The Seniors Center has written extensively about Guardianship-for-Profit. For More Information, read:
In November 2009, my then very independent 88-year-old mother who lived alone in a suburb in another state 1000 miles away, called and said she needed me. I flew there immediately. Two days later, she fell and broke her hip and clavicle. She spent days in the hospital and weeks at a rehab facility. My sister joined us. We talked to her family doctor and it became clear that Mom couldn’t live alone anymore, shouldn’t be driving, and had early signs of dementia. She had been managing because she had lived there for so long, her family doctor said she was on “auto pilot.”
Because she had a Durable Power of Attorney, Health Care Surrogate Designation, Living Will and HIPAA Release, we contacted her attorney to activate them so we could take care of her healthcare needs and finances. We decided to move her to an assisted living facility near my sister’s house, and I soon moved close by. She is 97 now, in a memory care unit and uses a wheelchair but is in good health for her age.
I can only imagine if this had happened and she hadn’t planned on how she wanted us to deal with a situation like this. Anyone who observed her on a more regular basis might have seen that she was in the early state of dementia and taken advantage of the situation by trying to obtain guardianship and wiping her out.
The Seniors Center began exposing the Guardianship-for-Profit Business in February, shortly after The New Yorker published an article about senior citizens whose lives were devastated by for-profit “guardians.” In April, the Senate Special Committee on Aging held hearings on Guardianship Abuse.
What is Guardianship?
Guardianship is where someone petitions the court, alleges that a person is “incapacitated”, or incapable of taking care of himself, and asks the court to appoint him or a third party to take care of the incapacitated person (ward’s) medical and financial affairs. Usually equity or probate courts, which operate under very different rules from criminal courts, oversee this process. There are no fixed definitions of what constitutes “incapacity”, which varies from state to state and can be determined by people who may not be physicians, or committees who collude with each other to come up with a report.
According to Dr. Sam Sugar, author of “Guardianships and the Elderly – The Perfect Crime”, nine common scenarios trigger taking elderly people into guardianships:
- A dispute in the family over taking care of an elderly parent or fear that a sibling or child may have undue influence and try to steal from the parent
- Concern for the dissipation of a parent’s money by a new person in his/her life
- A weapon by an angry spouse
- A family’s honest attempt to get help for a loved one
- A non-family member recognizing the need for assistance
- Intervention of financial institutions who call Adult Financial Protection institutions because of suspected fraud
- Intervention of medical institutions who see vulnerability or abuse
- Family members fearing the loss of their inheritance
- Law enforcement intervention, especially for drug and alcohol abuse.
Richard Black, director of Americans Against Probate Guardianship, tells the story of his father-in-law, Del Mencarelli, who was a victim of a longtime family friend. The friend defrauded his father-in-law out of $1 million and cost Black’s family $400,000 to gain control of Mencarelli and his estate, but in the middle of the court battle, Mencarelli died of neglect. According to Black, families spend an average of 4500,000 fighting these guardianships.
Spider-Man creator Stan Lee, a 95-year-old widower who had a $50+ million estate, was a victim of financial abuse. An LA Court had to issue a temporary restraining order against a man who claimed to be Lee’s caregiver. You can read about other examples here: https://stopguardianabuse.org/victims/
Courts are supposed to monitor guardianships and grant them only to non-family members if there is no family member available to take care of the elderly person, but things don’t always happen that way. In 43% of the cases, guardians failed to meet all court-mandated reporting obligations, including obtaining bonds, filing an inventory of assets in the estate or annual accounting of transactions. According to a recent article in Reuters and the National Association to Stop Guardianship Abuse, “the U.S. Government Accountability Office (GAO) identified hundreds of abuse, neglect, and exploitation by guardians in 45 states and the District of Columbia between 1990 and 2010. The GAO reviewed 20 cases and found that guardians had stolen or otherwise improperly obtained $5.4 million from 158 incapacitated victims, mostly older adults.”
An abusive industry has even arisen where professional, for-profit guardians are appointed by courts, which gives them absolute control over someone’s rights, including living conditions and healthcare. Guardians can transfer the elder’s financial assets, estate, and personal property even if they are in a trust, into their own names. They can limit family members from speaking to or seeing their “wards”. They can charge the estate an hourly rate to grocery shop, make phone calls, open mail or arrange family visits. The judges and lawyers who oversee this process also profit from it and are susceptible to corruption, biases and influence. If the ward dies, guardians can run up huge fees by presenting bills for services, pushing papers and filing motions.
