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Hurt Feelings, Family Battles and A Royal Mess
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Hurt Feelings, Family Battles and A Royal Mess

Without an estate plan in place, and that includes a will, power of attorney, and health care directives, dividing up an estate gets messy, fast. Preparing a will does not really take that much time, but it does require you to do some work, like making a list of your assets and sitting down with an estate planning attorney.

The title of this article from Zing! says it all: “What Happens If You Die Without a Will? You Might Leave Behind Hurt Feelings, Legal Battles and Chaos.” Dying without a will, means that your estate is “intestate,” and the rules of your state will dictate exactly what happens to your assets. You may not want your kid brother or the man you were divorcing to get anything but depending on your state’s laws and your marital state, that could happen.

In most states, your assets will pass to your kids and your spouse. If you don’t have any, your assets are passed on to your nearest living relatives. If your kids are minors, the court will decide who will raise them. A will is also about naming a guardian for your minor children and naming a person who will be in charge of your money to look after them.

When there’s no will, everything is decided by the court.

Having a complete estate plan is like a gift to your survivors. It tells them exactly what you want to have happen to your possessions, who you want to make decisions on your behalf for medical care if you are unable to, who you would want to raise your children and even what kind of funeral you want to have.

Here’s an example, let’s say that an adult is financially supporting a parent, even though the adult does not live with their parent. In New York State, if that person dies, their spouse inherits everything. If that person has a spouse and children, the spouse inherits the first $50,000 plus half the balance of the estate. The children inherit everything else.

The parent who was dependent upon the adult child, is left on their own. The parent would have to hope that her daughter-in-law (or son-in-law) would be willing to continue to help them. Basic estate planning could have set up a trust or other mechanism to support that adult.

Another concern: if you die without a will, it is more likely that people you don’t know, may try to fraudulently make claims on your estate. There may be bitter resentment, if one family member steps up to try to take charge of the process. That person will have to apply to the court to be appointed as the estate administrator. When that happens, your assets will be frozen. If no one wants to become the executor, the court will appoint a public trustee.

What if there’s not enough money to support the family and the family home needs to be sold? That would become a legal and financial nightmare for all concerned.

By sitting down with an experienced estate planning attorney, you protect yourself, your assets and your family and loved ones. You can determine how you want your assets to be distributed. You can also determine who you want to be in charge of your financial life and your health, if you should become incapacitated. With a will, power of attorney, power of attorney for healthcare, and other documents that are used, depending upon your unique situation, you can have a say in what happens and spare your family the legal, financial, and emotional stress that occurs when there is no will.

Reference: Zing! (March 4, 2019) “What Happens If You Die Without a Will? You Might Leave Behind Hurt Feelings, Legal Battles and Chaos”

Did Luke Perry Plan His Estate?

Fifty-two-year-old Luke Perry suffered a serious stroke recently and was hospitalized under heavy sedation. A few days later, his family made the decision to remove life support, when it was apparent that he wouldn’t recover and after a reported second stroke.

Forbes reports in its article, “Luke Perry Protected His Family With Estate Planning,” that he was surrounded by his children, 21-year-old Jack and 18-year-old Sophie, his fiancé, ex-wife, mother and siblings, when he passed.

The fact that the hospital let Perry’s family end life support, means that he likely had executed the proper legal documents, so his family could make the decision. Those documents were most likely an advance directive or a power of attorney. Without these legal documents, Luke’s family may have needed to obtain an order from a probate court to terminate life support—a public and emotional process that would have prolonged his suffering and made it even more stressful for his family.

Perry reportedly created a will in 2015. He left everything to his two children. According to a family friend, Perry discovered he had precancerous growths following a colonoscopy. This motivated him to create a will to protect his children.

Luke Perry had a reported net worth of around $10 million, so he may have created a revocable living trust, in addition to a will. If he had only a will, then his estate will have to pass through probate court. However, if he had a trust, and if his trust was properly funded (he transferred his assets into his trust prior to death), then his assets can pass to his children without court involvement.

One question is whether Perry would have wanted something to go to his fiancé, therapist Wendy Madison Bauer. Since his will was drafted in 2015, he likely did not include Bauer at the time. If the couple had married prior to his death, then Bauer would typically have received rights as a “pretermitted spouse.” These rights wouldn’t have been automatic, but would have depended on the terms of his will and/or trust, as well as whether the couple signed a prenuptial agreement that addressed inheritance rights. However, if the documents failed to show an intent to exclude Bauer as a beneficiary, then she would’ve been entitled to one-third of his estate under California law, if they’d been married.

