Barbara Macari’s husband, Frank, always handled the investments in the family. Then one day, Frank, a real estate broker, gave his wife the shock of her life.

“I was coming down the stairs, and he came to me and said, ‘I don’t understand money anymore,’” Barbara said. “I was just shocked because this was something that he had always handled, and handled it beautifully. He made a lot of money on investments. He was smart, he was astute, he was careful, and all of a sudden, he didn’t understand anything.”

A couple of months later, Frank, 74, was diagnosed with Alzheimer’s disease.

‘Huge Problem’ as Elders Increase

“He can no longer write checks,” said Barbara, 72. “He doesn’t even carry money with him because he doesn’t understand it.”

The Macaris are far from alone.

An estimated 5.1 million people age 65 and older have Alzheimer’s disease or other dementias that eat away their ability to manage their financial affairs. With the United States rapidly aging, those dealing with cognitive decline is projected to rise.

That means that seniors, with a median household net worth of $170,500, will be more vulnerable to financial exploitation, whether it’s a scam by crooks preying on them or theft by someone they trust.

“It’s a huge problem,” said Daniel Marson, a neurologist at the University of Alabama, Birmingham.

“It’s like a 2,000-pound elephant. Where do you start? Poor financial decision-making and financial exploitation, financial elder abuse are rampant.”

Marson added, “All older adults experience normal cognitive aging as they grow older. Whether this normal cognitive decline causes actual problems in their everyday life and functioning will vary across individuals and their living situations.”

Dementia for 35% Age 70+

“Thirty-five percent of everybody over the age of 71 will have some form of dementia,” said gerontologist Robert Rousch,director of the Texas Consortium Geriatric Education Center at Baylor College of Medicine in Houston.

In the financial realm, cognitive decline means a loss of “higher-order functional abilities” affecting a broad range of skills from counting coins to managing a checkbook, experts say.

Loss of those skills can have severe consequences for seniors, who lose $36.48 billion a year to financial abuse, according to a recent study by True Link Financial. The study estimates that almost half of that amount is lost to financial exploitation, such as high-pressure sales tactics using misleading or confusing language.

A third stems from scams or identity theft, and the remainder results from “deceit or theft enabled by a trusting relationship” typically exploited by a family member, friend, or legal/financial advisor.

“Since so much abuse is never uncovered, this is undoubtedly still a low estimate of the true cost,” said Kathleen Quinn, executive director of the National Adult Protective Services Association.

Mark and Kent Olds said their mother Gail, 79, has dementia and was exploited by a caregiver who took about $7,500.

“This lady took Mom to the credit union on two different occasions,” Mark said. “Mom gave this lady $6,000, $7,000 one time, a grand another. We noticed a few other things missing before we could put the stops on it.”

Too Trusting

The financial losses of seniors aren’t limited to what others do to them. They often hurt themselves by being too trusting and generous with their finances.

“When my mother was about 65 years old, she began giving money to anyone who asked, including those who just knocked on the door,” said Tom Murphy.

His father, also named Tom, eventually took the family and business checkbooks away from his wife, who was later diagnosed with Alzheimer’s disease.

Cognitive decline also can cost seniors the ability to handle simple financial tasks.

In the Olds family, Gail once had her power cut off because her bill was overdue. Kent was able to pay the bill and have the power restored.

Her sons, who are seeking legal guardianship over their mother, said they have arranged for her bills to be paid through automatic deduction from her bank account.

Cliff Brunette’s experience with his mother was similar.

“She went through the normal aging cycle where she was starting to get confused with the mail coming and what needed to be paid and what was an advertisement or what was a pre-notice to a bill, especially when it came to medical,” said Brunette, a volunteer at the Senior Source’s Guardianship and Money Management program.

“She would get multiple statements from insurance companies and doctor’s offices and Medicare,” Brunette said. “She would start to panic a little bit, and she would start to write checks out. I’d go over and I’d say, ‘Wait, you don’t owe this yet.’”

“It got to the point where I told her, ‘Just put a shoebox next to your kitchen table. When this stuff comes in, just throw it in there. When I come over to visit, we’ll go through it together,’” Brunette said.

