A 2010 study conducted by the Investor Protection Trust found that more than seven million older Americans — 20 percent of those over the age of 65 — had already been a victim of financial abuse. Here are some tips on how you can ensure your parents (or you in the future) can avoid becoming a victim of financial abuse:
1. Establish an estate plan with the help of a Personal Family Lawyer® while you are still of sound mind and body. This is perhaps the most meaningful way to protect your assets because when you work with a Personal Family Lawyer, we aren’t just putting in place form legal documents, but truly becoming a trusted advisor to your family. Be sure to choose your agents and trustees wisely, naming people who will know how to handle your financial affairs, as you would like.
2. Choose your health care agent and the person you give financial power of attorney with great care, and do not let yourself be pressured into changing agents against your better judgment. For example, a trusted friend could be a better choice than an adult child with out-of -control debt or a substance abuse problem. Don’t feel pressured into choosing a child just because your child is family. Family isn’t always the best choice.
3. Open a “convenience account” at your local bank rather than adding an adult child to the account as an owner. A convenience account will allow somebody else to write checks and pay bills, but will not make them an “owner” of the account. That could be especially important for asset protection if the child has debts they cannot pay. If they are an owner on the account, your assets are fair game for their debt collectors.
4. Keep control of your assets. Do not sign ownership over assets you need to meet expenses to your children simply so they can avoid probate. Probate is an expensive hassle and we want to ensure your children don’t get stuck dealing with the Court either, but the way to do it is to use a Trust, which can be established to keep your assets out of Court and ensure they are not at risk from your child’s divorce, creditors, or lawsuits.
5. Do not add an adult child to the title of your house. Your house could be in jeopardy if the child ends up in financial hot water, whether through careless spending, a severe accident or a long-term illness. Your child’s creditor can go after your house to settle debts if the child’s name is on the title.
One of the main goals of our law practice is to help families like yours plan for the protection of yourself and your family through thoughtful estate planning. Call our office today to schedule a time for us to sit down and talk about a Family Wealth Planning Session, where we can identify the best strategies for you and your family.