Because Perry died before he married Bauer, she’s not entitled to inherit anything through his will or trust, assuming his children are his only beneficiaries, and no later will, trust, or amendment is found that includes her. Perry may have left money for Bauer in other ways, like life insurance, a joint bank account, or an account with a TOD (Transfer on Death) or POD (Payable on Death) clause.

Luke Perry’s death provides an important lesson: don’t wait until you’re “old” to do your estate planning. Perry’s 2015 cancer scare made him take action, which simplified the process for his family to terminate life support and will likely make the process of dividing his estate easier.

Reference: Forbes (March 8, 2019) “Luke Perry Protected His Family With Estate Planning”

Smart Women Protect Themselves with Estate Planning

The reason to have an estate plan is two-fold: to protect yourself, while you are living and to protect those you love, after you have passed. If you have an estate plan, says the Boca Newspaper in the article titled “Smart Tips for Women: Estate Planning,” your wishes for the distribution of your assets are more likely to be carried out, tax liabilities can be minimized and your loved ones will not be faced with an extended and expensive process of settling your estate.

Here are some action items to consider, when putting your estate plan in place:

If you have an estate plan but aren’t really sure what’s in it, it’s time to get those questions answered. Make sure that you understand everything. Don’t be intimidated by the legal language: ask questions and keep asking until you fully understand the documents.

If you have not reviewed your estate plan in three or four years, it’s time for a review. There have been new tax laws that may have changed the outcomes from your estate plan. Anytime there is a big change in the law or in your life, it’s time for a review. Triggering events include births, deaths, marriages, and divorces, purchases of a home or a business or a major change in financial status, good or bad.

If you don’t have an estate plan, stop postponing and make an appointment with an estate planning attorney, as soon as possible.

Your estate plan should include advance directives, including a Durable Power of Attorney, Health Care Surrogate, and a Living Will. You may not be capable of executing these documents during a health emergency and having them in place will make it possible for those you name to make decisions on your behalf.

Anyone who is over the age of 18, needs to have these same documents in place. Parents do not have a legal right to make any decisions or obtain medical information about their children, once they celebrate their 18th birthday.

Make a list of your trusted professionals: your estate planning attorney, CPA, financial advisor, your insurance agent and anyone else your executor will need to contact.

Tell your family where this list is located. Don’t ask them to go on a scavenger hunt, while they are grieving your loss.

List all your assets. You should include where they are located, account numbers, contact phone numbers, etc. Tell your family that this list exists and where to find it.

If you have assets with primary beneficiaries, make sure that they also have contingent beneficiaries.

If you have assets from a first marriage and remarry, be smart and have a prenuptial agreement drafted that aligns with a new estate plan.

If you have children and assets from a first marriage and want to make sure that they continue to be your heirs, work with an estate planning attorney to determine the best way to make this happen. You may need a will, or you may simply need to have your children become the primary beneficiaries on certain accounts. A trust may be needed. Your estate planning attorney will know the best strategy for your situation.

If you own a business, make sure you have a plan for what will happen to that business, if you become incapacitated or die unexpectedly. Who will run the business, who will own it and should it be sold? Consider what you’d like to happen for long-standing employees and clients.

Smart women make plans for themselves and their loved ones. An estate planning attorney will be able to help you navigate through an estate plan. Remember that an estate plan needs upkeep on a regular basis.

Reference: Boca Newspaper (March 4, 2019) “Smart Tips for Women: Estate Planning”

Are You Retiring in 2019? Here’s What You Need to Know

There are more than few steps you’ll need to complete, before packing up your desk, cubicle or locker and saying good bye to your work family. Even if your 401(k) and IRA is in order, there are things you need to during the last few months of working, says Next Avenue in the article “Tips to Prepare for Retiring This Spring or Summer.”

There’s detailed planning, organization of documents, and additional financial details that need attending. You may also want to start creating your “bucket list” — a list of things you’ve always wanted to do, but never had the time to do while you were working. Getting all of this in order, will speed your waiting time and prepare you better, when the last day of your working life does finally arrive.

