Elder financial predators are more prevalent than ever. Illness and cognitive impairments make seniors more susceptible to abuse than other members of the population. Seniors are also more likely to have accumulated significant savings and assets over their lifetimes. Whether it is a fraudulent scheme to collect funds, or a caregiver or relative in need of money - elder financial abuse can and does occur with astonishing frequency across the U.S. The good news is that with some careful planning, elder financial abuse can often be prevented.
Seeking help from a trusted and responsible relative, friend, or professional is the strongest defense seniors have against financial abuse. However, it is often the most difficult hurdle. Most seniors today are intelligent, fiercely independent individuals who are accustomed to managing their own finances. It can be difficult to share this previously very private information with another. However, when others are aware of an elder's finances, this can both ward off potential predators as well as allow someone to step in if they see abuse occurring.
Here are ten ways seniors can work with relatives or professional fiduciaries to prevent financial elder abuse:
1. Get a Second Opinion on your Accounts
Just as you would get a second opinion on your health, arranging for a trusted individual to check in on your accounts is a great way to prevent fraud and financial abuse. Come up with a system that allows someone else to view account statements at a regular interval. Monthly statements, for example, are an easy way for someone else to glance over accounts and ensure there is no unusual activity.
2. Consider Joint Accounts
Joint accounts aren't for everyone. There can be negative tax consequences as well as potential risks. In the best of situations, however, a joint account can help avoid probate and makes transfers upon death much smoother. During one's lifetime, the person on the account can also help oversee the account(s) and take steps to protect the asset if necessary. Consult a financial advisor or elder law attorney to determine if this is a smart option for you.
3. Put Your Assets in a Trust
Even better than a joint account or joint tenancy arrangement is a revocable trust. By placing the assets in a trust, you are not handing over any ownership. The trust, which is a separate legal entity, holds the ownership, and the trustee has the power to govern the trust. You will likely be the initial trustee, with one or more successor trustees in place should you die or are no longer able to manage the trust. The new trustee will not own any of the assets, but will instead be in charge of ensuring trust assets are managed in the best interest of the beneficiaries of the trust. Should you have more than one child, a trust is always advisable over joint accounts.
4. Visit often with Family and Friends
When one's responsibilities begin to lighten and there is no regular job to go to or children to care for, it's easy to become isolated. When one is isolated, they become more vulnerable to financial abuse. Make a habit of scheduling regular visits with friends and family. This makes it more difficult for potential abusers to take advantage of you, and also allows loved ones to take notice of anything suspicious.
5. Enlist help paying your bills
Enlisting the help of a trusted loved one to keep track of bills is a great way to ensure you don't miss any monthly payments or pay any fraudulent charges. There are also a growing number of eldercare services that offer help at reasonable rates. Always check the references and verify the background of anyone you hire. If you don't wish for someone else to have access to your personal accounts, there are a number of online tools like mint.com that you can have set up to monitor bills and other expenses.
6. Always question Requests for Money or Transfer of Ownership
Financial predators have all kinds of creative scare tactics to lure money out of the hands of unsuspecting people. If you receive any suspicious emails, phone calls, or letters claiming you owe money, share it with someone else. An attorney, financial advisor, and even your bank, can help you determine if the claim is valid.
The same goes for requests from family members and close friends. Always enlist the help of an attorney before making changes to your trust, will, power of attorney or gifting large assets. There can be serious consequences for the "giftee" - both legally and financially.
7. Talk to an Elder Law Attorney
An experienced Elder Law attorney can not only assist with setting up a revocable trust and power of attorney, they can also provide valuable information about the best ways to avoid financial abuse. Once you find an attorney you trust, they can also be a great resource for other questions that may come up as you age.
While there's no sure way to prevent financial fraud or abuse, the tips described above are ways you can put yourself or your loved ones in the best position possible. If you take away anything, remember this: social involvement and knowledge are your best tools for fighting elder abuse.
If you have questions about financial elder abuse or estate planning for seniors, call my office at 925-322-1763 for your free consultation.