Protecting elders from financial exploitation

What is financial exploitation of seniors?

Financial abuse of seniors includes the taking of assets, whether illegally or im-properly, which belong to the victim.  The definition of this crime continues to evolve among the professional disciplines that are tasked with its prevention. Seniors are often the victim of financial exploitation. Major financial exploitation was self-reported at a rate of 41 per 1,000 surveyed, which was higher than self-reported rates of emotional, physical, and sexual abuse or neglect.

How can we use estate planning strategies to reduce the potential of financial exploitation of vulnerable older adults?

Legal protections begins with voluntary legal planning while an individual has the mental capacity to execute legal documents. It then moves along the full spectrum to involuntary court proceeding or conservatorships. 

How else can I protect an older person against frauds and scams?

Unscrupulous people target seniors and will abuse or take advantage of them. Consider doing the following:

  1. Learn about the types of abuse and associated warning signs.
  2. Get on the National Do Not Call Registry to reduce telemarketing calls.  Visit or call 888-382-1222 to register your phone number.
  3. Don’t sign any documents that you don’t completely understand without first consulting an attorney, family member, or close friend that you trust.
  4. Do not provide personal information over the phone unless you initiated the call and know with whom you are speaking.
  5. Tear up or shred credit card receipts, bank statements, and financial records before disposing of them in the trash. 

Source National Center on Elder Abuse, Administration on Aging,

My parents are thinking about selling their home they have lived in for many years but are worried about capital gains. What do they need to know?

If you sell your home at a significant profit some or all of that gain could be taxable. However, in most cases, if the home you sold counts as your main home, the first $250,000 of gain is not taxable - $500,000 if you are married and filing jointly. The home would qualify for exclusions if the following is true:

  • You owned the home and used it as your main home during at least 2 of the last 5 years before the date of sale. If you have a disability and are physically or mentally unable to care for yourself, you only need to show that your home was your residence for at leas 12 months out of the 5 years leading up to the date of sale. In addition, any time you spend living in a care facility counts towards your residence requirement, so long as the facility has a license from a state to care for people with your condition. 
  • You did not acquire the home through a like-kind exchange, known as a 1031 ex-change, during the past 5 years, and
  • You did not claim any exclusion for the sale of a home that occurred during a two-year period ending on the date of the sale of the home.

Source: Publication 523


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