As we age, we sometimes become susceptible to financial abuse from others. Scammers, dishonest caregivers, acquaintances, and family members sometimes steal money or belongings from older adults, manipulate their financial decisions, or pressure them to give gifts.
Although it can be difficult to think about, there are legal and financial steps you can take to help protect your parents from financial abuse. By updating your parents’ estate plan, you can help preserve their assets and ensure their wishes are carried out.
What is Elder Financial Abuse?
Elder financial abuse involves the improper or illegal use of an elderly person’s money, property, or assets.
Financial abuse can include theft, fraud, coercion, forgery, scams, or abuse of legal power.
Financial abuse of an elderly parent often occurs slowly over time. As a result, family members may not notice until most of the abuse has occurred.
Seniors who experience failing health, memory loss, or extreme loneliness may be at higher risk for financial abuse.
What are the Warning Signs of Financial Abuse?
Some common signs include:
- Unexplained withdrawals from bank accounts.
- Bills not being paid despite having enough money.
- Last-minute changes to estate planning documents.
- Valuables going missing.
- Unexplained transfers of money to someone new.
New friends or loved ones that quickly move to manage an elderly person’s finances or attempt to cut family members off from contact should also raise suspicion.
Don’t ignore any sudden changes in spending habits or financial decision-making.
Who is Most Likely to Commit Financial Exploitation Against an Elderly Adult?
Anyone can commit financial abuse. Predators often include strangers, caregivers, neighbors, contractors, acquaintances, or family members.
Scammers may also target older adults through phone calls, social media, emails, or text messages.
Tragically, others who are best positioned to commit financial fraud against older adults are people that spend a lot of time around them, such as caregivers who have easy access to an elderly person’s home and finances.
How Can Estate Planning Help Protect My Parents From Financial Abuse?
Estate planning can help prevent financial abuse by clearly stating your parents’ wishes in legal documents and appointing trusted individuals to make financial and legal decisions if needed.
Creating an estate plan allows your parents to choose who will make decisions on their behalf before memory loss or another crisis occurs.
A strong estate plan also leaves less room for confusion among family members and banks if your parents become physically or mentally unable to manage their own finances.
Should My Parents Have a Durable Financial Power of Attorney?
Yes. A financial power of attorney document allows your parents to choose someone they trust to help manage their financial affairs if they become physically or mentally incapacitated.
Deciding who to name as your parent’s agent is a crucial part of estate planning.
The person named should be trustworthy, financially responsible, and willing to act in your parents’ best interests.
Can a Revocable Living Trust Help Prevent Financial Abuse?
Yes. A revocable living trust allows your parents to maintain control of their assets while providing another layer of oversight.
If your parents become unable to manage their finances, a successor trustee you choose can help manage those assets according to your parents’ instructions.
Trusts often reduce the likelihood of financial exploitation because there is continuity of oversight from one person to the next.
Should My Parents Review Their Beneficiary Designations?
Yes. Many accounts like retirement plans, life insurance, and payable-ondemandation require your parents to name a beneficiary.
Failure to update beneficiary designations could result in assets unintentionally passing to an ex-spouse, deceased beneficiary, or someone your parents don’t want to inherit.
Your parents should review and update beneficiary designations regularly to help ensure important assets will pass according to their current estate plan.
How Can My Parents Protect Themselves From Financial Scams?
Older adults should be wary of anyone who calls, emails, texts, or contacts them unsolicited and asks for money or personal information.
Scammers often try to create urgency by insisting that your parents contact their bank or send money right away to avoid legal action, foreclosure, or financial penalties.
They should encourage your parents to verify the information independently before providing personal information or sending money.
Is it Beneficial to Monitor Bank Accounts?
Yes. Monitoring bank accounts, credit card statements, and investment portfolios can help catch financial abuse early.
Your parents should consider signing up for fraud alerts, account notifications, and online monitoring through their bank and financial institutions.
The sooner they catch fraudulent activity, the better chance they will have of stopping it and minimizing financial losses.
When Should My Parents Update Their Estate Plan?
Parents should review their estate plans after any major life event or changes in their financial or family situation.
Major life changes that may require your parents to update their estate plan include changes in marital status, birth of grandchildren, selling a home, and retirement.
If your parents live in a state that enacts frequent changes to estate law, they should plan to review their estate plan every 3-5 years.
What Should You Do If You Suspect Financial Abuse?
If you suspect financial abuse, gather as much information and evidence as you can and seek the advice of an experienced estate planning attorney or elder law attorney immediately.
You may also want to consider contacting your parent’s bank and/or notify the appropriate state or federal agencies.
How you handle the situation can affect your ability to recover lost funds or assets and whether you can press charges against the individual who abused your parents.
How Can An Estate Planning Attorney Help Protect My Aging Parents From Financial Abuse?
An estate planning attorney can prepare legal documents that help prevent financial abuse. Your attorney can explain various legal strategies that help protect your parents’ assets and reduce the likelihood of financial abuse occurring in the future.
An estate planning attorney can also review existing estate planning documents and make changes to help prevent financial abuse from occurring.
Contact Patton Law Group Today
Taking action now can help your parents avoid financial scams in the future. With the help of an experienced estate planning attorney, you can help your parents protect their assets by updating their estate plan and implementing safeguards to detect financial abuse early.
The experienced estate planning attorneys at Patton Law Group help clients protect their loved ones and their assets. Contact Patton Law Group today to schedule your consultation and learn how estate planning can protect your aging parents.