What is Being Done to Fix This?
On April 18, 2018, the Senate Aging Committee recommended enacting state laws to provide less restrictive arrangements than guardianship, such as assisted decision making, for seniors and others with disabilities, requiring telling the individual under care and family members that a guardian has been appointed, what the guardian’s responsibilities are and how to report guardian abuse, and mandating guardians tell the courts when people under their care have become able again to make their own decisions.
Individual states and municipalities are acting to protect elderly people from abuse, including financial and guardianship abuse, with task forces, elder courts, elder justice centers, and training members of the judicial system on elder abuse. In 2010, 10 National Guardianship Network (NGN) networks met at the Third National Guardianship Summit and one of the recommendations called for Working Interdisciplinary Networks of Guardianship Stakeholders (WINGS) to implement the summit recommendations.
What Can You Do to Protect Your Loved One from Guardianship Abuse?
Have a family meeting to discuss how to best protect your loved ones. If they don’t have financial and healthcare powers of attorney, consult an attorney to draft the documents. It is recommended that several people in the family be granted powers of attorney to ensure that if your loved ones become incapacitated, the person(s) they designate can make decisions for them. Keep on top of things and intervene early, because even if elders have advanced directives, wills, durable powers of attorney or trusts, if someone obtains guardianship over them, it can nullify them.
Monitor who your elders are talking to or who is helping them, especially if you do not live nearby. Unsuspecting, lonely elders who may be in frail health may let neighbors, service providers, caregivers or even complete strangers take advantage of them. If they live alone, make daily check-in calls and ask neighbors or friends to check on them. If they suddenly acquire new “friends”, check them out. If a family member is suddenly spending a lot of time with your elderly relative, find out what is going on. It may be someone with a substance abuse or financial problem looking for an easy mark. If this happens, the elder either might not realize what is going on, or report a problem out of embarrassment or fear. Only 1 in 44 cases of elder financial fraud are reported. If you suspect that it is happening to a loved one, report it to the authorities.
PHOTO CREDIT FOR THE FIRST PHOTO: lauramusikanski @ morguefile.com
I struggle to keep up with technology. It seems like I was just getting into Facebook when people started talking about Twitter. And by the time I figured out what Twitter was all about, my kids were talking about Snapchat.
Modern technology is doing a lot to make our lives so much better. Who could have imagined a few years ago that I’d be able to type something right here at my kitchen counter and that a few minutes later, you’d be able to read it?
Sadly all of this new technology makes it a lot easier for conmen, thieves, and scammers to get ahold of our hard earned cash. Watch the video above to hear about one of the latest scams targeting older people.
Cases of fraud, scams, cons are on the rise. Technological inventions and advancements are giving thieves and conmen new ways of getting people to part with our hard-earned money. Money can be wired electronically and so it is easy for thieves, fraudsters and conmen to pose as legit people whom you should make out a payment to. It is even sad that these people whose main aim is to take what does not belong to them, target the elderly people in the community. This is mostly because they so many older people are vulnerable, lonely, insecure and sometimes unfamiliar with new technologies.
That is why The Seniors Center created this blog: to search for constructive solutions to the most critical issues facing America’s senior citizens. Through TheSeniorsCenter.blog, we offer educational programs about scams, frauds, and cons targeting senior citizens — and the best ways to avoid becoming victims.
How to Prevent elder Fraud
There are a number if ways in which older people can avoid falling into the hands of fraudsters, conmen and thieves.
- Avoid giving out Information or money based on an email.
Phishing emails is a common thing where someone sends emails randomly and those that reply back become victims of fraud, or scams. They draft messages and disguise them to look like they are from a genuine site. They then demand to be paid money maybe as a bill or for some other use. Before sending money to anyone just confirm the information received on mail with a phone call or any other form of communication for authenticity.
- If possible seek the services of a trusted Financial advisor
As we age, our memory suffers and new technologies come forth. This definitely affects our financial decisions and most fraudsters count on that for their plans to succeed. That way if you need to make an unauthenticated payment, the financial advisor can easily check out for the red flags. Take it as a double security check to protect you.
