Do Mom & Dad Need Help Protecting their Money?
Updated: Oct 6, 2022
Research shows that financial decision-making ability peaks in our 50s and starts to decline after age 70. That’s why you hear about older folks falling victim to IRS phone scams and the ubiquitous grandparent scam, where fraudsters pretend to be grandchildren calling for financial help.
Few people want to hear that they’re not as sharp as they used to be. And many won’t recognize the rising risk of losing hard-earned life savings as they age. Ironically, as the ability to make sound financial decisions decreases with age, our self-confidence in this area actually increases.
If you want to protect your parents from fraud and bad financial decisions, you’ll have to tread carefully, especially if you want to avoid alienating them. They might resent the interference or believe that admitting weakness in this area will be the first step toward giving up independence.
Talking candidly about your own concerns about fraudsters and scam artists and what you’re doing to protect yourself can be a good springboard to a productive conversation. You and your parents can then work together on the following tasks:
Draft Powers of Attorney
Everyone (no matter what their age) needs to designate a power of attorney for healthcare decisions and a power of attorney for financial decisions. These documents name the people you want to speak for you in case you become incapacitated. Don’t forget to share your wishes and preferences with the individuals named in the documents.
Simplify and consolidate financial accounts
Most people have dozens of accounts. Experts recommend working with just one bank and one brokerage firm, and having just two credit cards, one for daily purchases and one for automatic bill payments. Fewer accounts make it easier to notice if something’s amiss.
Stay in touch
Scam artists count on the fact that their victims are usually isolated. Weekly calls and regular visits can help you spot red flags, like a note to send a check to the IRS or a pile of sweepstakes offers.
Keep up with the latest scams
Staying on top of the latest scams is something you can do together. During visits or phone calls, talk about the latest schemes on websites like StopFraud.gov, AARP’s Fraud Watch Network, and the IRS Dirty Dozen Tax Scams.
Keep watch on bank accounts
Many financial institutions offer text or email alerts to notify you of unusual activity, as do sites that provide regular looks at free credit reports. Work with your parents to set up alerts to come to them—and you.
Get trusted advisors involved.
Ask your parent’s doctor or financial advisor to contact you if they notice any cognitive decline in your parents. Make sure you talk this over with your parents first!
Plan for the worst
Talk to your parents about what will happen if they show signs of diminished capacity, but they don’t recognize they’re impaired. Encourage them to set trigger points for having you (or another trusted child) take over their finances and what you can do if they resist because they think they’re fine.
Questions? Takacs McGinnis Elder Care Law may be able to help. Just give us a call at 615.824.2571.