It begins with a seemingly innocent invitation. Your aging loved one's presence is requested at a seminar about the secrets of successful retirement planning, hosted by a local senior living community and featuring a financial advisor who will be more than happy to answer any questions they might have. The best part? The event includes a complimentary buffet! Should you encourage your loved one to attend?

There's nothing inherently wrong with trying to obtain information about financial planning and retirement (in fact, it's a good idea to learn as much as you can), it's important for aging adults and their families to keep in mind that there really is no such thing as a free lunch. Indeed, offering a free meal is a common tactic used by an especially nasty breed of scammers called "pension poachers" —financial planners, attorneys and insurance agents, who seek out older adults with steady incomes in the form of pensions and convince them to restructure their assets in a potentially catastrophic way.

"Financial folks come into these communities, wearing flag pins on their lapels, looking for all the world that they're as red, white and blue as the day is long," says Debbie Burak, founder of Veteranaid.org, an online resource for veterans and their families. But, according to Burak, the veil of patriotism often conceals a less upstanding goal of pension poachers, who often target aging veterans who are eligible to receive the Aid and Attendance pension benefit from the VA.

Scammers leverage veterans' lack of knowledge

The Aid and Attendance pension offers financial assistance above and beyond the typical veteran's benefit. It's a means-tested stipend that helps servicemen and women (and their spouses) who need help with activities such as bathing, dressing and eating to pay for care. But according to Burak, despite the overwhelming positives of this pension, confusing eligibility rules and a lack of easily accessible information has made older veterans prime targets for con artists. "The easiest people to take advantage of, are children and seniors," she says. "They [pension poachers] literally troll, not for who needs the most help, but for who has the most money."

The typical con commences with an invitation for the older adult to attend a seminar on retirement planning. According to Burak, the organizers of these events often do everything they can to convince the adult children and other family members of the aging veteran not to attend.

Each event brings a new crop of unsuspecting older adults who are ever-so-grateful to learn that they could qualify for extra financial assistance from the VA by tweaking their financial portfolio a bit. This often means placing the majority of their assets in an annuity, pension advance or similar financial tool. The goal is to make it appear as though the older individual has less money than they actually do.

Initially, the arrangement seems beneficial for each party; the aging veteran gains financial assistance to help pay for their care needs (either at home or in a senior living community), the financial planner/attorney/insurance agent makes a commission, and the senior living community potentially gains a new resident. Unfortunately, the truth is that the older adult often ends up unwittingly placed in a situation that could (and often does) result in financial ruination.

Take Uncle Joe, for example. Uncle Joe is an 83-year-old Vietnam veteran who has a 50-year-old nephew named Sam. A financial advisor convinces Joe to pour most of his money into a 10-year annuity in Sam's name, so that Joe can qualify for the Aid and Attendance pension. But Joe is stunned when the VA rejects his application. (Side note: no financial advisor can "guarantee" that a person will be accepted by the VA). Joe needs to move into a nursing home. Because his application for Aid and Attendance was rejected he doesn't have enough money to pay for the nursing home himself, so he has to apply for assistance from Medicaid. Unfortunately, Joe's Medicaid application is also denied because of the annuity he created for Sam. Sam wants to help his uncle, so he tries to withdraw money from the annuity to help Joe pay for care, only to find that he cannot touch the money in the annuity until he turns 59—nine years from now.

"They [pension poachers] don't stop to think that you've reduced that person's income down to so little—they don't see it as unethical to sell a 96-year-old veteran a 10-year annuity," Burak laments. "And it's the easiest sell in the world, when presented right. It's got nothing to do with honoring someone who served this country."

Strict regulations: helpful or harmful?

Outcry over the acts of pension poachers lead to a year-long investigation by the Senate Special Committee on Aging. Burak served as an advisor to the committee, which uncovered rampant practices of pension poaching throughout the country. But she laments that recent efforts to crack down on predatory professionals by implementing stricter eligibility rules for Aid and Attendance may end up doing more harm than good for aging veterans.

Two bills attempting to establish a three-year look-back period for Aid and Attendance (similar to Medicaid's five-year look-back) failed to pass the Congressional gauntlet, but the VA is trying to bypass the legislative process and implement a look-back policy on their own. The rules would be strict; even giving money to a church could be used against an older veteran who is trying to qualify for assistance.

Burak and many others feel that these unyielding regulations could spell disaster for aging veterans. For one thing, it would give scammers the ideal argument for making a fast decision about financial restructuring. "This bill will not stop pension poachers," says Burak. "You've given them just what they need to close the sale. They can simply say ‘If you don't move right now, you're going to be denied because of the tree-year look-back.'"

Spotting suspicious situations

What can veterans and their caregivers do to avoid being conned by a pension poacher? The Federal Trade Commission (FTC) has a few suggestions:

There's no such thing as a free lunch: Financial seminars that offer free food are hosted by individuals and organizations who are banking on recouping their investment by convincing an older adult to re-tool their finances.

‘Too good to be true' is exactly that: Families who are in desperate need of money to help cover the cost of elder care can have a hard time seeing through shady professionals who say things like: "We'll guarantee you'll get the Aid and Attendance pension," and "Get the benefits you're entitled to." These phrases should always set off alarm bells. There are no guarantees in life.

Check their credentials: Before trusting your money (or your loved one's money) to an advisor, be sure to research their qualifications and reputation. For veterans issues, it's always best to opt for a VA-accredited advisor. These financial and legal professionals are qualified to help guide families through the application process. One of the distinguishing features of VA-accredited advisors is that they are not allowed to charge any money to file an application with the VA.

Don't be afraid to say ‘no:' Scammers often pressure their potential victims to make quick decisions, before they can gather any outside information that could dissuade them from saying ‘yes' to a financial plan that might not be in their best interest. This is why it's so important to do your research before making any major decisions regarding money. Get the facts, and don't be afraid to say ‘no' if you don't feel comfortable with the plan the advisor has developed.

For more information on Veterans Benefits, see: