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Estate Plans Can Protect against Exploitation

October 17, 2022 •  Law Office of A. Lee Shaw, PLLC
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 of the elderly. There are several types of individuals more at risk for exploitation, according to a recent article from mondaq titled “How An Estate Plan Can Protect Against Financial Exploitation.” These include someone with a 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 illness, 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 for 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 protection. 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 important to protect a person if someone is attempting to exploit them. Estate planning attorneys team up with financial advisors, CPAs and other professionals to create a plan to avoid or end elder abuse. Other 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.
  • Establishing a budget and sharing information with advisors and a trusted person, so any spending anomalies are easy flagged.

Elder financial abuse is an all-too common occurrence but taking proactive steps to safeguard the vulnerable family member is a good 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.”

Suggested Key Terms: Elder Financial Abuse, Exploitation, Durable Power of Attorney, Revocable Trust, Co-Trustees, Estate Planning Attorney, Credit Freeze, Safeguards, Isolation, Property Titles, Beneficiary Designation, Joint Owners

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