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Guarding against Elder Scams, Exploitation and Abuse

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Federal law enforcement recently arrested people accused of exploiting mostly elderly customers by selling fake fine wines and whiskey as an investment, where salespeople with British accents would start talking about 40% returns and fancy storage in France.  

Of course, we don’t expect Muslims to buy fake wine as an investment, do we?  How about lottery or sweepstakes scams bilking the elderly of over $100 million a year?  What about more run-of-the-mill real estate scams?    

I have seen Muslims fall for some pretty outlandish things, but there are conventional forms of fraud, or if not fraud, some pretty hard selling in unsuitable investments, which may or may not be elder abuse. Their bank accounts are emptier whatever they are. For the most part, the elderly repeatedly seem to be victims of the same kinds of things. My goal here is to highlight some everyday things to watch out for and help develop a plan for both the elderly as well as for adult children to spot this stuff and avoid the harm that comes from it.  

For various reasons, the nature of the marketing we get changes as we get older. The kinds of mailers and online ads people over 65 get are different from what people in their 20s get. I am most concerned about marketing that results in significant financial disruptions.  

Not just marketing but personal, business, and even family relationships pose risks.   

Seminars

Fancy Seminar Dinner popular with eldersThe great thing about reaching age 65 is that many companies want to give you free food, often in fancy restaurants. You will start getting mailers and calls from people who want to feed you. What’s the harm? 

In the book “Influence,” author, psychology, and marketing expert Robert Cialdini delves into various drivers that allow a person to acquire a remarkable level of influence over others using relatively simple tactics. One of the tactics is reciprocity. It’s basic. People don’t want to be indebted to others. There are actual studies about how feeding people makes them primed to open their wallets. Doing very little for someone can influence that person to be responsive to giving up much more in exchange.  

Dinner seminars are powerful marketing tools because they can employ multiple effective persuasion techniques. For example, a marketer may get a crowd of people to agree to some obvious, basic statements. You think inflation is terrible, right? Do you agree that 1% is a low rate of return? You agree with 20 other things; you just walked down a garden path.  

Another critical aspect of seminars is that the person on the podium comes with authority. The presenter may have a bunch of initials behind his name you have not heard of before or a bunch of professional titles. They are professional salespeople; however, while they may not have any special knowledge of the underlying investment, their expertise is to sell. Their job is to close the sale RIGHT NOW.  

It would help if you had no reasonable time for contemplation or discussion with family.  

Emotional Drivers

Everyone has pushable buttons. It’s often not hard to know what they are. It’s easy for marketers to figure out what riles up a young mother of a toddler or what kinds of things a ten-year-old boy likes. Marketers take advantage of this. If you know about the type of thing that happens every day on Fox News, you understand marketers are all about the emotional manipulation of the elderly.  

Messages could include:

“If you don’t do this NOW, you will lose your life savings.”

“The government is giving your benefits to someone else.” 

“You have a 50% chance of being in a nursing home.” 

A major goal is to make people think as emotionally as possible.  We are human beings and not robots.  Of course we all use emotions when making decisions.  This is normally good.  Is giving a grandchild a balloon at a carnival a logical decision?   Both “logic” and “emotion” to lead to a wrong decision; it’s just that it’s easier to play on emotions, and it’s something that makes people act quickly. Good decisions are best made with wisdom, whatever that is.  

It is almost impossible for people of all ages to separate financial decisions from emotions.  

There is rarely a hurry to make major financial decisions. There may be other buyers of the same property in real estate, but deciding to become a real estate investor and the strategy deployed should take time.  

“Friends”

Adulthood can, for many people, become increasingly lonely. But it’s great when we make new friends. Some people can attract the wrong kinds of friends, who may be more interested in getting access to “business partners” or “investors”- or sometimes they need “loans.”  

Sometimes, the elderly may casually meet a young woman at a restaurant; the next moment, he finds himself writing a big check to invest in a rice paddy in the Philippines (I have seen this).  

Friendships that get into an adult’s financial situation can often escalate gradually. There is no shortage of con artists operating within the Muslim community. They often prey on isolated Muslims because of family conflicts or distance from other family members.  

Marriage

Marriage later in life is undoubtedly a gift and blessing for many. However, it is also a tactic used by predators. I often tell the story of a case I had where a widower married a woman without knowing she was a convicted felon. During their 20-year marriage, she and her family members (virtually all criminals) stole millions of dollars from the family, including from the trust of the widower’s late wife, which was supposed to be for her children. They isolated the once highly successful man from his many children and grandchildren. He lived out the rest of his life in squalor.  

In many states, like California, getting married secretly is possible. I know people who have endeavored to keep their marriage under wraps out of fear of alarming their adult children.  

