The Glaring Problem with the Senior Safe Act

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The Senior Safe Act, which was passed by Congress and signed by President Trump last year, allows advisors to hold transactions when you suspect financial abuse of a client. The Act is designed, at least in theory, to allow time for the trusted contacts you have on file to take appropriate action. Many of those victimized by predators or manipulated by unscrupulous family have dementia and have lost their judgment about what makes sense financially. The Act ensures that you are not breaking privacy rules by alerting trusted contacts in the reasonable belief that your client is being financially abused.

You can hold a requested transaction as long as a month. This is where the Senior Safe Act has missed the mark.

Let’s look at the reality of impaired elders who are in charge of their wealth through the family trust. The trust is in order, and if the elder recognizes that he or she is experiencing decline in mental ability, that trustee may choose to resign. Simple. But that happens in too few cases. Many elders who have cognitive decline and dementia do not recognize that they are impaired. “I feel fine!” he tells his worried family. When asked to resign as trustee, having total control over (theoretically) millions of dollars in a trust, the elder flatly and stubbornly refuses. Meanwhile, financial abuse can continue unabated.

Cognitive decline typically has a very slow onset. Short-term memory loss does not raise enough red flags for those closest to the elder to take any action. “She’s just getting old,” they say dismissively. But memory loss is often the first and earliest warning sign of Alzheimer’s disease, the most common form of dementia. The odds of having Alzheimer’s disease by age 85 are greater than one in three.

Think about your own older clients. Some live well beyond age 85. The risk of dementia rises with age. Short-term memory loss interfering with daily life is not a normal part of aging. Financial abuse and cognitive impairment go together.

When financial abuse reaches a visible level, the advisor may do what the law allows and call the trusted contact, usually an adult child. The advisor hopes that the call will trigger something and the abuse will be stopped. But here is a reality check: The family can’t accomplish anything in two weeks or even a month, after which transactions by the elder can no longer be held.

Here is an example of just such a situation, showing how long it took.