This is the last blog in our series on problem gambling. We are going to examine this from two age groups, the older adult who may still be working and earning money and the retiree who may be gambling away his or her retirement funds with no chance of recovery.
Let’s start this final blog by being blunt – in the overwhelming majority of cases, the only way to stop someone with a gambling problem is to separate them from their money. Like drug addictions, the supply must be cut off in order to move forward. Most drug addictions require a detox period before treatment can actually begin. For the gambler, there is no detox other than taking control of their finances. It has to be done.
Here are a few ideas on how to do this:
Managing Funds - An attorney, fiduciary or counselor can sit with the family and devise a plan that can limit the gamblers access to money. In these cases, the gambler is left with a small budget to pay for daily needs which, with the gambler's cooperation, is reviewed weekly. Why? Because if he has money over and above the budget, then they are accessing funds somewhere else and this must be explored.
Asset Transfers - A more intrusive method, but one that may be necessary when the gambling continues, is to begin the process of transferring assets into another family member's name. This can be tricky from a tax and legal standpoint so we will discuss the pros and cons of this a bit later. This can also open the door to family discord and accusation.
Neutral Party - Employ a neutral third party such as a professional fiduciary or an attorney who can manager the money and provide financial oversight. Using this method tends to alleviate any possible family problems.
Before we take a closer look at these actions, it’s important to make sure all family members are on the same page when it comes to addressing the gambler. This is the first step towards recovery and usually the most uncomfortable one – but if there is any hope of stopping the financial bleeding, it's a step that must occur.
Whoever decides to take control of this process must state, in no uncertain
terms, that this action is being undertaken as a last resort. All family members must understand that this move is to protect the long-term financial well-being of the gambler and the possible consequences that may occur if the gambling behavior continues and debts mount.
If it is an older family member or retiree, it must be reiterated that you want their final years to be as good as possible. If there is no estate plan in place, discuss with them the need to put one together and why.
Once everyone is in agreement, meeting with the gambler and their partner (if they have one) must be done in a supportive way and not with any sort of attitude. Laying guilt trips, displaying anger and making accusations will only create resentment and resistance, closing off any possible avenues of communication and resolution. Given this, here are some thoughts on what to do and not do in the meeting.
Don’t believe that the reality show “Interventions” we see on television are always successful. In my experience as an addictions clinician, these activities fail far more often than they succeed. Discussions like this are best held in a small, intimate group with emotions left at the door. This is easier said than done but if such a meeting becomes too emotionally charged, the gambler will feel attacked and respond with defensiveness and anger. The gambler, like someone with a drug addiction, is keenly aware of what is wrong yet have built up walls of defensiveness and rationalizations to hide their guilt and actions. Slapping them in the face with what they already know is wrong does not work. Happy endings at the end of one meeting are for scripted TV shows and fairy tales. There is success in treatment, but it requires commitment, hard work and difficult choices.
Positive versus negative. When this discussion occurs, focus on the positives of taking control of the finances rather than the negatives of what will happen if you don’t. By taking a positive approach, it gives the gambler a chance to save face. For instance, rather than saying, “We are taking over the accounts because you can’t be trusted not to spend them!” you can say, “Taking control of the finances while you get help will take away any urges you have to gamble with that money and keep your focus on your treatment and getting better.” That is a much more supportive approach.
You want them to be a part of the solution and not identify them as the problem. In this meeting, your role is to break down the defensiveness of the gambler. This is best done by taking a team approach rather than being a prosecutor with a defendant on the stand. You will stand a much better chance of finding some middle ground that all can accept and begin the process of establishing goals.
A respected third party can be used. Bring in a family attorney, fiduciary or financial planner to discuss what can be done. A third party will have no emotional investment in the situation and present the options from a business standpoint rather than an emotional one.
