Dad is Lending Money and Getting Scammed
The elderly are targets for all sorts of money scams, e.g., healthcare scams, fake financial advisers, long lost great grandchildren that don't exist, prescription scams, obituary and funeral scams. These scams are quite elaborate; however, scams are often as as simple as someone convincing your parents to loan him or her money that will likely never pay it back.
When this happens, it creates considerable angst for the children.
Often what we see is a neighbor, caregiver, or someone that gets close to your parent who is also struggling with a difficult financial situation, such as a car repair or job loss. They mention it to your parent, and before you know it, your parent has loaned a reasonable amount of money to someone who may never pay it back.
Your parent is of the belief they will get their money back. They had no document signedacknowledging the loan or the terms. You believe they have made a mistake and are now wondering what you can do.
If your parent is of sound mind, there may be little that you can do to assist at this point. Yes, you may contact an attorney, but I am not aware of laws that preclude an adult from loaning money. Much like investing, you may place money anywhere you wish. At times a Bernie Madoff comes along and dupes people with falsehoods upon which they may or may not later recover some of their money.
If your parent did not get a written agreement charging interest, the loan may be a gift and subject to gift taxes.
The IRS placed limits on gifts of $14,000 in 2013, and a loan without interest may qualify as a gift. This is something you should assist your parents with to check if the loan was significant in size. If your parent did not get an agreement, it does not hurt to seek one after the fact. The person being loaned the money should understand and not desire your parent to endure penalties after the fact.
If the sums are smaller, but you fear Dad is increasing his gift-giving habit, for example, you may need to carefully approach him about what he is doing. Before you do this, examine the situation carefully.
Does he feel disenfranchised from his children and is now dispensing his assets as he sees fit to those he is closest to?
Is the borrower providing key services to him in his less able state, and he is dependent on them?
Is he of less than sound mind and is therefore being taken advantage of?
We most frequently see parents loaning money inappropriately when family is more distant, either physically, emotionally or both. My advice is to get close and stay close. Visit often. Do things together. Spend time together. Video conference, call regularly, text, write, do whatever you need to do to stay connected.
Family Caregiving Advice ColumnLearn More...
About this Post
Latest on the Blog...
Nov 2, 2019
Oct 26, 2019
Oct 19, 2019