Over this past year and a half, COVID has affected—and continues to affect—the most vulnerable populations. We’ve heard too many stories of financial elder abuse and accounts of loved ones picking up the financial pieces after a loss. We feel that it is our duty to educate our readers on how to protect and support their parents’ finances through active and transparent dialogue. So, we’ve written a series on it. Please join us.

Part 2 – What Could Happen if We Avoid Having the Conversation?

As a financial advisor, I see firsthand what happens to families when they wait until the last minute to create a plan for aging parents or loved ones. Some of the repercussions are devastating and yet, for the most part, completely avoidable.

Having open and honest conversations with aging family members about the future of their health and financial affairs sets the tone for easier transition when the time comes to step in and help. If adult children and parents avoid having the conversation, it could turn into a dire situation quickly. While most adults are open to talking about health issues, many are more private about financial matters. Our first article in this series discussed some ways to broach these topics.

Here’s a few considerations on what could go wrong if we avoid having a discussion with aging seniors around finances.

No Power of Attorney Leaves Seniors Vulnerable

Waiting to identify and execute a signed power of attorney document can sometimes be too late. If your parents wait too long and something unexpected happens, they will need someone to act on their behalf. Sometimes the only option is guardianship, and we all saw how that turned out in “I Care A Lot.” Appointing a guardian not only gets expensive, but it doesn’t ensure that your parents’ wishes will be executed as they planned.

If your parents are worried about assigning a power of attorney, you can reassure them that it is in case of emergency down the road. To ease any concerns, they also have the ability to put “parental controls” in place to restrict any changes to documents, such as beneficiary information, insurance plans, etc. They can feel confident knowing that their decisions will be implemented as planned.

And while children are typically the ones who look after aging parents, there are other options for adults who do not have children. Some people choose a niece or nephew, a close friend, a cousin, or a neighbor to serve as the power of attorney. Or, if you prefer to hire someone to look after your health and financial matters, you could consider hiring a health proxy to make healthcare decisions on your behalf and a trustee at a bank or financial institution to serve as an executor of your estate after you pass away.

The best way to make sure that your aging parents are taken care of the way they want to when they get older is to document it. Don’t wait until it’s too late. 

Unpaid Bills Leads to Complications

One telltale sign that your aging parent may need support managing finances is noticing stacks of bills piling up around their home. Too often as mental capacity diminishes, adults begin to forget to keep up with managing their expenses. They may forget to pay a long-term health insurance bill, which could result in their coverage to lapse. Luckily, some insurance carriers offer a grace period for reinstatement if the policy holder suffers from cognitive impairment.

You may consider setting up automatic withdrawals to ensure that bills are paid on time. This will help to avoid defaulting or being delinquent on bills. It will also help avoid overpaying as well.

If you have access, you could consider double checking bank statements or checkbooks and opening up mail if you come across something unfamiliar. You may even consider questioning how much they paid on a bill. Aging seniors find it easier to automatically write a check for a bill to check it off their list, but what if they bill is incorrect or needs additional follow up?

The Washington Post shared a study published by Stanford University that reported “of 5.5 million inpatient visits [between 2010 and 2016], surprise bill percentages increased from 26.3 to 42 percent, with the average out-of-network bill rising from $804 to $2,040.” While many states have imposed laws preventing surprise insurance bills, many still have not. Be sure that your loved ones are not paying bogus bills. Keep more in their pocket for long-term care.

Protect from Elder Financial Abuse

A sad but common theme among the elderly is elder financial abuse. Just as our parents protected us as children, we’re going to need to be there to protect them as they age. The following are some of the most common types of criminal financial activity among seniors:

• Theft of credit cards, bank information, personal identity
• Fraudulent phone and internet solicitation
• Fraudulent investment or insurance schemes
• Fraudulent contracts – i.e. extended car or home warranties that cover nothing
• Medical billing scams

Remind your loved ones to never give personal information over the phone. Ask them to contact you if they have questions about a call, letter, or bill they received in the mail so you can look over it before they act.

Next Steps

Have the conversation. You could prevent any number of difficult situations from occurring. The first step in protecting your parents is to start a dialogue and monitor health and financial aspects of their life. Contact me at stu@eaglerockfinancial or (978) 864-9581 if you need support starting a healthy financial discussion with your aging parents. I can help guide you along the way through this sensitive conversation and point you in the right direction toward financial health.

 

Stu Steinberg, CFP, CPA, MBA has been working with families and their businesses since 1988. He can be reached at 61 Water Street, #2, Newburyport, MA  01950 and at (978) 864-9581 and stu@eaglerockwealth.net

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. This information is not intended to be a substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax advisor.

Securities and Financial planning offered through LPL Financial, a registered investment advisor. Member FINRA www.finra.org / SIPC www.sipc.org.