Whether you are three months or six months from retirement, here are some tips for your to-do list:

Social Security. Figure out when the best time for you to take Social Security benefits will be. Can you delay it until age 70? That’s when you’ll get the biggest payout. The earlier you start collecting benefits, the smaller your monthly check will be. Take it early, and you are locked in to this lower rate.

Health Care. Figuring out how to manage health care costs, is the single biggest worry of retirement for most Americans. An injury that puts you in a nursing care facility can make a huge dent in your retirement funds, even if it’s just for a short while. This is the time of your life, when focusing on your health is most important, even if you’ve been careless in earlier decades. Evaluate your health status and get check ups with your regular physician and your dentist.

Investments. Check with your HR department about when you’ll need to roll over your 401(k) plan. If you transfer the funds into a low-cost IRA, you may save in fees. Work with your financial advisor to determine what your withdrawal rate will be. You may need to reevaluate some of your retirement goals or consider working part time during retirement for a few years.

Medicare. If you’re almost 65, you can start enrolling in Medicare now. The government lets you start the process within three months of your 65th birthday. Start this process, so you are covered, once you are not on the company’s health care plan.

Expectations. The first six months to a year of retirement can be both wonderful and terrible. While enjoying freedom, many people find it hard to withdraw money from the same accounts they spent so many years building. What if they don’t have enough for a long life? Take a realistic look at your lifestyle, budget, and spending habits, before you retire to make sure you are financially ready to do so. If you think you might work part time, look into the positions that are available in your area and what they pay.

Lifestyle. Often, we are so busy planning for the financial side of retirement, that we forget to plan for the “soft” side: what will you do in retirement? Will you volunteer with an organization that has meaning for you? Write the novel you’ve started on a dozen times? Spend more time with your grandchildren? Travel? What will make you feel like your time is being well-spent, and what will make you fulfilled?

Don’t forget the legal plan. Retired or not, you need to have a will, power of attorney, and health care power of attorney to protect your family, whether you are preparing for retirement or in the middle of your career. Speak with an estate planning attorney to ensure that these important documents are in place.

Reference: Next Avenue (March 6, 2019) “Tips to Prepare for Retiring This Spring or Summer”

Personality Changes in Seniors

It can be frustrating when your aging parents seem to become grumpy or irritable. You wonder if you did something wrong. You worry about whether your dad is going to be cranky from now on. You might stress over whether his bad moods are a sign of Alzheimer’s disease. If you find yourself in this boat with your aging spouse or parent, here is some information on personality changes in seniors.

When You Should Worry About Personality Changes in an Older Adult

If your aging loved one becomes moodier than usual and there does not seem to be a reason, people close to her should pay attention and try to find out what is causing the difference in mood. She might be in pain with arthritis or another uncomfortable medical condition. She could be upset, because she is struggling financially after a lifetime of hard work.

Her medication might be affecting her mood. Sometimes the answer is a simple thing like drinking more water. Dehydration can cause headaches, which can make the sufferer irritable. Keep track of her liquid intake and adjust accordingly.

There are times, however, when emotional disturbances can indicate a more serious problem, like an undiagnosed medical problem, a medication reaction or the early stages of dementia. If you cannot find a reason for your loved one’s moodiness, you might want to go along with her to the doctor.

Grumpy Older People are an Inaccurate Stereotype

Many people assume that every person over the age of 50 yells “Get off my lawn!” to all passersby. In reality, older people are no more likely to be cranky than people of any other age. In fact, researchers say that overall seniors tend to be happier than younger people. Over time, many people tend to remember the happy experiences and the memories of daily annoyances fade.

When seniors retire, they no longer have to deal with the daily hassles of commuting to work, dealing with difficult co-workers and getting paid a lower salary than their less intelligent boss to do a job they hate. Instead of having all the work and stress of raising their children, the aging adult gets to visit the grandchildren, getting all the enjoyment and none of the work.

It is easy to see why many people become happier as they get older. Perhaps the stereotype of grumpy older adults, is just a creation of our ageist society that does not value its elders.

Why Some Seniors Appear to be Cranky

Let’s say that your dad was soft-spoken when you were growing up. He did not criticize or complain. All of your friends wished he was their dad. Now that you are grown, he speaks his mind and lets people know when he does not like something. He might not be irritable. He might just be less concerned about what people think of him. Many people reach a point, at which they realize that they do not have to try to please everyone.