Relationships, both friendship and marriage, and all that comes with them are wonderful. However, they are also how families get ripped off.

Other Family 

Another thing to be concerned about for some families is, sadly, other family members. Families are more complicated than the tax code or any laws humans have devised.  

Some children exploit parents using many of the same tactics con artists do, but their knowledge of their parents (or parent-in-law) can make that exploitation much more effective. One tactic is isolating an elder from family members, magnifying real or perceived slights, or playing the family politics game better than others. Some children have managed to extract enough wealth from parents that parents become dependent and impoverished.  

How to guard against exploitation and abuse

One common thread in financial abuse and exploitation is isolation. The more isolated an elder is, the more vulnerable they will be. Some people actively work to divide family members and pit them against each other. Sometimes, the elder will drive his children away through his conduct.  

The Islamic injunction against breaking family ties comes up over and over again. For example:

And those who violate Allah’s covenant after it has been affirmed, break whatever ˹ties˺ Allah has ordered to be maintained, and spread corruption in the land—it is they who will be condemned and will have the worst abode (Quran 13:25) 

I understand family ties are sometimes tough to maintain. In some cases, where there is active abuse, it may be impossible to be close. However, children, all children have a responsibility to their parents. Nieces and nephews, grandchildren, and other family members must constantly check in on their elders and friends to know who they are. This practice is helpful for reasons beyond guarding against elder abuse. 

A Brain Trust

Elder Brain Trust In addition, everyone, even younger people, but really everyone, should have a “brain trust.” We need to make our significant decisions through a shura. Nobody should ever marry without investigating the person they want to marry and getting good counsel from trusted people about the decision. Such advice is obvious, but it’s just as important for a 19-year-old getting married as it is for a 79-year-old. It’s much harder for 79-year-olds to get advice on such things.   

Due diligence is essential for major financial decisions or business relationships. A business owner used to hiring construction contractors and doing a spreadsheet analysis for every deal will still check out new contractors and get a CPA, various consultants, and other trusted advisors. Anyone who wants to hire a financial advisor or comes across a great investment idea where a guy wants $500,000 wired to his account should have a similar level of skepticism and do their due diligence.  

Anyone that wants you to make decisions based on emotion alone won’t want their mark to do that due diligence or talk to loved ones.  

Being in the presence of trusted people with no financial incentives in the relationship protects people them losing what they have.   

A Disability Panel

When Muslims do their Islamic Estate Planning, I often recommend a “disability panel”- a group of trusted people who can decide if the trust’s Grantor (the person who created the trust) has financial incapacity. When there is financial incapacity, a successor Trustee, selected by the Grantor, takes control of the finances.  

A panel in a living trust is a helpful tool when incapacity is an issue. However, that question has not come up in many cases of financial abuse and exploitation. Actively maintaining and building family ties is the best defense,not just for the elderly but for everyone.  

Of course, when there are actual elder abuse predators, it’s also important to consider that there are are some important criminal and civil laws in place, as well as Elder Protective Services agencies and law enforcement.  If you or a loved one may be a victim of elder abuse, consult with an Attorney to evaluate your best path forward.

To discuss the process of getting an Islamic Estate Plan, schedule a 15-minute mini-consultation with Islamic Estate Planning Attorney Ahmed Shaikh here.  

 

 

 

A Muslim Husband’s Guide To Community Property

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Community property and inheritance in IslamJust a disclaimer, this post may not be useful to people who do not live in community property states like California, Texas, and a few others. Other states follow separate property or “community property”- many are former British Empire colonies and Louisiana, which follows a version of the Napoleonic code.

The “Contradiction”

I hear this from Muslim husbands somewhat regularly:

  • In Islamic Inheritance, the wife gets ⅛ (well, maybe ¼, but ⅛ if there are children).
  • In community property, The wife gets ½.

Clients have often told me this disparity is a contradiction. Islamic Inheritance, relative to other heirs, is both a minimum and a maximum. You cannot give more than what has been ordained by Allah, right?

Community Property is NOT inheritance.

Example:

Ibrahim and Adam are partners in a detergent-making business, and both own 50% of the company. They are both men, and to be clear, they are not married to each other or related in any way. Ibrahim is married to Hafsa (who is female), and Adam is married to Salma (who also happens to be female).

Ibrahim dies. Adam gets 50% of the business. How? Adam did not inherit 50% of the company, he had already owned 50% of the business, and he owned it regardless of if Ibrahim was dead or alive.

Wait, I thought we were talking about community property?

So far, none of this is community property. Also, none of it is inheritance. I provided the above example to describe how community property is similar to other property arraignments you may be familiar with.  Nobody has to do community property, but it’s also not as alien as some may think.

