Your parents have always handled their own financial affairs, but as they age, you may worry that they could fall prey to some of the schemes con artists use to swindle the elderly out of their life’s savings. This is not an irrational fear. Next Avenue notes that in the 65+ age group, one in five has become a victim of fraud. The average amount stolen, one study reports, is $30,000, but one in 10 lose $100,000 or more.
Anyone may attack your parents’ financial well-being, from a caregiver, friend or family member to complete strangers sending out mass emails in hopes of catching seniors in their net. While they are willing and able, your parents have estate planning options that could protect them from financial abuse.
Name a financial power of attorney
A financial power of attorney is someone appointed to make financial decisions for a person who has become incapacitated in some way. Your parents should name someone they trust to be able to take care of matters regarding living expenses, accounts, investments and more. They could choose to include all financial responsibilities or only specific ones.
Set up a trust
A trust is an entity separate from your parents. After setting it up, they would transfer ownership of their assets to the trust, and then name a trustee to carry out the wishes they specify for the assets. For example, the trustee may be responsible for investing assets and distributing a set amount of income from the returns to your parents while they are alive. The deed to their real estate may also be in the trust so they can live in their home for the rest of their lives; they do not have the ability to sign it away to someone else.
Not only does the trust protect your parents’ assets from fraudsters, it also prevents creditors from claiming the assets both before and after your parents’ deaths. After their death, the trustee would be able to distribute the assets to beneficiaries without losing more assets to the probate process.