Caregivers of people with dementia need to watch for sudden changes in financial accounts, unexpected bills, missing assets, or transactions they didn’t authorize. These signs often indicate financial exploitation—one of the most common forms of elder abuse—or can stem from a person with cognitive decline making unsound decisions or falling victim to scams. Even if no abuse is occurring, cognitive changes mean the person may be unable to manage finances safely, leaving accounts vulnerable to fraud or neglect.
Financial red flags rarely appear all at once. A caregiver might notice a single suspicious credit card charge, an unfamiliar creditor calling, or a bank balance that doesn’t match the person’s spending habits. The key is recognizing these signals early, because financial abuse of a person with dementia often escalates—small unauthorized withdrawals become large ones, power of attorney gets misused, or bills go unpaid and damage credit. Acting quickly can stop abuse before it causes serious harm and can also protect the person’s ability to pay for care they need.
Table of Contents
- What Kinds of Unauthorized Transactions Are Most Common?
- How Can You Spot Money Missing From Bank Accounts or Investments?
- What Are the Signs a Caregiver or Family Member Is Misusing Power of Attorney?
- How Do You Protect Accounts Once You’ve Identified Concerns?
- How Can Scams Specifically Target a Person With Dementia?
- What Should You Do If You Discover Fraudulent Debt in the Person’s Name?
- How Can Unpaid Bills and Neglected Accounts Cause Hidden Financial Damage?
- Frequently Asked Questions
What Kinds of Unauthorized Transactions Are Most Common?
Caregivers often discover fraudulent charges on credit cards or debit cards, ranging from small recurring subscriptions the person never signed up for to large one-time purchases made by someone else. A common scenario involves a family member, friend, or caregiver using the person’s card without permission—perhaps “borrowing” money with the intention to pay it back, but never doing so. ATM withdrawals from machines the person wouldn’t normally use, especially in different cities or states, are another warning sign.
Online fraudsters may gain access to banking portals and drain accounts through wire transfers or bill-pay features. Even more insidious are charges that look legitimate on the surface but are actually unauthorized—for instance, if someone gains access to the person’s email, they can change the recovery phone number, reset online banking passwords, and take control of the account entirely. The person with dementia may not remember giving anyone access, may not check statements, or may not understand what transactions mean when they do see them. A caregiver who reviews statements regularly can catch these changes before major damage occurs.
How Can You Spot Money Missing From Bank Accounts or Investments?
Regular review of bank statements is the most reliable way to catch missing funds. Log into online banking at least monthly, and if possible, sign up for transaction alerts that email or text whenever a withdrawal exceeds a certain amount. Compare the current balance against what you’d expect based on income and known expenses. If the person receives Social Security, a pension, or other regular income, the account should grow by that amount minus typical bills; if it’s shrinking unexpectedly, funds are leaving the account through unknown channels.
Investment accounts and savings held at brokerages are sometimes liquidated without the account holder’s consent, especially if someone has gained power of attorney. The person with dementia may not notice because investment statements come quarterly or annually, not monthly, and they may not understand what the numbers mean. If a person with significant savings suddenly has less money than before, and no major purchase or medical expense accounts for the difference, ask the financial institution directly for a history of all transactions. Some banks have delays in processing or reporting, so missing funds might not show up for weeks.
What Are the Signs a Caregiver or Family Member Is Misusing Power of Attorney?
Power of attorney gives someone the legal right to make financial decisions on behalf of another person, but it’s also a common avenue for abuse. Red flags include a caregiver or family member with power of attorney suddenly making large purchases for themselves, transferring assets to their own accounts, or paying themselves significant “caregiving fees” without a written agreement or without performing actual care. A person with proper authority should be able to explain why money left the account and to produce documentation—receipts, invoices, or written agreements.
A legitimate power of attorney arrangement typically involves the caregiver handling bills, deposits, and necessary expenses on behalf of the person with dementia, not accumulating personal wealth at their expense. If you’re not sure whether transactions are appropriate, ask for an accounting—a detailed list of every deposit and withdrawal over a specific period. Financial institutions can also provide this information. Courts can revoke power of attorney if abuse is proven, but that process takes time and money, so catching problems early is crucial.
How Do You Protect Accounts Once You’ve Identified Concerns?
The first step is securing access: if you suspect unauthorized access, change passwords immediately and add strong authentication like two-factor verification. Contact the bank and alert them to suspicious activity; many banks will freeze accounts temporarily while they investigate. Request a fraud dispute form and file it for any unauthorized transactions. Keep copies of all documents, including statements, communications with the bank, and any correspondence with the suspected abuser.
Consider setting up a dedicated account for the person’s care—one that receives only their income and pays only their essential bills—and keep it separate from other family finances. This makes it easier to monitor and harder for someone to access large sums. Some caregivers open a bank account jointly with the person with dementia, which gives the bank no choice but to allow either person to withdraw funds, so this approach offers less protection than a power of attorney or conservatorship. If financial abuse is severe, consult an elder law attorney about legal options like guardianship or conservatorship, which give the court’s backing to financial decisions and can override any power of attorney given to an abuser.
