Recently I addressed a wonderful audience of Senior citizens to talk about current frauds and scams. On each table there was a sheet which introduced me, our topic and asked that they fill out the form below to be eligible for the door prize. On the form I asked for name, address, phone number, date of birth, place where born and social security number. Only one person really questioned me as to why I needed this information and pretty much everyone else filled out the form with all the information. After I collected all the forms I then informed them that they had given me enough information about themselves that if I was a really good computer hacker I could have their bank accounts emptied and their credit cards maxed out within hours if not minutes. At that point they all said, “Well we thought we shouldn’t give all that information, but since you were an invited guest speaker we trusted you” and there lies the problem. It’s all a matter of trust.

According to the Federal Trade Commission at least 35% of the complaints they receive each year are about Identity theft. Identity theft is not limited to strangers getting a hold of your personal information and using it for their ill gotten gains. On September 28, 2006 the Record Eagle reported about an Alden (Alden woman faces embezzlement charges) woman who had embezzled $60,000 from a woman in a nursing home. It turns out that it was the woman’s daughter who stole the money from her mother. As sad as it sounds, Family fraud is one of the “most common and underreported types of elder abuse”, says Helen Marks Dicks, director of the Elder Law Center at the Coalition of Wisconsin Aging Groups.

Ms. Dicks goes on to say that the problem starts when retirees give a General Power of Attorney or other legal authority to an adult child or other family member. Before they know it that relative has transferred real estate into their name as well as drain bank accounts before anyone becomes aware of the situation and in many cases once its detected its not prosecuted because the senior is too embarrassed or doesn’t want to have a major family fight.

Many financial advisers recommend giving someone authority to handle your financial affairs if you become incapacitated through the use of a Durable Power of Attorney. But “you really have to be careful about who you choose to handle your money,” Dicks says. In a financial pinch your nest egg might hold the golden eggs that an unscrupulous relative might dive into.

So how does one protect them selves from this situation? According to Adam Lett, an Estate Planning attorney with the Traverse City office of Smith, Haughey, Rice & Roegge, you can make it a matter of accountability, “If you give one adult child the power of attorney, you can inform your other children and require that an annual accounting be prepared for you and the agent’s siblings to review”. Mr. Lett goes on to say you should also, “resist pressure to transfer money and property into your children’s names to preserve their inheritance. There can be significant unintended consequences. Also, if long term care becomes an issue, the new Medicaid rules might make it impossible to accomplish what you desire, but you may not find out until after you decide to make the transfer”.

In many cases children just assume that with age your ability to take care of your affairs diminishes. In one of the most bizarre client situations I’ve encountered was where a person who had spent her life as Township Treasurer was bullied by her son into relinquishing control of her assets because she was now retired. When she sat down with me I reviewed her statements which indicated she was withdrawing $2,500 a month form her brokerage account. Her first response was complete surprise and she blurted out, “No I’m not...” but then quickly said, “Oh I guess my son is doing something with the money for me, since he handles everything ...Certainly he’s not stealing it. He’s a good boy and I trust him”. I told her I was sure she was right and that once she talked to her son he would straighten it all out. I called her about a month ago to see if we should get back together and she said no. I asked if she had asked her son about the brokerage withdrawals. She quietly said, “No”, that she didn’t want to get him upset and to have him think, “She didn’t trust him”.

In many cases the children count on your silence. One women at the seminar said to me afterwards that her daughter had stolen thousands of dollars from her and she did nothing about it. I asked her why and she shrugged and said warily, “What should I do call the police and have my own daughter arrested? I just told her she already received her inheritance, changed my will and let it go at that. To make a big fuss wouldn’t have gotten the money back and anyway why embarrass myself by admitting to the world that the one person you thought you could count on had let you down so badly” With that she turned, and with tears in her eyes, walked away. As I watched her go I thought to myself that I’d be different if it were me who had been defrauded by one of my kids. I’d throw their butts in jail so fast it’d make their head spin…and then I stopped and thought about it. Who was I kidding; I’d probably do exactly the same thing as my sad new friend had. Family fraud is probably one of the worst scams out there. No matter what you do you lose. Say something and you may destroy your family, keep quite and you may wind up broke and in all cases you feel like you’ve failed as a parent and that’s the biggest hurt of all. Family fraud is a game we all hope we don’t have to play.

Fred L. Goldenberg is a Certified Senior Advisor and the owner of Senior Benefit Solutions of Michigan. He is a founding member of the Senior Resource Alliance of Northern Michigan.