Lack of Accommodations Can Make Older Adults Irritable

It used to be fun to go out to eat with your mom. However, now she is so disagreeable, that you wonder if it is worth the effort. Try to think of it from her perspective. She had to struggle to get out of the car and make her way with a walker or cane through a crowded restaurant, hoping she did not fall and break a bone, when a child darted in front of her.

With all the background noise, it can be hard for her to follow the conversation at the table or hear what the server is saying. Without bright lighting, she might not be able to read the menu. Rather than focus on her behavior, you should realize that our society makes few accommodations for seniors.

References:

AARP. “The Truth About Grumpy Old Men (and Women).” (accessed February 28, 2019) https://www.aarp.org/health/healthy-living/info-2018/grumpy-old-men-myths.html

Estate Planning for Parents with Young Children

Attorneys who focus their practices on estate planning, know that not every story has a happy ending. For some of them, it’s a professional mission to make sure that young parents are prepared for the unthinkable, says KTVO in the article “Family 411: Thinking about estate planning while your kids are young.”

It’s a very easy thing to forget, because it’s so unpleasant to consider. The idea of becoming seriously ill or even dying while your children are young, is every parent’s worst fear. But putting off having an estate plan with a will that prepares for this possibility is so important. Doing it will provide peace of mind, and a road forward for those who survive you, if your worst fears were to come true.

Start with a will. In a will, you’ll name a guardian, the person who would be in charge of rearing your children and have physical custody of them. Don’t assume that your parents will take over, or that your husband’s parents will. What if both sets of parents want to be the custodians? The last thing you want is for your in-laws and parents to end up in a court battle over custody of your children.

Another important document: a trust. You should have life insurance that will be the source for paying for the children’s education, including college, summer camps, after-school activities and their overall cost of living. In addition, proceeds from a life insurance policy cannot be given to a minor.

However, what if your son or daughter turned 18 and were suddenly awarded $500,000? At that age, would they know how to handle such a large sum of money? Many adults don’t. A trust allows you to give clear directions regarding how old the child must be, before receiving a set amount of money. You can also stipulate that the child must complete college before receiving funds or reach certain milestones.

An estate plan with young children in mind, must have a Power of Attorney for financial decisions and one for medical decisions. That allows a named person to make important financial and medical decisions on behalf of the child. You may not want to have their legal guardian in charge of their finances; by dividing up the responsibilities, a checks and balances system is set into place.

However, for medical decisions, it is best to have one primary person named. In that way, any care decisions in an emergency can be made swiftly.

While you are creating an estate plan with your children in mind, make sure your estate plan has the same documents for you and your spouse: Power of Attorney, medical Power of Attorney, a HIPAA release form and a living will.

Speak with a local estate planning attorney who has experience in planning for young families.

Reference: KTVO.com (Feb. 6, 2019) “Family 411: Thinking about estate planning while your kids are young”

Plan Before a Health Crisis Strikes

A woman wakes up to hear her husband gasping for breath, unresponsive and in full cardiac arrest. He was only 55, he biked 25 to 50 miles every day, he ate right and was one of the healthiest people she knew. Yet, he was having a heart attack. He did not have a health care directive in place, and she did not know what his wishes were in the case of a health emergency.

The story, as related in “START WITH A PLAN (not a heart attack)” from OakPark.com, is not as unusual as one would think. What does make it unusual, was that both of these individuals are attorneys. They had never had an estate plan created or drafted documents.

As the woman sat by his hospital bed in the critical care unit after his surgery, she started thinking about the practical realities. If he remained unconscious for some time, how would she access his individual finances, his paycheck or pay the monthly bills? She would need to hire an attorney and seek guardianship from the court to handle his financial affairs. If he died, she’d have to hire an attorney and open a probate case.

Without a will in place, her husband’s estate would be deemed intestate, and the laws of the state, in her case, Illinois, would be applied to distribute his property. Half of his property would be distributed to his children and the other half to her.

That might mean she would have to borrow money from her own children to pay bills and cover their college tuition.

Her husband responded well to the surgery, but at one point he needed to be transferred to another hospital. As they travelled by ambulance to another hospital, a terrible thought occurred to her: what if the ambulance were in an accident and they were both killed? Who would rear their children? How long would it take to settle the estate, with no will?