- Always authenticate information received on phone before sending money
Unless it is someone you know and trust, you should always countercheck and ensure that the person on phone is who they say they are.
- Prepare necessary legal documents in advance
Some of the most important documents include power of attorney, which appoints someone or some people who will act on your behalf when need arises. It will be hard for any fraudster, conman or even thief to successfully get his way through these people as appointed by you.
While only 35 percent of American population is over 50, 57% of all fraud is fraud victims are 50 or older. This shows that older Americans are the most vulnerable hence targeted by fraudsters, creating awareness is the best way of combating this statistic.
You may have seen ads on tv where some former tv star is selling reverse mortgages as an easy way for seniors to get extra cash by using the equity in their home. Before you grab your phone and call the number on the screen, you should know what you are getting yourself into, whether it is a good idea for you and if someone is trying to scam you.
The Seniors Center has created this guide to help retired people make their best decisions about reverse mortgages. Make sure to click the links at the bottom of this article for even more information.
What is a Reverse Mortgage?
A reverse mortgage is a type of home equity loan for older homeowners. Unlike a traditional mortgage where you make monthly payments until it is paid off and you end up owning the property free and clear, with a reverse mortgage, you take out a loan on
the equity of your property and the lender pays you. The money you get is usually tax free and you don’t have to pay the money back as long as you live in your home. If you die, sell the home or move out, you, your spouse (unless he/she is on the mortgage), or your estate must repay the loan, which might mean selling the house. The money can be used to pay medical bills, pay down an existing mortgage, for added income or for a costly repair.
Types of Reverse Mortgages
- Single-purpose reverse mortgages – Are offered by some state and local governmental agencies and some non-profit organizations and must be used for a specific purpose, such as to pay taxes or for home improvements, as specified by the lender. It is the least expensive option.
- Proprietary reverse mortgages – Are backed by the company that offers it. This is a good option if you have a very high appraised value and a small or no mortgage because you may qualify for more funds.
- Home Equity Conversion Mortgages (HECMs) – are federally-insured and backed by the U.S. Department of Housing and Urban Development (HUD). They may be used for any purpose.
Proprietary and HECM reverse mortgages are expensive and there are high upfront costs. How much you can borrow will depend on the type of reverse mortgage you choose, your age, the appraised value of your home, current interest rates and a financial assessment of your ability to pay property taxes and homeowner’s insurance (including flood insurance if you are in a flood zone). You must also maintain your property and pay utility bills and HOA dues, if applicable.
You can elect to get a single disbursement (if you have a fixed rate loan), fixed monthly cash advances for as long as you live in your home, fixed monthly cash advances for a specified time, a line of credit you can draw on or a combination of monthly payments and a line of credit.
Typically, you can take up to 60% of the limit in the first year and there are limits thereafter depending on how much you owe on an existing mortgage. How much you can borrow depends on your age, the value of the home, the interest rate and the lesser of appraised value or the HECM FHA mortgage limit of $679,650.
Qualifications for a Reverse Mortgage
- The youngest borrower must be 62 or older
- You must own your home outright or have a small mortgage and it must be your primary residence.
- You must not be delinquent on any federal debts or property taxes or hazard premiums.
- You must pass a credit check and lenders will evaluate your income, assets and monthly living expenses.
- Your home must meet FHA property standards and flood requirements.
- You can’t owe more than the value of your home regardless of how much you borrow and if the balance is less than the value of your home at the time of repayment, you or your heirs keep the difference.
- If you are married but your spouse is not on a HECM, and you die or move out permanently, your spouse can stay in your home as long as he/she is listed in the HECM documents as your spouse. Your spouse will not get any of the proceeds, however, and must maintain the home, pay taxes and insurance as long as he/she stays in the home.
- If you are in the hospital or a rehab center for longer than 12 months, the loan will become due and payable, which could result in foreclosure, as can defaulting on property charges, property taxes, maintaining property insurance, HOA fees, etc.
- If you are the heir to the estate and the last surviving parent dies, you assume responsibility for the future of the reverse mortgage. You may sell the home or purchase it for 95% of its appraised value.
Costs of a Reverse Mortgage
- The homeowner pays the cost of having the home appraised.
- Closing costs are higher than for a conventional mortgage and are based upon your home’s value.