Words matter. They sure do – and more than you know. Avoid over generalizations. Do not use words like “always” or “never” to discuss the gambler’s behaviors. For instance, saying “You always spend your social security check at the casino” or “The bills are never paid on time” are exaggerations. Sometimes the gambler spends all of his check and most times the bills are not paid on time but not always or never. Why is this important, because with the irrational thinking of the gambler, he will remember that one time he paid the bill on time. This gives him yet another excuse to continue his behaviors because “no one trusts me, so why should I try.” Keep all discussions factual, as emotionally free as possible and stay away from words that can be construed as accusatory.
Other words and phrases to avoid. While we are at it, let's look at some other words and phrases to avoid in such a meeting. One other word that creates havoc that I have witnessed multiple times, it is the word "claims". For instance, "Jane claims that she did not go to the casino." In such a sentence, claims sounds like the person saying the word feels Jane is lying and Jane takes it that way, throwing up her defenses. It is better to say, "Jane says that she did not go to the casino." There is no judgement in that sentence. Another big one is, "You need to..." again, it gives the other person and out, even if they just think it, that "how the heck do you know what I need!" It is far better to say, "I need you to..." because the person receiving this message is not being told what to do, rather being told what you want. Other words/phrases to avoid is "You should..." and "You must...". Just think about what it means when someone speaks to you this way.
With this out of the way, now it’s time to look at the three ways to address the finances that we outlined above.
If the gambler agrees to the family management of funds while he or she is in treatment, here are some guidelines to consider:
One Manager - One person should be named as a manager with another put into place to review progress. If it is a partner, any joint checking or savings accounts should be switched into the partner’s name.
Find Sources of Income - Any sources of income should be made direct deposit into the account(s) controlled by the non-gambler. Checks delivered to the home are like bags of crack delivered to a cocaine addict. Once in their hands, a relapse is right around the corner.
Open Accounts - Explore what credit accounts are open. This can be done by calling a credit bureau or going online and requesting a credit report. This may require a power of attorney.
Get a PO Box - Go to the post office and change the mail delivery to a post office box. This will make sure that all credit card offers are intercepted by you. It also allows you to monitor bills and invoices that arrive.
Tax Returns - Take over the tax returns. We have seen gamblers sign there spouses name to a completed tax return and then take any refunds when it arrives. And having the PO Box is helpful here as well since you will have access to any W-2 forms which will show investment income, cashing out accounts or other sources of income that you may not be aware of.
As we said earlier, there are no fairy tales and few happy endings when it
comes to your initial dealing with a problem gambler. Even with all the tips we offered above and you displaying the patience of Mother Theresa, your help may still be met with resistance. Then, it’s time to consider moving on to the next step – transferring assets.
Let’s be clear, what is being offered here is general advice only and taking this step will surely need the knowledge, wisdom and oversight of an attorney or professional fiduciary since every situation is different and unique. With that, here are some thoughts:
Consider a trust. There are a number of trusts that can be utilized but meeting with an attorney is the only way to know what’s right in your situation. Once money is placed in the trust, it is no longer available to the gambler.
Transferring Assets. Moving property into someone else’s name is a step that may be necessary. But this action is not without considerable risk. Such a transfer may be considered a gift and subject to tax and other legal considerations. The age and health of the gambler must also be considered since such transfers could have an adverse effect on any Medicaid application, even disqualifying the applicant due to the five year look back period regarding transfers. Finally, unless the person the property is transferred to is extremely trustworthy, what is to stop them from selling it? Always seek legal advice before transferring assets.
Credit Cards. Even if the gambler transfers property to another, creditors still have the right under the law to go after that property to satisfy debts. So if you are the beneficiary of a transferred asset, do not co-mingle funds, such as a checking or savings account – or you may not only lose the transferred funds but what you have deposited as well.
Wills. If the gambler has transferred property or money to you, you could put into your will that this property is to be returned to the gambler upon your death or placed into a trust that has been set up to benefit the gambler or the family. Again, legal advice is needed.
We addressed some accounts above but what about other accounts the gambler may have access to that could continue to fuel the problem? Here are some you can look for:
401(K) accounts – unfortunately, money can be borrowed from these accounts. Although the amount borrowed is limited, it is still a significant amount that can adversely affect retirement plans.
