MoneyDo: Protect Yourself/Family From Financial Elder Fraud
Most of us have taken steps to protect ourselves from the menace of identity theft, from freezing our credit to even adding protections to our computers and email. While Identity Theft is trouble, not as many of us are aware that Financial Elder Abuse is actually more of a danger than identity theft.
Experts agree that many Financial Elder Abuse cases are not reported, so the number of instances of this fraud exceeds the 200,000 cases reported annually in the United States.
Elder fraud can be defined several ways, but generally involves abuse of financial control in a relationship where there is an expectation of trust. Typically, this type of fraud is perpetrated by someone known to the victim, who has been asked for assistance.
This week, your MoneyDo task is two-fold: 1) Take steps now to protect your finances as you age, and 2) Ensure your parents and those you love are also adequately protected.
The best line of defense against Financial Elder Fraud is surrounding both you and your parents with a strong and trustworthy social support network.
Start by putting a Financial Power of Attorney (POA) in place. The person you nominate should be someone you trust, but also someone is who has a strong financial foundation and comprehension. Without that foundation, money issues may drive otherwise-trustworthy people to take unexpected action.
When selecting a POA, the obvious first choice is your spouse. But think hard on who you’d consider as a secondary POA. Remember: take care in your selection process when nominating a secondary POA. Your POA will have “the keys to the city” if you lose the ability to act on your own behalf. Nominate and have your parents nominate several secondary POAs. Perhaps one POA pays the bills and the other monitors the bank account.
Secondly, surround yourself and your parents with trustworthy individuals – often family. Elderly individuals who have many people involved in their lives are much harder targets for fraud predators.
“Surround” means having conversations with your parents on a regular basis, a tactic that will give insight to their affairs and mental state. (It’s also a good thing, in general, to stay in touch with your parents.) Understand who they ask for advice and who their powers of attorney are. Use your regular conversations to inform them about the dangers of fraudsters and solicitation calls.
An open line of communication will give your parents comfort to seek advice from you when something doesn’t feel right. It will also help build trust as you work on our third suggestion…
Thirdly, we suggest a system of checks and balances. As you age, learn to trust your network. Allow your family to monitor your bank accounts, or help your parents monitor their bank accounts. Look for unusual activity. Fraudsters tend to start small to see if they are successful. Again, the more eyes looking out for you and your family, the better.
Fourth, we suggest having a family meeting. The key is to establish expectations, ground rules, and appropriate checks and balances to ensure that everyone follows your plan—and to have your loved one update their estate plan, if need be, to document these wishes and avoid potential misunderstandings between family members. Clear expectations help everyone understand their role.
Some of these steps may not only improve your defense against Financial Elder Fraud – use them as a chance to strengthen ties and lines of communications between you and your loved ones. You’ll discover you’re not just promoting financial stability, but building a strong family and social network at a time when you’ll need it most.