- There are origination fees (which can be costly), mortgage insurance premiums, third party costs for title search, inspections, recording fees, mortgage taxes and servicing fees.
- As you get money over time, interest is added to the balance you owe each month, and this can add up.
- Unless you have a fixed rate variable reverse mortgage, the rates are tied to a financial index and the market and can go up. Interest rates are usually higher than for a traditional mortgage.
- Reverse mortgages can use up the equity in your home and you may have little to leave your heirs.
Reverse Mortgage Scams
Unscrupulous salespeople who are trying to sell you home improvements or tell you that you need a new roof or a repair you cannot afford, or your homeowner’s insurance won’t cover it, might suggest a reverse mortgage.
Some reverse mortgage salespeople try to induce you to take one out in order to buy an annuity or long-term care insurance, even though, in some cases, it is illegal to require you to purchase products in order to get a reverse mortgage.
Sometimes, a financial planner or investment advisor tries to convince seniors to buy financial products they don’t need and to take out a reverse mortgage to pay for them, or someone who has your power of attorney might take one out in your name and then divert the proceeds.
Unscrupulous realtors convince seniors to take out a “HECM for purchase” so they can buy a lower-cost home without having to put money down, and then divert the proceeds.
If you think you have been scammed or have second thoughts, you have at lease three business days after the closing tocancel the deal for any reason without penalty.
A reverse mortgage may be a good option for you, but you need to do your homework. Learn the facts. Good online resources are www.reversemortgage.org, www.hud.gov, and https://www.consumer.ftc.gov/articles/0192-reverse-mortgages.
In 2008, Tony Marshall was convicted on 14 counts of theft, grand larceny, and conspiracy relating to the financial exploitation of his own mother, Brooke Astor, widow of William Vincent Astor, president of the Vincent Astor Foundation, and legendary patroness of New York City.
Upon her marriage to Vincent in 1953, Brooke readily engaged in the family tradition that has made “Astor” a household name for over a century: funneling their massive real estate fortune into charitable organizations, honorable causes, and arts and education projects all over their hometown of NYC.
Vincent and Brooke, in particular, gave astounding amounts of money away. Through the Vincent Astor Foundation, Brooke made grants to the New York Public Library, the Metropolitan Museum of Art, Rockefeller University, Cornell University Medical College, the New York Botanical Garden, and the Wildlife Conservation Society.
After Vincent’s death, Brooke continued on to forge a reputation as New York’s undisputed queen of philanthropy. In 1996, New York Landmarks Conservancy declared her a “living landmark” for her contributions to the city.
But nearing her 100th birthday, Brooke’s health began to deteriorate. Despite being in excellent physical health for most of her life, Alzheimer’s Disease started her down an undeniable path of mental decline, opening a door to her son, his wife, and their associates to prey on her wealth through guardianship.
While Brooke struggled to recall what happened from one day to the next, Tony exploited his mother to the tune of $14 million. He made outrageous charges to her account, sold incredibly valuable pieces of art in her personal collection, altered her will to inherit her estate, and even persuaded her to give him a beloved property (which he then billed her to maintain). Several of these maneuvers broke bequests she had made to leave her assets with charities.
Though Marshall eventually paid the price for his crimes in court, the Brooke Astor case remains America’s most publicized senior guardianship abuse case.
The New Yorker has a devastating article about the Guardianship Business in Nevada where Court-appointed “guardians” are able to take control of the lives of older people, selling their assets and moving them into assisted living.
“The scheme is ingenious,” she told me. “How do you come up with a crime that literally none of the victims can articulate without sounding like they’re nuts? The same insane allegations keep surfacing from people who don’t know each other.”
The Seniors Center has an amazing discussion about the Social Security Trust Fund and the ways Congress spends America’s retirement savings leaving an empty Trust Fund. Senator Don Riegle says the law mandates payment of interest for the money that has been taken,=.
The Seniors Center has just posted an amazing new video on gratitude…
The Seniors Center has just posted a “new” video from 1984. President Reagan explains exactly what we’ve been saying all along. Social Security money belongs in the Social Security Trust Fund. No place else. I hope Paul Ryan sees this!
Today, The Seniors Center officially announced The Seniors Center Blog. Check out our newest press release, featuring some statements from The Seniors Center President Dan Perrin.