Profit sharing accounts – is the gambler still working and does the employer have a profit-sharing plan? If so, money can be removed from these accounts as well.
Individual Retirement Accounts (IRAs) – As the name implies, IRAs are truly individual in that only the individual who owns it can access the funds. Although the spouse may be the beneficiary, the gambler can withdraw money at any time without anyone’s permission. The only way to deal with this is to have the gambler withdraw the funds, pay the penalties and taxes and open up another account under another person’s name.
Life Insurance – Money can be borrowed from funds that have built up in a permanent policy (not a term life since there is no cash value). This money can be protected by naming the beneficiary an irrevocable beneficiary. This blocks the gambler from withdrawing money without the beneficiary’s permission.
Annuities – The gambler can transfer ownership of an annuity to you or another individual. Another action that could be taken is to annuitize the payouts to avoid the risk of a lump sum withdraw, however unless the gambler is over the age of 59 ½, these distributions may be subject to penalties and income taxes.
There are other pools of money that may also be available including inheritances, civil settlements and investment accounts. When an audit of assets is done, these may be discovered and need to be discussed – but, if a gambler wants to hide assets, it can still be done. So you can see how a gambling addiction is in many ways far more complicated than other addictions.
Recovering and Paying Back
Depending on the age of the gambler, whether they are still working or retired, figuring out how to stop the financial bleeding and beginning to replenish retirement accounts needs to begin. So let’s look at an older adult who is still working and how they can begin addressing the mountain of debt and the drained retirement funds. Here are the first two steps:
Make a list of all creditors. This list could be very large. Creditors could include national credit cards, store credit cards, pay day loans, taxes, child support, utilities, student loans, etc.
Are there any gambling debts? This may be difficult but break it down this way – did the gambler borrow from family and friends to finance the habit? Were other funds raided to pay for the behaviors. And do not rule out money owed to street level bookies.
Once you have some idea of what is owed, establish a payment plan. As we indicated in an earlier blog, you want to sit down and look at the household expenses. For instance, you don’t want to pay off the MasterCard when the gambler faces disconnection from the electric company. You must establish a list of priorities. If you need help, seek the advice of an attorney, professional fiduciary or financial planner.
Another action you do not want to take is remortgaging the house, taking out a reverse mortgage or borrowing from retirement accounts. This continues to put the family behind the eight ball and more losses should a relapse occur.
This may sound like odd advice, but do not pay off these debts immediately.
Although it flies in the face of good financial advice, remember we are dealing with a problem gambler and research shows that when debts are paid quickly, a relapse for the gambler is not far behind.
There are two theories on this:
Motivation - When the gambler is forced to struggle to repay the debts, it can act as a motivating factor in remaining in treatment;
Consequences - The struggle reminds the gambler of the consequences of their behavior.
Bankruptcy is also an option of last resort especially for older adults who can
still recover financially. Besides being a blotch on the credit records of the person for years, it does make financial recovery much more difficult. In fact, some research indicates that four out of five people who file bankruptcy are back in financial trouble just a few years later.
If the gambler is retired and there is little chance that the debts can be paid because returning to work is not an option, then a discussion on bankruptcy may make sense. In cases such as this, immediate action needs to be taken and finances need to be managed. The focus needs to be on keeping the senior safe in housing, keeping the utilities on and making sure medical issues are addressed.
Professional Fiduciary/Daily Money Management
Studies show that daily money managers help seniors remain home longer and avoid costly out of home expenses and may be especially helpful when intervening with seniors who may be problem gamblers. But not all money managers are made equal. In situations where there are large mountains of debt, search for a professional fiduciary who offers daily money management services. A daily money manager by themselves will not always have the insight into solving debt issues created by gambling.
So what do daily money managers do?
They ensure that bills are paid on time, checks are deposited, taxes are paid, checkbooks are kept balanced and insurance payments are kept current. These services can help seniors avoid eviction, loss of medical coverage, foreclosure, utility shutoffs and other credit problems. Money managers also provide oversight on accounts and spending and are in a position to catch unapproved withdraws and expenditures.
