Handling financial exploitation of a person with dementia requires immediate, coordinated action: secure their accounts, document the abuse, report it to Adult Protective Services and law enforcement, and consult an elder law attorney about establishing or enforcing legal protections such as power of attorney or guardianship. The single most important first step is to stop the bleeding — contact the person’s bank and financial institutions to flag the account, freeze suspicious transactions, and set up monitoring alerts. For example, if an adult child discovers that a home aide has been writing checks to herself from a parent’s account, the family should call the bank that same day to freeze outgoing checks, file a report with APS, and then work with an attorney to ensure proper legal authority is in place to manage the person’s finances going forward. Financial exploitation is the most common form of elder abuse, and people living with dementia are disproportionately vulnerable because cognitive decline impairs their ability to recognize scams, resist pressure, or track their own money.
The damage can be devastating and swift — life savings drained in weeks, homes signed away, retirement accounts emptied. This article covers how to recognize the warning signs of financial exploitation, the legal tools available to protect someone with dementia, how to report abuse and pursue recovery, the roles of banks and financial institutions, common perpetrators and their tactics, steps for ongoing financial safeguarding, and what to do when the exploiter is a family member. Beyond the immediate crisis response, families need a long-term plan that balances protecting the person’s assets with respecting their remaining autonomy and dignity. That balance is one of the hardest aspects of dementia caregiving, and this article addresses it honestly — including the uncomfortable reality that some protective measures feel paternalistic, and that the legal system does not always move fast enough to prevent harm.
Table of Contents
- What Counts as Financial Exploitation of a Person With Dementia?
- Legal Tools for Protecting Finances When Someone Has Dementia
- How to Report Financial Exploitation and What Happens Next
- Working With Banks and Financial Institutions to Stop Exploitation
- When the Exploiter Is a Family Member
- Setting Up Ongoing Financial Safeguards for Someone With Dementia
- The Evolving Landscape of Financial Exploitation Protections
- Conclusion
- Frequently Asked Questions
What Counts as Financial Exploitation of a Person With Dementia?
Financial exploitation of a person with dementia includes any unauthorized or improper use of their funds, property, or assets. This can range from outright theft — stealing cash from a wallet or forging signatures on checks — to more subtle manipulation, such as pressuring a confused person to change their will, add someone to a deed, or hand over control of bank accounts. It also includes scams perpetrated by strangers, such as phone fraud, romance scams, and predatory lending schemes that target people whose judgment is compromised. The key legal concept is that the person’s cognitive impairment means they may lack the capacity to consent to these transactions, even if they technically signed the paperwork. One common scenario involves a trusted person — often a family member, caregiver, or new acquaintance — gradually taking control of daily finances under the guise of helping. At first it looks like assistance: paying bills, driving to the bank, managing subscriptions. But over time, money starts disappearing.
A neighbor who offered to help with groceries begins using the debit card for personal purchases. A grandchild who moved in to provide care starts withdrawing large sums. By the time other family members notice, significant assets may be gone. The exploitation often accelerates as the dementia progresses and the person becomes less able to question or remember transactions. It is worth distinguishing financial exploitation from poor financial management that sometimes accompanies dementia itself. A person in the early stages may make impulsive purchases, fall for obvious scams without any specific predator, or simply lose track of bills. These situations still require intervention, but the approach differs — you are protecting the person from their own impaired judgment rather than from a bad actor. Both situations demand action, but exploitation involves an identifiable perpetrator and may involve criminal conduct.
Legal Tools for Protecting Finances When Someone Has Dementia
The most effective legal tool for preventing and addressing financial exploitation is a durable power of attorney for finances, ideally established early in the disease process while the person still has legal capacity to sign one. This document designates a trusted agent to manage bank accounts, pay bills, file taxes, and make financial decisions. The word “durable” is critical — it means the authority continues even after the person loses capacity, which is exactly when protection is most needed. Without a power of attorney, families may face the far more expensive and time-consuming process of pursuing court-appointed guardianship or conservatorship. However, a power of attorney is only as good as the person who holds it, and it can itself become a tool of exploitation. If the designated agent is the one committing the abuse, the document actually makes theft easier.
Courts across the country have seen cases where an agent under power of attorney systematically drained accounts while other family members assumed everything was being handled responsibly. For this reason, elder law attorneys often recommend naming co-agents who must act together, requiring periodic accountings, or including provisions that allow other family members to request a review of financial activity. If the person with dementia no longer has capacity to sign a power of attorney — which is a clinical and legal determination, not simply a family’s opinion — the remaining option is guardianship or conservatorship, depending on the state. This requires a court petition, a hearing, and often a medical evaluation. It is slower, more expensive (often several thousand dollars in legal fees), and more intrusive, as it formally strips the person of certain rights. But when exploitation is already occurring and no power of attorney exists, it may be the only way to gain legal authority to lock down accounts, reverse fraudulent transactions, and hold the exploiter accountable. Families should be aware that contested guardianship cases, where the alleged exploiter fights for control, can drag on for months.
