Estate Plans Can Protect against Exploitation

Estate Plans Can Protect against Exploitation
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According to experts, despite increased phishing emails and robocalls, it is far more common for financial exploitation to be committed by people who know the victim, such as relatives, caregivers, neighbors, or ‘friends.’

Financial exploitation is far more common than most people think, especially among the elderly. According to a recent article from mondaq titled “How An Estate Plan Can Protect Against Financial Exploitation,” several types of individuals are more at risk for exploitation.” These include someone with cognitive impairment, in poor physical health, who is isolated, or has a learning disability.

Exploiters share common characteristics as well. They are often people with mental health illnesses, substance abusers, or those who are financially dependent on the person they are exploiting.

There are warning signs of financial abuse, including:

  • Changes in patterns of spending, transfers, or withdrawals from accounts
  • Isolation from friends and family
  • Unexplainable financial activity
  • An inability to pay routine bills and expenses
  • Sudden changes to estate planning documents, beneficiary designations, or the addition of joint owners to accounts or property titles

One way to avoid financial exploitation is with an estate plan prepared in advance with an eye to protection. Instead of relying on a durable power of attorney, a funded revocable trust may provide more robust security. A revocable trust-based plan includes safeguards like co-trustees and a requirement for independent party consent to any trustee change or amendment.

A support system is also essential to protect a person if someone is attempting to exploit them. Estate planning attorneys collaborate with financial advisors, CPAs, and other professionals to create a plan to avoid or end elder abuse. Further steps to be taken include:

  • Consolidating accounts with a trusted financial advisor so all assets are easily observed
  • Have a family member or trusted person receive copies of account statements
  • Consider a credit freeze to avoid any possibility of being coerced into opening new credit card accounts or taking out loans.
  • Any spending anomalies are quickly flagged by establishing a budget and sharing information with advisors and a trusted person.

Elder financial abuse is all too common, but taking proactive steps to safeguard a vulnerable family member is an excellent strategy to deter or thwart anyone intent on taking advantage of a loved one.

Reference: mondaq (Sep. 23, 2022) “How An Estate Plan Can Protect Against Financial Exploitation.”