As Oscar Wilde once said, “With age comes wisdom.” While that may be true to a degree, it is no secret the unfortunate byproduct of advancing age is the deterioration of one’s physical and mental abilities. While diminishing capacity is obvious in some people, it is more subtle in others, leaving them unprotected and vulnerable to potential abuse. In today’s rapidly changing world, one of the most prevalent types of abuse is Financial Exploitation. According to the National Council on Aging, approximately five million elderly men and women are abused each year, with financial losses of more than $35 billion. As friends, family members, and trusted advisors, we must be keenly aware of this dynamic to ensure the best interests of the elderly are served. Below are important planning tips for anyone you know who is entering advanced age or is caring for someone who is:
Know the Signs of Cognitive Impairment
One of the most useful ways to protect those who are in their advanced stage of life from financial exploitation is to understand and be able to identify the signs of cognitive impairment. Below is a list of common signs to watch for:
Forgetfulness (i.e., Important dates, recent conversations, names, etc.)
Overwhelmed with basic directions or instructions
Impulsiveness (i.e., Random purchases, spending/gifting large sums of money, etc.)
The recent release of third stimulus checks has presented would-be criminals with easy opportunities to scam people, specifically the elderly. According to a CNBC article, scammers are using bogus emails that appear to be from the IRS to get individuals looking for their stimulus payments to click on links to access additional information. Of course, the link is a trick to gain personal information that can be used for identity theft and stealing financial information. Government imposter scams are on the rise and since COVID’s inception, over $450 million in losses have been reported.
What’s the plan?
With financial exploitation on the rise, it is more vital than ever to develop a plan to prevent this kind of abuse.
What can you do?
1) Build a trusted team of advisors, including Certified Financial Planners™ and tax and legal advisors as early as possible.
2) Ensure Powers of Attorney and other legal documents reflect your wishes.
3) Educate yourself, family members, and caregivers on what to look for (See Above!).
4) Trust, BUT VERIFY, family and friends! Unfortunately, over 30% of financial exploitation is committed by family and friends so designating an objective “Trusted Contact” may be necessary. The Trusted Contact’s role is to be a resource for financial advisors, brokerage firms, banks, etc., to contact in the event exploitation is suspected. The Trusted Contact’s role is NOT to make financial decisions as this is the role of a Power of Attorney.
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