Thankfully, the ambulance arrived safely at the hospital, her husband recovered from his heart attack and the first thing they attended to when he recovered was their estate plan.

It’s a dramatic story, but a telling one: everyone, no matter how healthy, needs to have an estate plan in place. That means a will, power of attorney, healthcare proxy, HIPAA release form and any other planning tools that each family’s situation may need.

Make an appointment to meet with an estate planning attorney to put your plan in place. Don’t wait until you have time, because you never know when you may run out of time.

Reference: Oak Park.com (Feb. 27, 2019) “START WITH A PLAN (not a heart attack)”

Why Should I Create a Trust If I’m Not Rich?

It’s probably not high on your list of fun things to do, considering the way in which your assets will be distributed, when you pass away. However, consider the alternative, which could be family battles, unnecessary taxes and an extended probate process. These issues and others can be avoided by creating a trust.

Barron’s recent article, “Why a Trust Is a Great Estate-Planning Tool — Even if You’re Not Rich,” explains that there are many types of trusts, but the most frequently used for these purposes is a revocable living trust. This trust allows you—the grantor—to specify exactly how your estate will be distributed to your beneficiaries when you die, and at the same time avoiding probate and stress for your loved ones.

When you speak with an estate planning attorney about setting up a trust, also ask about your will, healthcare derivatives, a living will and powers of attorney.

Your attorney will have retitle your probatable assets to the trust. This includes brokerage accounts, real estate, jewelry, artwork, and other valuables. Your attorney can add a pour-over will to include any additional assets in the trust. Retirement accounts and insurance policies aren’t involved with probate, because a beneficiary is named.

While you’re still alive, you have control over the trust and can alter it any way you want. You can even revoke it altogether.

A revocable trust doesn’t require an additional tax return or other processing, except for updating it for a major life event or change in your circumstances. The downside is because the trust is part of your estate, it doesn’t give much in terms of tax benefits or asset protection. If that was your focus, you’d use an irrevocable trust. However, once you set up such a trust it can be difficult to change or cancel. The other benefits of a revocable trust are clarity and control— you get to detail exactly how your assets should be distributed. This can help protect the long-term financial interests of your family and avoid unnecessary conflict.

If you have younger children, a trust can also instruct the trustee on the ages and conditions under which they receive all or part of their inheritance. In second marriages and blended families, a trust removes some of the confusion about which assets should go to a surviving spouse versus the children or grandchildren from a previous marriage.

Trusts can have long-term legal, tax and financial implications, so it’s a good idea to work with an experienced estate planning attorney.

Reference: Barron’s (February 23, 2019) “Why a Trust Is a Great Estate-Planning Tool — Even if You’re Not Rich”

Does Your Estate Plan Include Furry or Feathered Family Members?

Here’s a sad fact: The Humane Society of the United States estimates that as many as 100,000 to 500,000 pets end up in shelters, after their owners die or become incapacitated. So, while we spend upwards of $60 billion on food, supplies and veterinary care, says The National Law Review in “Estate Planning For Your Pets,” we also allow many beloved pets to end their lives in shelters.

The answer is to include your pet’s care in estate planning, just as we do for our family members. The first major consideration is to name who you would want to be responsible for your pet, if you should become incapacitated. Make sure that person is willing to take on the role of caretaker and that they have sufficient room in their homes (and their hearts) for your pets.

If they agree, then start by preparing a sheet with this basic information:

  • What does your pet eat? Do you give him/her treats, and if so, what kind?
  • Medical records for your pet: vaccinations, surgery, special medications.
  • The name of the veterinarian and any specialists.
  • What does your pet do, when she/he is nervous or anxious? What calms them down?
  • What other information would you want someone to know, in your absence?

Speak with your estate planning attorney to see if they have a “Pet Care Authorization” form. This is a form that is similar to something you would use for a child staying with a relative who might need care. The form would designate the agent to act on your behalf for a variety of situations, including medical care.

For planning for your pets after you die, you can designate a caretaker. This may be the same person who agreed to care for your pet, if you became incapacitated. You can do this in a last will and testament or a revocable living trust. You’ll also need to provide funding for the care of your pet.