How to Report Financial Exploitation and What Happens Next
Reporting financial exploitation starts with a call to Adult Protective Services in the state where the person with dementia lives. Every state has an APS office, and most accept reports from anyone — you do not have to be a family member. Certain professionals, including healthcare workers, social workers, and in some states bankers, are mandatory reporters. When you call, provide as much detail as possible: the person’s name and location, the nature of the suspected exploitation, specific transactions or behaviors you have observed, and the identity of the suspected perpetrator if known. APS will typically open an investigation, which may involve interviewing the person with dementia, reviewing financial records, and coordinating with law enforcement. Simultaneously, you should file a report with local law enforcement, particularly if large sums are involved or if the exploitation is ongoing. Financial exploitation of a vulnerable adult is a crime in all fifty states, though the specific statutes and penalties vary.
In practice, law enforcement response to financial elder abuse cases has historically been uneven — some jurisdictions have dedicated elder abuse units that take these cases seriously, while others may treat them as civil disputes, especially when the perpetrator is a family member. Persistence matters. If local police are unresponsive, consider contacting the state attorney general’s office or the local district attorney’s elder abuse division. For example, consider a situation where a person with moderate Alzheimer’s disease begins receiving frequent calls from a telemarketing operation and sends multiple wire transfers totaling tens of thousands of dollars over several months. The family discovers the loss only when checking bank statements. In this case, the family would report to APS, file a police report, contact the bank to attempt to reverse or freeze further transactions, and potentially report the scam to the Federal Trade Commission and the state attorney general. Recovery of funds in scam situations is unfortunately difficult, which is why prevention and monitoring are so important.
Working With Banks and Financial Institutions to Stop Exploitation
Banks and financial institutions have become increasingly important partners in combating financial exploitation of older adults and people with dementia. Many major banks have trained tellers and fraud departments to recognize signs of exploitation — unusual withdrawal patterns, a new person accompanying the account holder, large transfers to unfamiliar recipients, or a confused customer who cannot explain the purpose of a transaction. Some institutions allow families to set up trusted contact persons on accounts, so the bank has someone to call if it suspects something is wrong. This does not give the trusted contact access to the account — it simply provides a safety net. The tradeoff with bank-level protections is between security and autonomy.
Placing transaction limits, requiring dual authorization for large withdrawals, or freezing an account entirely can prevent exploitation, but it can also prevent the person with dementia from accessing their own money for legitimate needs. A person in the early stages who is still largely independent may find it humiliating or frustrating to have their bank card declined or their check held. Families need to calibrate these protections to the person’s current cognitive level and adjust them as the disease progresses, rather than implementing the most restrictive measures all at once. It is also worth noting that banks are not obligated to honor a family member’s request to freeze or restrict an account unless that family member has legal authority — a power of attorney, guardianship order, or similar document. Walking into a bank and saying “my mother has dementia and someone is stealing her money” may prompt the bank to file a suspicious activity report internally, but the bank cannot take directions from you about the account without proper documentation. This is another reason why having legal authority in place before a crisis is so important.
When the Exploiter Is a Family Member
The most painful and complicated exploitation cases involve family members. Research has consistently shown that the majority of financial exploitation of older adults is committed by someone the victim knows and trusts — often an adult child, grandchild, or spouse. These cases are harder to detect because the family member typically has legitimate access to the home and may already be involved in the person’s care. They are also harder to prosecute because other family members may be reluctant to involve law enforcement, and the person with dementia may not be able to testify or may still feel loyalty to the exploiter. A warning that families should take seriously: financial exploitation by one family member often escalates when it goes unchallenged. The exploiter may rationalize the behavior — “Mom would want me to have this money,” “I deserve compensation for all the caregiving I do,” “I’m just borrowing it.” These rationalizations allow the behavior to continue and grow. If you suspect a sibling, child, or other relative is exploiting a person with dementia, do not assume a private family conversation will resolve the problem.
Consult an elder law attorney before confronting the person, as the attorney can advise on preserving evidence, protecting remaining assets, and pursuing legal remedies. In some cases, seeking an emergency guardianship or a restraining order may be necessary. One significant limitation in these cases is that even when exploitation is proven, recovery of stolen assets is often incomplete. The exploiter may have already spent the money, have no assets of their own, or declare bankruptcy. Criminal restitution orders exist but enforcement is inconsistent. Families should pursue accountability, but they should also be realistic about the likelihood of recovering everything that was taken. Focusing early efforts on stopping ongoing losses is often more productive than trying to recover past ones.
