Your parents may have reached an age where they need help with their finances. You may be concerned that they will mismanage their assets or succumb to elder financial abuse that could deplete their savings.
With 15% of the United States population now over the age of 65, many Americans are left wondering how they can financially protect their aging parents. Between cognitive decline, scam artists, and the expense that comes with longer life expectancy, careful financial planning is crucial.
There are several simple steps you can take to protect your elderly parents’ assets. Below are ideas and ways to get started. Remember, it’s better to start the conversation now rather than later.
Start Managing Their Money
With time, aging adults need some amount of help in managing their finances. However, it is common for adult children to feel uncomfortable discussing their parents’ financial situation with them. This happens despite knowing that failure to bring up the topic could result in financial difficulties. Read more about managing your elderly parents’ finances in our recent blog.
Set Up a Living Trust
A living trust is a legal documentation of how to handle your parents’ finances and assets. A living trust for elderly parents is often set up to help them manage their money as they become older, or when their health declines. Remember, a trust does not replace a will. Usually, trusts deal only with specific assets, such as life insurance or a piece of property. A will deals with distribution of nearly everything else in an estate.
According to AgingCare, there are several types of trusts to consider for your parents including:
Testamentary Trusts
A testamentary trust doesn’t take effect until after the person is deceased. It must go through probate before the trust is established. This means that the funds must first become public record and will most likely be reduced due to attorney and court fees from probate. The funds entering a trust are taxed according to the current estate tax law.
Irrevocable Living Trusts
With an irrevocable trust, the beneficiaries have a say in if it is revoked or revised in any way. They must provide their permission to make these changes. The grantor of this trust loses their right to the assets when transferred.
An irrevocable trust is typically used when a parent is applying for Medicaid, so they don’t have to dispose of all their assets to become eligible for the health care coverage or nursing home care. This allows your parents to hold on to their assets to pay bills and still qualify for Medicaid as well as making sure a spouse doesn’t lose their home upon the death of a significant other.
Revocable Living Trusts
With a revocable trust, the person retains control of all the assets in the trust and can revoke or change the terms of the trust at any time. Having a revocable trust offers an added layer of protection for your parents as it makes it difficult for a family member who is not the trustee to mismanage your parents’ money.
Educate Parents About Scams
An estimated one in 20 older adults have suffered from monetary scams or frauds. Scams have a devastating effect on older adults who have fallen victim. This leaves them in a very vulnerable situation with little to no time to recover the loss. It’s important to talk to your parents about these most common financial scams that target seniors.
Medical or health insurance scam
Every United States citizen or permanent resident over the age of 65 is eligible for Medicare. In these types of scams, the person posing as a health representative gathers personal information from elderly people. The scam artist then uses the collected information to bill Medicare and pocket the money.
Telemarketing or phone scams
This is one of the most common scams that preys on the elderly. Older people make twice as many purchases over the telephone compared to the national average. Since there is no face-to-face interaction or paper trail, it is extremely difficult to trace the origin of these calls. Sometimes the buyer’s name is shared with similar scammers leading to repeated defrauding of the same individual. The most common tactics used are ones where the money is solicited for fake charities, natural disasters or on the pretext of financial need for a person’s child or relative being admitted to the hospital.
Internet Fraud
Since aging adults have slowly adapted to technology and the internet, they’ve become easy targets for automated internet scams. Pop-ups that simulate virus-scanning software trick the victims into downloading fake programs that allow scammers to access the victim’s personal information from their computers including passwords. Another example includes email or phishing messages from seemingly legitimate companies that ask users to update or verify their personal information. For example, some of the emails appear to come from the IRS for tax refunds.
Seek A Trusted Partner
Are you wondering, “How can I protect my elderly parent’s assets?” If so, you’re already on the right track. Starting the conversation early is the first step to financial security and we know it might not be easy. If you need recommendations for a financial planner or help with determining the costs of retirement living for your parents, contact Tutera Senior Living. Our financial retirement experts would be happy to answer your questions and help you through the process. Feel free to call us at 877-988-8372.