You can use a trust as an alternative to an outright distribution of funds to the caretaker. The pet trust would be overseen by a named trustee, who would be responsible to ensure that funds are used to benefit your pet(s). Make sure to allot a reasonable amount of money to cover the cost of veterinary care, grooming, feeding, training and any additional expenses.

You don’t have to be a wealthy person to have this arrangement in place. It is simply a practical matter to ensure that your furry family members are taken care of, after you pass away. Another factor to consider: what is the average age expectancy of your pet? A parrot could easily live 60 to 80 years, and a horse could live for four decades. The care and feeding of a horse will be considerably higher, than for a golden retriever or house cat.

Speak with an estate planning attorney to learn how pet care can be built into your estate plan, so next time your pet welcomes you home you will know you’ve planned for their future.

Reference: The National Law Review (Feb. 18, 2019) “Estate Planning For Your Pets”

How to Combat Elder Financial Abuse

One estimate is that the amount of elder financial fraud is $30 billion a year, defining it as the theft of money by thieves who include con artists, strangers, caregivers or trusted friends or family members. According to Consumer Reports, in the article “3 Critical Ways to Prevent Elder Financial Abuse,” these crimes are often not reported. Sometimes, the seniors are too embarrassed to admit that they were fooled, or they don’t want to put a family member at risk. They often don’t know they have been scammed, or are physically unable to articulate what has happened to them.

This is starting to change, as banks are starting to increase their reporting of suspected elder financial abuse. Last year, U.S. banks reported roughly 25,000 cases of suspected elder financial abuse to the U.S. Treasury. That’s more than double the amount reported in 2013, as reflected in data from the U.S. Treasury department’s Financial Crimes Enforcement Bureau.

One reason behind the surge is demographics: although the baby boomers are getting older, they have a tremendous amount of assets and are vulnerable to being defrauded.

However, the increase in reported cases may also be bolstered by big pushes from the federal government, states, and the financial industry to fight elder financial abuse. New regulations are now in place to encourage people who are on the front lines for elder abuse: brokers, bankers and financial advisors.

FINRA, the self-regulatory agency that oversees brokers, now requires them to ask clients, no matter how young or old, to provide the name and contact information for a trusted family member or friend. If the broker believes that person is being exploited, they have someone to contact. The new regulations also allow brokers to put a hold on withdrawals from a client’s account, if they believe there may be elder financial abuse occurring. The hold is for 15 days but can be extended 10 more days.

From the federal government, the Senior Safe Act became law in 2018. It enables the employees of any financial institutions to report concerns about elder abuse, without fear of being held liable for disclosing private information. To qualify for this protection, financial institutions are required to provide training to staff about recognizing the abuse. At the state level, NASAA (the North American Securities Administrators Association, a group of state regulators) adopted a rule in 2016 which mandates that brokers and financial advisors report any suspected abuse to state authorities. The rule also allows them to stop withdrawals on accounts and protects brokers and advisors from liability, if they stop account disbursement. Sixteen states have enacted versions of the rule, and there are six more states working on legislation.

On a more personal level, there are three things family members and friends can do to prevent elder financial abuse. One is to stay in touch and ask questions of aging parents. Isolation and cognitive impairment are the biggest risk factors. Make sure that your parent is keeping up with bill paying, and whether he or she is in contact with new friends, strangers who may not have their best interests in mind.

If your parent is willing, start by offering to help with a few financial tasks, like bill paying. Keep it low key, by including a visit with the task. If you see things are not being handled well, stay on top of it.

Another step is to set up checks and balances, by making sure that critical legal documents are in place. There should be a will, a healthcare proxy, a HIPAA release form and a durable power of attorney. The durable power of attorney will let you pay bills and manage finances, if and when they can no longer manage. If there is no will or estate plan in place, make an appointment for your parent with a qualified estate planning attorney as soon as possible.

Consider streamlining aging parent’s finances. If they have too many credit cards and too many bank accounts, it may make things easier if they can pare things down to one bank and one credit card. Be very careful with retirement accounts, like 401(k)s and IRAs, to avoid any taxes and penalties.

Simplifying money management and being involved with your parent’s finances and their lives can help prevent financial elder abuse.

Reference: Consumer Reports (Feb. 22, 2019) “3 Critical Ways to Prevent Elder Financial Abuse”