Setting Up Ongoing Financial Safeguards for Someone With Dementia
Proactive financial safeguarding can prevent exploitation before it starts, and the best time to set up these systems is shortly after a dementia diagnosis, while the person can still participate in planning. Practical steps include consolidating accounts to make monitoring easier, setting up automatic bill payments so that essential expenses are covered even if the person forgets, removing the person’s name from marketing lists to reduce exposure to scams, enrolling in credit monitoring services, and placing a credit freeze to prevent new accounts from being opened in their name. For example, a family that consolidates a parent’s six bank accounts and three credit cards into one checking account and one credit card can review a single set of statements each month instead of tracking activity across nearly a dozen accounts.
Technology can also help. Some banking apps allow a family member to receive real-time transaction alerts, and certain financial planning services offer fiduciary accounts with built-in oversight. However, no system is foolproof, and ongoing human attention — regularly reviewing statements, asking questions about unfamiliar charges, and staying in communication with the person with dementia about their financial life — remains the most reliable safeguard.
The Evolving Landscape of Financial Exploitation Protections
The legal and institutional framework for protecting people with dementia from financial exploitation has been strengthening in recent years, though significant gaps remain. Many states have enhanced their elder abuse statutes, increased penalties for financial exploitation, and expanded mandatory reporting requirements. The financial services industry has also moved toward greater responsibility, with some broker-dealers and investment advisors now permitted or required to place temporary holds on suspicious transactions involving older clients.
Federal agencies, including the Consumer Financial Protection Bureau, have published guidance and resources specifically addressing financial exploitation of older adults with cognitive impairment. Looking ahead, the growing prevalence of dementia as the population ages will likely increase pressure on lawmakers, financial institutions, and healthcare providers to develop more robust protections. Advances in digital banking present both opportunities and risks — online account monitoring makes it easier for families to spot problems quickly, but digital payment platforms and cryptocurrency create new avenues for exploitation that existing safeguards were not designed to address. Families dealing with dementia should stay informed about evolving protections in their state and revisit their financial safeguarding plans regularly as both the disease and the regulatory landscape continue to change.
Conclusion
Financial exploitation of a person with dementia is a serious and unfortunately common problem that demands swift action and ongoing vigilance. The core response involves securing accounts immediately, documenting and reporting the abuse to Adult Protective Services and law enforcement, establishing or enforcing legal authority through power of attorney or guardianship, and working with financial institutions to put monitoring and restrictions in place. Prevention is always preferable to response — early planning, account consolidation, credit freezes, and regular statement reviews can catch problems before they become catastrophic.
The emotional weight of these situations should not be underestimated, especially when the exploiter is someone the family trusted. Seeking guidance from an elder law attorney, connecting with local APS resources, and consulting organizations such as the National Center on Elder Abuse or the Alzheimer’s Association can provide both practical help and emotional support. Protecting a person with dementia from financial harm is one of the most important responsibilities a caregiver or family member can take on, and it is one that benefits from preparation, knowledge, and a willingness to act decisively when something is wrong.
Frequently Asked Questions
Can a person with dementia revoke a power of attorney?
Legally, a person can revoke a power of attorney only if they still have the mental capacity to do so. If dementia has progressed to the point where they lack capacity, they generally cannot revoke it. However, if there is a dispute about whether the person had capacity when they attempted to revoke or grant a power of attorney, a court may need to resolve the question, often with input from medical professionals.
What if the person with dementia insists they are not being exploited?
This is extremely common. The person may not recognize the exploitation due to cognitive impairment, or they may feel loyalty or affection toward the perpetrator. Their denial does not mean exploitation is not occurring. You should still report your concerns to APS, which can investigate independently. Courts can also appoint guardians over the person’s objection if the evidence supports it.
How do I know if my loved one has the capacity to manage their own finances?
Financial capacity is not all-or-nothing — a person may be able to handle simple transactions like buying groceries but unable to manage investments or understand complex contracts. A neuropsychological evaluation can assess specific financial abilities. If there is any doubt, consult the person’s physician and consider a formal capacity assessment, especially before making major legal or financial decisions.
Can a bank refuse to let someone with dementia withdraw their own money?
Banks are in a difficult position. They generally cannot refuse a withdrawal request from an account holder without a court order, power of attorney, or similar legal authority directing them to do so. However, some states now allow financial institutions to place temporary holds on transactions they reasonably believe involve exploitation of a vulnerable adult. The rules vary by state and institution.
Is financial exploitation of a person with dementia a criminal offense?
Yes, in all fifty states. The specific charges, definitions, and penalties vary — it may be prosecuted as theft, fraud, undue influence, or under a specific elder abuse or vulnerable adult statute. However, as noted above, prosecution rates for financial elder abuse have historically been lower than for other crimes, and outcomes depend heavily on the quality of evidence and the resources of the local prosecutor’s office.
What if the power of attorney agent is the one committing the exploitation?
This situation requires legal action to remove the agent. Other family members or interested parties can petition the court to revoke the power of attorney and appoint a new agent or a court-supervised guardian. This should be pursued urgently, as the agent’s legal authority makes continued exploitation easy. An elder law attorney can advise on emergency measures, which in some jurisdictions include temporary restraining orders on financial accounts.
