Financial elder abuse – defined by the National Committee for the Prevention of Financial Elder Abuse as the illegal or improper use of an elder person’s funds, property or resources – can take numerous forms and will cost seniors billions of dollars each year. Its impact on an elder person’s emotional, physical and financial health – and thus longevity – can be significant and long-lasting. To help protect an aging loved one in your life, consider starting on the following six steps.
Now is the time to begin talking with your loved one to ensure their financial intentions are known and the proper safeguards are in motion. That may involve one of those difficult discussions about money, but it’s better to have tough conversations before tough times. There are many incremental ways to lessen the risk of financial elder abuse, like through automation (direct deposit, automatic bill pay) and technology (financial tracking tools to identify irregular activity). Tie these into your loved one’s larger, comprehensive financial plan. A will, financial and health-care powers of attorney, updated beneficiary designations, and possibly other wealth planning strategies like trusts may be especially important components.
Don’t underestimate the threat to financial security in later life that identity theft, fraud or financial exploitation may pose. Seniors are often targeted specifically, and the consequences of this type of financial elder abuse can be devastating. If you can, educate yourself and your loved one about the latest scams, which include everything from fake sweepstakes and investment schemes to con jobs after a disaster and email phishing. Does your loved one know how to protect their personal and financial information? Unfortunately, those who financially exploit the elderly are often another family member, friend or caregiver – think misuse of a guardianship or joint bank account, exorbitant charges or spending requests – so caution must extend even that far.
Social isolation is among the risk factors for elder abuse. So, stay connected with your loved one though regular phone calls, video chats, email and in-person visits. Furthermore, encourage – and, perhaps if necessary, assist – your loved one in remaining socially active and engaged, whether that’s with friends and neighbors, a civic group, through volunteer work, or in their faith community. Is there a caregiver in the picture? Get to know that person. Being present and involved in your loved one’s life can help catch and halt financial elder abuse or even prevent it from occurring in the first place.
Involve the financial team
Confirming with your loved one that each member of their financial team – wealth advisor, CPA and attorney, for instance – is fully informed about their wishes and on the same page can mean that more eyes are more effectively monitoring your loved one’s financial wellbeing. Your loved one will also have more places they can turn to for advice, resources and, should they need it, help. Asking your loved one to involve their professional team in financial decisions may provide an additional layer of protection, heading off potential problems before they occur.
Identify a trusted contact
Ask your loved one to choose someone they trust. Then ask them to give their wealth advisor advance permission to contact this person for guidance in the event the advisor notices a change in your loved one’s cognitive abilities – often simply a normal part of aging – or other decline. Cognitive impairment is another risk factor for elder abuse. Identifying a trusted contact puts a formal safety net in place to protect your loved one in difficult circumstances that a fraudster or other financial abuser may be eager to exploit.
Look out for warning signs of diminished financial capacity
True, it’s not a particularly welcome topic to address, but diminished financial capacity is an unfortunate reality we all may face one day. And it’s worth preparing for, because a loved one’s inability to manage money to serve his or her best interests can make them more susceptible to financial abuse. Warning signs of diminished financial capacity range from decision-making that’s inconsistent with long-term goals and a lack of awareness about recent transactions to the failure to recognize or appreciate financial consequences, erratic trading behavior or difficulty with familiar tasks.
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The opinions expressed by featured authors are their own and may not accurately reflect those of Buckingham Strategic Partners. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice.
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