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)”

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”