his or her attorney to update your will or trust to leave something to this relative who is so understanding. You even decide to put him or her in charge when you can no longer care for yourself or after your death.
If any of this looks familiar to you, watch out. If your children start questioning your financial decisions and then someone with whom you’ve had little contact in years comes back into your life to help you out, step back a minute. Reassess the relationship. These are classic swooper manipulative actions that I have seen time and time again. These swoopers typically have experience with this and have done it to other relatives. It worked well with grandma and Uncle Joe, so you are next on the list. Do not be embarrassed. Seek assistance from someone else. The likelihood is that the swooper is taking advantage of your diminishing state for their own gain.
Sometimes dippers become swoopers as their parents age in order to keep the financial spigot open and flowing. This also can isolate the parents from other family members. The swoopers are in control.
The Professional Dependents. Professional dependents are a kind of combination of the dippers and the swoopers. Professional dependents are usually children or other relatives who have no visible means of support, have never been able to hold a steady job, and have always relied upon the pity, generosity and handouts from you and others to get by. These professional dependents rarely make good life choices and typically blame the world for their woes. These financial exploiters are skilled manipulators who make it appear that their plight is not their fault. They are always the victim.
Like the swoopers, the professional dependants will lavish attention upon you and may even help you out, when other family members don’t. Like the dippers, they may not ask for money directly, but make their financial plight obvious to you. They then make you think that it is your idea to help them out. You regularly give cash gifts to these professional dependents or pay their bills. They may also be receiving gifts or assistance from others.
A child who lives with you can also be a professional dependent. This child contributes nothing to the household operation, either financially or time-wise. All too often, the child just sponges off of you.
It is not uncommon for a child to move in with you “temporarily” after a major life event such as a divorce or loss of a job. He or she may even bring a girlfriend or boyfriend with children into your home. Then the child then just sleeps, sits around watching TV or playing video games, doesn’t look for a job and doesn’t help with household chores. This “temporary” arrangement many times becomes permanent.
All three of these, the dipper, the swooper and the professional dependent, are rather insidious types of financial exploiters, because you usually do not know it is happening. These exploiters do not look like exploiters and don’t act like exploiters, but are exploiters nonetheless.
And they often pass on these skills to their children. The grandchildren see their parents exploiting grandma or grandpa. To the grandkids, it is their normal. The grandkids become exploiters themselves, beginning with exploiting grandma and grandpa.
If you are getting up in years and your children and others start questioning some of your financial decisions, it might not be a bad time for self-reflection. Take the financial literacy test on the AARP website at http://www.aarp.org/money/budgeting-saving/info-01-2014/test-your-money-smarts.html. Or go and ask for assistance from a professional. In any event, be on guard for the dipper, the swooper and the professional dependent because they are not out to help you. They are out for themselves.
By: Matthew M. Wallace, CPA, JD
Published edited November 30, 2014 in The Times Herald newspaper, Port Huron, Michigan as: Making plans for unexpected events