Example:

Ibrahim and Hafsa decide to divide up their home and interest in their business, bank account, and brokerage account as community property. In one respect, this is no different from Ibrahim’s relationship with Adam. She gets 50% regardless of Adam being dead or alive, so 50% is NOT inheritance. People claiming it somehow contradicts the Islamic Rules of Inheritance are making apples to oranges comparisons.

Marriage is a contractual family relationship.

Say Adam agrees with his daughter Kulsum to give her $1,000,000 after he dies in addition to her rightful share of the inheritance? This arrangement is not allowed in Islam. He can give Kulsum a gift of $1,000,000 now if he wants.

It’s a bit different when it comes to marriage. Adam can agree with Salma that he will pay $1,000,000 to Salma upon death or divorce as part of a negotiated Mahar. Adam won’t negotiate anything like a Mahar with his daughter Kulsum. If Adam dies, he will still be Kulsum’s father; she is not getting another one. Salma can potentially go on and marry and divorce or be widowed again, negotiating more Mahar arrangements if she wants. Instead of payment at death, Adam can also give Salma half of all his assets. Maybe it’s a bad idea for him to do that. If he has children, it will probably cause a few problems. However, he can do it if he wants.

However, Adam can also get into a business arrangement with his daughter and co-own assets. Indeed, it is common for parents and children to co-own assets, just like it’s common for married couples to co-own assets. Of course, people co-own assets with unrelated people (the stock market is full of that).

Islamic Inheritance with Community Property

As you might guess, Islamic Inheritance may work differently with community property assets than if you are dealing with a deceased father who had a business partner. Business assets, say in a corporation, are easily divisible. In community property, each spouse owns 50% of everything. So, it’s not just 50% of each bank account (which one can divide easily), but of real estate and personal assets, like the bed the surviving spouse is sleeping on.

Every Islamic Estate Plan will typically need to draft an agreement that includes non pro-rata division of community property. That means other heirs like Kulsum will get their rightful share of the whole, but not necessarily the rightful share of each asset. In the case of Adam, it means his wife Salma can keep her bed, jewelry, and maybe even the house (the house is something I write about separately), but Kulsum will get her inheritance from what constitutes her father’s estate.

Is Community Property Mandatory?

No. Married couples do not need to own their assets as community property. In much of the United States, there is this expectation that marriages are not just a family and social partnership but a financial one. Often, spouses do not distinguish between the husband’s assets and the wife’s, especially if they have been married for several years. While that is fine, it’s not for everyone. Indeed, in some situations, this kind of thinking can be dangerous and unfair and result in injustice.

In many situations, community property is the default way property couples and the courts treat property. So married couples who do not get a prenuptial or postnuptial agreement, anything earned through the skill, labor, and effort of either spouse belongs equally to them.

What is not community property?

In general, property NOT earned through skill, labor, and effort is separate property. By that, I mean inheritance and gifts to an individual will not be community property. This “skill, labor, and effort” terminology is not universal, and there will be some nuance to it. For example, lottery winnings (sidenote: don’t play the lottery) are typically community property even though the winner got rich through no skill, labor, or effort beyond scratching a piece of paper or writing down some random numbers.

Blended Families and Later in Life Marriages

Not everyone who gets married starts young with the hope of building a life together. Many people have pre-built lives, estates, and sprawling families with children, sons, daughters-in-law, and grandchildren. A new spouse will enter a world of family politics and implicit and explicit conflicts over wealth. Don’t ever take this lightly.

Of course, what the spouses want to do with their wealth matters. But there are the opinions of others that matter as well because the goal for all concerned should be long-term peace and harmony in the family. A spouse, particularly a wife, is interested in some financial security. That will create conflicts with other family members and color how they perceive the relationship. Unless the couples handles this well, the family can be an unpleasant place for some time.

How Islamic Estate Planning Helps

Islamic Estate planning is far more than the Islamic Rules of Inheritance. It’s about creating a rule book with many different kinds of legal documents that aid the cause of peace and harmony in the family over the long term. Relationships are more about people than documents, but good planning can be valuable.

Click here for a no-obligation 15-minute mini-consultation with Islamic Estate Planning Attorney Ahmed Shaikh.

 

 

Contemplating Nursing Homes for Elders?  The Rules are Changing

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Note:  This post is about Medi-Cal rules for nursing home care in California (it’s called Medicaid in other states, but it’s different in those places) as of May 2022.  If you are in a jurisdiction outside of California or reading this much later, you may not be getting the most updated information.  

I come to you with an unpleasant thought.  The more we know about nursing homes, the worse they seem.  There may well be “good” nursing homes, but we need to expand our conception of “good” out of necessity.  Some families cannot take care of their elders.  With a nursing home, you are talking about a place where people don’t want to work, where overmedicating elders is often the first option, and where lawsuits for neglect and abuse are commonplace.

