I recently wrote about the growing likelihood that some of us will live to 100. While a longer life is a good thing, it will also present challenges – and unfortunately, sometimes financial predators.
At a conference in May, I heard Philip Astor Marshall speak. Marshall’s grandmother Brooke, heir to the vast Astor fortune, was left in her last years living in squalor. Her son and guardian, Marshall’s father, was stealing from the estate, dramatically reducing the amount spent on his mother’s care. He and his brother sued their father to protect their grandmother.
Sadly, this doesn’t just happen to the ultra-rich. One report estimates that one in 10 seniors have suffered financial abuse.
What makes elders vulnerable?
For one, as our brain ages, we are more susceptible to making poor decisions. Recent research shows that highly intelligent retirees (even those with no signs of dementia) find it harder to distinguish safe investments from risky ones. Plus, the probability of dementia rises with age: only 7 percent of over 60-year-olds have dementia, while nearly 30 perent of those 85 or older suffer from it.
If you’re a senior citizen or you have one in your life, it’s important to know how to prevent abuse. Here are five suggested ways:
Talking with your elderly loved ones on a consistent basis to check in on their health and their activities is important. If they are hesitant to talk about their money situation, you can bring up a situation you are dealing with.
Routinely remind them to maintain safe practices, such as shredding receipts, bills and account statements. Remind them to be wary of opening unknown emails and that they should never give out their Social Security number or financial account numbers online or on the phone.
Maintain open communication so you can pick up on if they are showing any signs of confusion or mental decline.
Know how your loved ones spend time and thus their money.
If they hire outside help for things such as home maintenance, try to be involved in the vetting process. Get to know their health care aides. Review monthly or quarterly statements to identify any unusual, frequent or large payments.
If your loved one is showing signs of decline, offer to pay bills for them. That way you’ll know exactly what is going on.
Set up checks and balances
Make sure your elderly loved ones have the proper estate planning documents in place that will allow trusted family members the ability to help them as needed.
If you have siblings or other family members, divide out responsibilities – perhaps one person oversees the bank account and checkbooks and another the investment accounts. Then trade responsibilities every couple of months.
Build relationships with professionals
Encourage your loved ones to allow you to attend meetings with them with the key advisers.
We recommend to our aging clients that their child or other family member attend meetings. As their family member ages, the child has a relationship with us already.
We encourage the same when your seniors meet with an estate planning attorney.
Spend a rainy weekend with your loved ones to conduct an inventory of their financial documents – life insurance and long-term care insurance policies, bank accounts, annuities and investment accounts.
Our financial planning clients have access to a secure on-line vault where these documents can be stored.
If they aren’t working with a financial adviser, their finances may be spread out with multiple firms, brokerage houses, insurance companies, etc. To make your loved one’s finances more manageable, consolidate accounts where possible. This will make it easier to spot any unusual withdrawals or transactions.
Even with these and other steps, financial fraud may occur in your family. Resources to tap include AARP and NAPSA (National Adult Protective Services). Be active and involved as your loved one ages.
Joni Lindquist, MBA, CFP is a Certified Financial Planning professional and active member of the Financial Planning Association of Greater Kansas City. She is a principal at Aspyre Wealth Partners, formerly KHC Wealth Management. She partners with clients to help them Master What’s Next, clarifying and achieving their aspirations at each phase of life.