Worst Possible Time

The deterioration in financial skills couldn’t come at a worse time for seniors, said Lynne Egan, who chairs the Committee on Senior Issues & Diminished Capacity at the North American Securities Administrators Association.

“Our ability to make financial decisions starts to decline at about the time it becomes more important that we protect our nest egg because we don’t have time on our hands to earn back losses that may have occurred,” she said.

Because of the potential for financial exploitation of seniors, outside institutions including banks, health care providers, lawyers and financial advisers have developed policies and training to detect telltale signs.

Egan said bank employees can be the first line of defense against financial exploitation because they often get to know their older customers.

Glenda Coffman, a banker at Chase, proved Egan’s point when she saved an elderly customer from sending $30,000 to a would-be scammer. A teller referred him to Coffman when he asked about withdrawing an unusually large sum.

“He said he needed to get some money to help out his grandson,” she said. “He wouldn’t give me too much information about the transaction, just that he wanted to help his grandson. I got him his money and he went on his way.”

Red flags really started waving by the third day the man tried withdrawing fund. When Coffman questioned him again the customer was more forthcoming. He told her that his grandson was in trouble and needed to pay legal fees.

Coffman encouraged him to talk to his daughter — his grandson’s mother — but the man eventually withdrew $30,000 and left. The next day, the customer’s daughter came to the bank and redeposited the $30,000. The grandson wasn’t in legal trouble after all.

Trained to Know Customers

Crediting the happy ending to the training Chase gives its employees, Coffman said, “One of the things we try to do is to get to know our customers and their families, if at all possible, just so when stuff like this occurs, it pops out at you.”

The Investor Protection Trust, a nonprofit investor education organization, works to educate doctors, nurses and other frontline medical professionals to recognize when their older clients may be vulnerable to or victims of financial abuse.

The organization supplies a pocket guide that suggests questions medical professionals should ask their older patients to determine financial capacity: Who manages your money daily? Do you run out of money at the end of the month? Do you regret or worry about financial decisions you’ve recently made?

The trust operates a similar program for lawyers.

Lynne Egan’s association of securities administrators has made expanding and strengthening protection for senior investors a top item on its congressional agenda. She said it’s sorely needed.

“It takes a village of people to protect a senior.”

Ways to Shield Seniors From Financial Abuse

So how can you protect an elder from financial abuse?

For starters, be active in their lives and aware of who’s in their circle. Be especially vigilant of sudden “friends.”

“Run background checks on caregivers or financial advisers.”

“Accompany an older adult to important appointments, including a financial adviser, bank or lawyer.”

It’s not just outsiders to be wary of. “Most exploitation of a senior is done by a family member,” said Lynne Egan, who chairs the Committee on Senior Issues & Diminished Capacity at the North American Securities Administrators Association.

Daniel Marson, professor of neurology at the University of Alabama at Birmingham, said warning signs of cognitive decline include:

Memory lapses regarding finances, such as failing to pay bills or paying the same bill two or three times;

Problems with everyday math, for example, uncharacteristic addition and subtraction errors in a checkbook;

Alterations in financial judgment,for instance, someone usually very careful with money now taking on risky ventures.

However, it’s important to remember that not every slip-up has its roots in cognitive decline. “To be a warning sign, there needs to be a change from some prior level of function,” Marson said. “If someone has always made a mess of their finances, the fact that they screwed up yesterday is not a warning sign.” Way to spot the signs of financial abuse in a person with dementia include:

• Monitor bills and check bank statements. Unpaid bills or large sums withdrawn from an elder’s account could indicate the person is not managing well financially or has been scammed.
• Be aware of unusual or seemingly unneeded purchases in the home, perhaps items miss-sold by unscrupulous cold callers, salespeople at the door or by phone or telesales companies.
• Look out for unexpected changes to the person’s house, such as incomplete renovations, missing valuables or work crews carrying out unnecessary work.
• Be aware of sudden new friends or acquaintances. In particular, be aware of someone the person says is inquiring about moving in, is taking trips with the senior or is making joint financial commitments.
• Large amounts of cash kept in the home could be a sign that the person with dementia is withdrawing unusual sums from accounts and creating a high risk of theft, which will put them at unnecessary risk.

For more information on elder financial abuse check with the Alzheimer’s Association