Helping aging family members manage money
Wednesday, 28 August 2019
The clues of mental illness in a loved one may appear slowly and subtly — a few bills piled on the table, the mention of a new friend coming around often, an out-of-character impulse buy.
Sometimes the signs are more like a flash flood — a drained bank account, the purchase of a home or car for a stranger, or a new will drawn up unexpectedly.
When people age, suffer certain mental illnesses, or become sick, it's not uncommon for them to lose track of how to properly manage their finances, or to trust the wrong people to help them.
Michael Blain, a Senior Vice President and Trust Officer for BBVA who specializes in estate and trust administration, says it's extremely important for family members to be aware of the early signs of cognitive loss or mental illness that could damage or destroy their financial situation.
“If you wait too long, someone may have already taken large sums of money, which you may not be able to get back," he said.
Some of the signs include:
- A mounting stack of unpaid bills or unopened mail.
- Reluctance to talk about finances in front of a relative or caregiver.
- Instances of falling for telemarketing scams claiming they owe money to the IRS or a utility, and they must pay immediately over the phone.
- Excessive online or television shopping sprees.
- Losing or misplacing items to an extreme degree.
Loneliness and isolation can be part of the problem. Blain says it's easier for opportunists to target vulnerable people who don't have enough daily support and company. Even if they have support, some people are just overly trusting and easily conned.
“I've had several of my own clients who have called me and told me they've gotten a call saying they've won the lotto. The first thing I ask them is, 'Did you buy a lotto ticket?' When they say no, it's 100 percent chance it's a scam," he said. “They're so vulnerable to that, because they're older, they're from another generation, and they just don't understand that it really is a scam and not something in their best interest."
Who's watching mom and dad?
For many families, caregivers are an essential part of a support system for aging parents, whether in their home or in an assisted living facility. While many provide compassionate, professional help when it's needed, there are plenty of instances of caregivers taking advantage of their vulnerable charges, conning them out of money and gifts, stealing from them, or worse.
Blain says in his long career of managing estates and trusts, he's seen his share of pilfering and forgeries — and even a caregiver marrying the surviving spouse. It's not always an outside job. Sometimes a relative or family friend will swoop in try to manipulate the elderly adult into giving them legal authority — or even actual assets.
Blain says unfortunately adult protective services can't do much about situations like this, especially if the victim appears to have their faculties and can answer simple questions. The best approach, Blain says, is to maintain an open, supportive line of communication with your aging parents, even if it's difficult.
How to protect your family
One of the best ways to protect yourself and your family is to talk with your financial and legal advisors about setting up a trust.
“I think one of the great ways to help protect someone's financial assets is to have a trust, and have their trust," Blain said. “And as a trustee, I notice any unusual activity, unusual requests, requesting money to be given to someone I've never heard of. It's key signs that something's going on and someone's probably trying to take advantage of (the client.)"
Aging adults can set up a revocable or irrevocable trust with their wishes spelled out, including provisions for what happens when they become incapacitated.
Another step to consider: talking with your parent or aging family member about granting power of attorney to you or another trusted family member. The person with power of attorney will be able to legally act for them in the event they can no longer maintain financial control.
To help with that process, Blain suggests you grant power of attorney for your own affairs to a trusted advisor or family member at the same time. “I think a good way to present that is to ask your mother or your father, 'Do you have a power of attorney?' And if the answer is no, it's easy just to say, 'Well, I'm going to the attorney to have one done for myself. You should come along.' This way, they won't feel overpowered or forced to sign something."
Financial power of attorney is important because it allows you to pay bills and manage debts on your family member's behalf directly from their accounts. You can also ask a court to appoint you the guardian or conservator of your elderly parent, but this is generally sought in cases where the aging adult has severe dementia, Alzheimer's disease, or another serious, debilitating illness. This process can be costly and could involve complicated court proceedings, whereas getting power of attorney is relatively easy.
There may be cases when the parent is just too stubborn to hand over the reins, and depending on the situation, you may just have to let go.
The key, as in anything, is to get it all in writing. Blain says he's seen countless blended families that get along just fine until someone dies, and the assets become a point of contention.
“I don't know how many times I hear, 'My father wouldn't have wanted that.' But that's what he put in writing. So, apparently it was."
The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or financial advice. You should consult your legal, tax, or financial advisor about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates.
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|ARE NOT DEPOSITS||ARE NOT FDIC INSURED|
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|ARE NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY|
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