How to avoid being taken advantage of as an older person. Elder financial abuse is a significant risk. Here's how to avoid it.
Studies from the NCOA have found that up to 5 MILLION older Americans (over the age of 65) are abused every year. It’s estimated that only about one in every 24 cases are reported!
Financial exploitation of an elderly person is when there is misuse or withholding of an older adult’s resources by another. Elder financial abuse results in an average of at least $36.5 billion of losses every year; a loss that most can’t afford. “In almost 60% of elder abuse and neglect incidents, the perpetrator is a family member. Two-thirds of perpetrators are adult children or spouses.” (NCEA)
It’s crucial to prepare for possible elder financial abuse and prevent these devastating situations. We have some tips on how you can ensure that you or an older loved one can avoid becoming a victim of elder financial abuse:
1. Establish An Estate Plan
The first step is to establish an estate plan with an experienced lawyer while you are still of sound mind and body. This is perhaps the most meaningful way to protect your assets because it hedges you with pre-established legal protections. It’s important to choose your agents and trustees wisely, naming people who will know how to handle your financial affairs as you would like.
TIP: Coordinate meetings with an estate planning attorney, financial advisor or someone at your financial institution about your best options.
2. Carefully Choose a Health Care Agent and Financial Agent
Choosing the person who will have control over your health care and a person with financial control in the event of your incapacity should be considered very carefully. It’s imperative not to be pressured into choosing agents against your better judgment.
For example: choosing a trusted friend as your agent to have financial control (financial power of attorney) could be better than an adult child with serious debt, poor money management habits, or a substance abuse problem. Don’t feel pressured into choosing someone just because he or she is family. Family isn’t always the best choice.
TIP: Build relationships with the people who handle your finances, such as your banker. They can be on the look out for any suspicious activity related to your account.
I would not recommend these to a client.
3. Keep Control Of Your Assets
Signing over ownership of your assets to your children, especially assets you may need for expenses, is not always advisable. You may feel compelled to do this to protect your family from probate, but there’s a better process for this.
TIP: It is okay to say “no” when family members pressure you about access to your assets or financial control. After all, it’s your money.
Probate is an expensive hassle and it’s good to ensure your family does not get stuck in probate court. It’s likely better to use a Trust to protect your major assets, such as your home. A Trust can be established to keep your assets out of court and ensure they are not at risk from your child’s divorce, creditors, or lawsuits. Be sure to get guidance from an experienced lawyer on asset protection.
4. Careful When Adding Family to the House Title
Putting your family home in a Trust is often a great strategy. However, merely adding your family member – such as your adult child – to the title of your house, however, can be very risky without proper planning.
Your house could be in jeopardy if your child ends up in financial trouble, whether due to careless spending, a severe accident, or a long-term illness. Then your child’s creditor can go after your house to settle debts, if the child’s name is on the house title.
Protect Yourself In Advance
These are a few of the best ways to protect against elder financial abuse. Now that you know, the next step is to take action!
At Artisan Law Firm, we specialize in guiding clients to protect themselves, their families, and their assets from these risks. If you have not started the estate planning process yet, do not wait until you are in a high risk situation.