How Can Scams Specifically Target a Person With Dementia?
A person in the early or middle stages of dementia may receive phone calls from scammers posing as grandchildren, IRS agents, or tech support personnel, and the cognitive decline makes it harder for them to recognize these as frauds. Classic grandparent scams—”I’m in trouble in Mexico and need bail money”—are effective precisely because memory loss means the person can’t easily confirm whether their grandchild is actually safe. Scammers may call repeatedly until the person complies, and by the time a caregiver finds out, thousands of dollars have been wired.
Online romance scams also target seniors, especially those who are isolated or lonely; a person with dementia may not recognize the warning signs that the relationship is fake and may send money or gift cards to someone they believe they’re falling in love with. Some scams are impossible to reverse—wire transfers and gift card purchases rarely result in refunds. The limitation of protecting someone from scams is that it often requires removing their financial independence entirely; some people resist handing over all control even when they have cognitive decline, and making that transition respectfully requires difficult conversations.
What Should You Do If You Discover Fraudulent Debt in the Person’s Name?
Someone may have opened credit cards, taken out loans, or incurred medical debt in the person with dementia’s name without their knowledge—this is identity theft. The person receives collection calls or notices of debt they don’t remember incurring. Contact the creditors immediately and explain that the person lacks capacity and did not authorize the debt; provide a copy of any cognitive decline documentation or diagnosis if you have it. Ask the creditors to freeze the accounts and flag them as fraud.
File a report with the Federal Trade Commission’s Identity Theft website (IdentityTheft.gov), which creates an official record and provides templates for disputing fraudulent accounts. Place a fraud alert with the credit bureaus and consider a credit freeze if the person won’t need credit in the future. The challenge is proving the person lacked capacity at the time the debt was incurred; if the person had mild cognitive impairment but still seemed functional, creditors may argue the debt is legitimate. Sending a caregiver’s name as the contact on the account won’t remove the debt from the person’s credit report—only successfully disputing it or reaching a settlement will do that.
How Can Unpaid Bills and Neglected Accounts Cause Hidden Financial Damage?
Caregivers so focused on immediate needs sometimes miss that medical bills, property taxes, or insurance premiums aren’t being paid. A person with dementia might receive a statement, set it aside, and forget about it entirely. Unpaid property taxes can lead to liens, unpaid medical bills to collections, and unpaid insurance to coverage gaps.
If the person falls and has no homeowner’s insurance because premiums weren’t paid, the medical costs become their responsibility. A specific example: a caregiver found that the person’s disability insurance had lapsed three years earlier when no one paid the premium. When the person became unable to work, they couldn’t reinstate the policy because health conditions developed after cancellation now made them ineligible. Setting up automatic bill pay for fixed expenses, keeping a file of all account information and billing dates, and reviewing the mail regularly prevents these slow-motion disasters that only become apparent when a crisis occurs.
Frequently Asked Questions
Should I have power of attorney before dementia is diagnosed?
Yes. Once someone is diagnosed with dementia or shows clear signs of cognitive decline, it becomes harder to establish power of attorney because courts require proof the person still has capacity to understand what they’re signing. If you suspect early cognitive decline, consult an elder law attorney about establishing power of attorney or other legal protections before capacity is questioned.
Can a person with dementia still make valid financial decisions?
In early stages, yes, but capacity fades. A person might understand a bill payment but not a complex investment decision. If you’re unsure, err on the side of caution and have an attorney evaluate capacity. Capacity isn’t all-or-nothing—the person might have the ability to make small decisions but not large ones.
What’s the difference between power of attorney and guardianship?
Power of attorney is a document the person signs voluntarily, giving someone authority to act on their behalf. Guardianship is a court order that removes the person’s legal rights; only a judge can establish it, and it’s more restrictive but also more protective of the ward. Guardianship is appropriate when the person lacks capacity entirely or when power of attorney has been abused.
How often should I review financial statements if the person is in late-stage dementia?
At minimum monthly, more often if the person is in assisted living or a facility where someone else may have access to their funds. Some institutions have higher rates of financial exploitation, so more frequent monitoring is protective.
Can a bank refuse to let me access an account if the person has dementia?
Yes, if only the person’s name is on the account and they haven’t given you authorization or power of attorney. You may need a court order to access it, or you can ask the person to add you as an authorized user while they still have capacity. If you suspect financial abuse or neglect, contact Adult Protective Services; they may have legal standing to access account information.
If I suspect financial exploitation, should I confront the person I suspect?
Probably not, especially if that person is a family member or someone the person with dementia trusts. Confrontation can escalate the situation and may lead to retaliation or the abuser cutting off the person’s access to funds. Instead, contact Adult Protective Services, law enforcement, or an elder law attorney who can advise you on safe next steps.
