Protecting Elderly Family Members – What Can You Do?

Roxanne Alexander, CAIA, CFP®, AIF®, ADPA®
Senior Financial Advisor

Fact: We are all getting older. Unfortunately, there are many ways that the elderly can be targeted and taken advantage of financially. We are seeing increases in fake phone calls and emails and IRS fraud as scammers and the technology used becomes more and more sophisticated. There are some steps you can take to help ensure that you and your family are protected from fraud or inadvertently making a transaction that you cannot reverse. I have heard several stories about caregivers, even family members, who did not have good intentions, managing to take funds from the elderly.

If you feel your elderly parent, spouse, or friend is having cognitive difficulties but is not considered medically incapacitated, some of the steps below may also be helpful. It can be hard for someone to relinquish control over their finances, especially when they have been accustomed to handling their affairs for decades, so for some people this may be a sensitive subject.

There are several options that can be easily put into place if you think you or your loved one may be at risk.

  1. Trusted contact forms: Most custodians such as Vanguard, Schwab, Fidelity, TD, etc., offer trusted contact forms, where you can list a trusted friend or family member who can be contacted if there is any suspicion of financial exploitation. This person has the right to confirm your contact information, health status, and the identity of any legal guardian, trustee, or power of attorney. The trusted contact will not be able to view your account information or execute transactions. You would probably want to make sure this person knows that they are listed as a trusted contact.
  2. Set up view-only access: You can set up view-only access for accounts so that a family member can log in and monitor activity. You can also set up a family member or friend to receive email alerts and notifications regarding the account. Paperwork would need to be signed by the account owner to allow viewing access. Keep in mind that these notifications (similar to receiving duplicate statements, which may not catch fraud immediately) may not be timely enough in case of an incident such as a wire transfer.

This action, along with the trusted contact form, are two steps that provide a basic layer of protection. Technologically-savvy family members could also be authorized to download the custodian’s app on their phone and set up notifications. For example, some credit card apps send alerts every time the card is used, and they pop up on your phone.

Having viewing access is also a good way to monitor your loved ones’ spending habits – usually, an unexpected or unexplained change can indicate a potential problem.

  1. Advisor notifications: If you work with a financial advisor, the advisor is usually set up to receive notices on any delinked accounts, accounts being transferred out, contact info changes, deposits, and withdrawals on a daily basis, but again, these notices may not be timely enough if a wire is initiated and money has already left the account. Your advisor may also be able to contact the custodian or a family member if there is suspicious activity in the account.
  2. Add a power of attorney: Adding a power of attorney will allow another person to conduct transactions on the account, view the account, sign paperwork, etc., depending on the extent of their power-of-attorney privileges. This document will not prevent an elderly family member from making transactions or requests – it will just add another person to the account who also has this ability. This step will not prevent the account owner from calling up and wiring funds or moving the account. You should discuss this with your estate planning attorney before adding this document to make sure it matches your intentions.

The most restrictive steps you can take, which can prevent the account owner from doing anything inadvertently, are as follows:

  1. Resign as trustee: The ability to resign as trustee on a trust will depend on the language of the trust. If you resign, the successor trustee(s) will take over. You may need to prove you are incapacitated by providing doctor’s letters stating your health condition before this can be done.
  2. Conservatorship or guardianship account: This step requires an original court-certified conservatorship/guardianship order, which will then be reviewed by the custodian of the funds. The custodian will then decide what type of additional paperwork is needed for the specific type of account, such as a new account application that may have to be filled out to add the guardian. This route will prevent the account owner from being able to do anything on the account. You would probably not choose to go to this extreme unless the account owner is incapacitated and can no longer manage their financial affairs.

The worst-case scenario may be if large wire is accidentally or unintentionally sent, since this can be impossible to get back once it leaves the account. Usually there is paperwork to fill out and sign, as well as security questions to answer, but if the account owner is able to provide all this information there is not much that can be done to stop the transaction.

If you have concerns about someone in your family, you may want to discuss these steps and possibly reach out to their attorney or financial planner to discuss the best options based on the situation.

Feel free to contact Roxanne Alexander with any questions by phone 305.448.8882 ext. 236 or email: RAlexander@Evensky.com 

For more information on financial planning visit our website at www.Evensky.com

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