Daily money managers also help protect seniors from scams and other
financial fraud and abuse. The National Center on Elder Abuse reports that this service has been instrumental in saving many seniors from the loss of savings and other assets. Money managers review bank and credit card statements monthly and are aware of what to look for in cases of fraud – such as large withdrawals, checks written to multiple charities or other groups for large amounts and frequent withdrawals from ATMs or other charges.
"It makes sense to use a professional fiduciary who provides daily money
management for seniors who may have a history of problem gambling," said RJ Connelly III, certified elder law attorney and professional fiduciary.
"What professional fiduciaries can do is provide the kind of oversight needed when helping a problem gambler or their family develop a financial plan that best meets the needs of the problem gambler in recovery. The daily money management services offered provide an array of services that can help keep the client safe."
“What is important to know," continued Connelly, "is that daily money managers are not CPAs or accountants, attorneys, licensed investment advisors, stock or security brokers, insurance agents, or medical or social service professionals. However, they work in collaboration with these professionals in order to achieve the desired goal for the client.”
But, not just anyone should be put in charge of a senior’s finances - especially those with a gambling problem.
“This service is certainly needed in our aging society”, said Attorney Connelly. “But as with all things, clients must be aware that some people who claim to be money managers may be out to take a senior’s money rather than manage it. Unfortunately, because this is a relatively new field, there is no government oversight of daily money managers. Hiring the wrong person on top of losses caused by gambling can create an insurmountable problem for a senior.”
“When hiring someone to provide fiduciary or daily money management services, doing your own due diligence is imperative in picking a quality organization that provides these services for yourself or a loved one,” said Connelly.
According to American Association of Retired Persons (AARP), a good place to find a trusted money managing professional is by contacting the American Association of Daily Money Managers (AADMM), the national organization that sets standards of practice for its 700 members who are required to abide by a strict Code of Ethics, in accordance with all state and federal laws, and adhere to their principles which can be found on their website.
A Final Word
As we wrap up our series of blogs on problem gambling, we know that recognizing problem gambling in seniors is difficult and getting them into treatment can be even more of a problem. Most are reluctant to admit to their addiction and the shame that they live with can be overwhelming – especially if they have lived a life without any other blemishes.
In most cases, the problem becomes apparent only after financial problems surface, and at that point, they are usually facing a multitude of issues that may include foreclosure, utility shutoffs, medical and mental health concerns. Complicating this issue even further is age and conditions like dementia that may be present.
“This is an issue that will become a major problem in the years to come,” said Attorney Connelly. “As the baby-boomers age, they are bringing with them problems like drug addictions and sexually transmitted diseases, issues that were once reserved for younger adults. With the proliferation of casinos and on-line gaming, a rapid rise in problem gambling among seniors is right around the corner. This is something we cannot ignore. It can end in a loved one losing their home or becoming so overwhelmed with debt that they may never be able to dig out. That's not the way we want our seniors to end their lives."
If you are interested in getting our handbook on problem gambling among seniors when it is published, please subscribe to our website.
List of Problem Gambling Resources
NATIONAL PROBLEM GAMBLING HELPLINE
RHODE ISLAND COUNCIL ON PROBLEM GAMBLING
1425 Pontiac Avenue Cranston, RI 02920
CONNECTICUT COUNCIL ON PROBLEM GAMBLING
MASSACHUSETTS COUNCIL ON COMPULSIVE GAMBLING
Attorney Connelly practices in the area of elder law. This area of law involves Medicaid planning and asset protection advice for those individuals entering nursing homes, planning for the possibility of disability through the use of powers of attorney for the both health care and finances, guardianship, estate planning, probate and estate administration, preparation of wills, living trusts and special or supplemental needs trusts. He represents clients primarily in the states of Rhode Island, Connecticut and the Commonwealth of Massachusetts. He was certified as an Elder Law Attorney (CELA) by the National Elder Law Foundation (NELF) in 2008. Attorney Connelly is licensed to practice before the Rhode Island, Massachusetts, Connecticut, and Federal Bars.