Muslim Nursing HomeStill, nursing homes are necessary.

The reasons are varied but can include:

  • In some cases, having people with severe memory care issues can be dangerous for small children.
  • Adult children have economic or space limitations that prevent them from caring for their elders, even if home-based care options are available from government sources.
  • Some elders don’t have children or close family; the nearest family member may be a niece or nephew if they are lucky.
  • In many middle-class and upper-middle-class families, it is common for children to go far away from home for college, get jobs in other cities, marry and start families far away, and lose connection with their parents and siblings.  In American culture, there is no fundamental obligation to elder parents.
  • Families can be complicated, with lots of love, pain, and trauma mixed with some incendiary family politics.

Paying for Nursing Homes

So, we have exhausted alternatives, and it is necessary to get an elder into a nursing home.  What happens next?

Insurance does not pay for long-term care at all.  There are insurance products that pay for long-term care, but most people do not purchase it, or by the time people are interested, it’s too expensive anyway.

You can also just pay for it in cash.  If the elder is wealthy, it’s not a problem.  But otherwise, you are looking at costs that range from $10,000  a month (if you are lucky) to $20,000 per month.  Relatively few people have this kind of cash lying around.

The last option is, of course, going to government programs.  Elderly Americans are eligible for Medicare, which for the most part, does not pay for nursing home care.  The next option is Medi-Cal, which is healthcare for the poor.

Medi-Cal for the Poor, and You are not Poor 

People want to pass on their assets and not have their hard-earned wealth go down some nursing home sinkhole.  So historically, people got rid of assets putting themselves into a virtual state of destitution.  They have done this even when they are not sure they will ever be going to a nursing home.  Relatively healthy elders have done this even when they have years or even decades ahead of them, just to deal with this fear.

Unfortunately, working with this fear is the way things have been for some time:  To get Medi-Cal, you need to go through “Medi-Cal qualification.”  That means people purposefully impoverishing themselves.  They can have no more than $2,000 in liquid assets; while certain things, like homes, don’t count towards qualifications, they are subject to “Medi-Cal estate recovery.”  Essentially it means Medi-Cal is loaning the cost of care to the family, and they will get it back after death.

The family member in a nursing home figures they will pay for it one way or another, so they just start giving things away in anticipation of Medi-Cal.  What makes this even more complicated is that if you start giving things away too soon before needing Medi-Cal to pay for a nursing home, the government will count this against you. Medi-Cal rules exclude people- why people had done Medi-Cal planning long before they needed it (and ultimately may never need it).  In some cases, adult children may prod this kind of activity to take possession of the assets earlier.   A typical strategy is to use the technical rules of Medi-Cal to purchase exempt assets and dispose of others creatively.

Purposefully impoverishing yourself is a horrible idea.  Every person is entitled to autonomy, liberty, independence, and personal dignity.  Do not voluntarily give away such things unless there are no other options.  I would never recommend anyone start gifting away everything they have.

How Medi-Cal Planning Has Worked

For example, Abdullah, 81 years old, and his children expect him to go to a nursing home in the next few months because he believes he may be going through the early stages of dementia.  Abdullah has a paid-off home worth 1.6 million, a car, investments worth 210,000, and his only income is social security.  Medi-Cal has an income limitation (138% of poverty).   Under Medi-Cal rules, he cannot have more than $2,000.

However, if he were married between himself and his wife (not going on Medi-Cal), both are allowed $139,400.  For Medi-Cal purposes, his house is exempt from consideration.  There is the prospect of Medi-Cal recovery, but the rules have relaxed in recent years; the government only goes after assets subject to probate.  Assets in a living trust, including one done through an Islamic Estate Plan, would be exempt from the estate recovery process.  So Abdullah should not give his house away just yet.

How Things Are Changing

Under a new California law (AB 133), starting July of 2022, Abdullah would be able to keep $130,000, which is up from $2,000.   Combined with his wife, the number is $267,400.  But more importantly, for purposes of planning over the long term, the asset limitations will be eliminated starting January 1, 2024.  So, Abdullah can have millions of dollars and still qualify for Medi-Cal, so long as his income is low enough.

Medi-Cal asset recovery will still exist (a federal requirement California cannot get rid of entirely). Still, all you need to do to avoid this is do what you should be doing anyway, get an Islamic Estate Plan.

Don’t get rid of your wealth out of fear of losing your wealth.  The government in California seemed to encourage this before, but no more.

To discuss getting your Islamic Inheritance planning done, schedule a mini consultation with Islamic Estate Planning Attorney Ahmed Shaikh by clicking here.