As an elderly American, it’s vital to safeguard your assets. This is doubly true if you’re at risk of experiencing cognitive decline, the loss of your mental faculties as you age. As someone suffers memory loss or dementia, they can become more dependent on others. This often results in financial elder abuse and the financial exploitation of the elderly.
How Cognitive Decline May Lead to Financial Exploitation
Updating your estate to match your current conditions is vital. If your mental state declines, you’ll be more vulnerable to financial exploitation. While there are safeguards against elder abuse, you must update your estate plan to use them. If you don’t, scammers or even your own family could take the money you need for retirement.
Anna Mae Franklin’s story, as told by Marketplace.org, is a stark example of this issue. Her brother Arthur moved in with her after developing dementia. Later, Anna Mae discovered that her daughter, Linda, had been stealing Arthur’s funds. Before Anna Mae caught on, Linda had spent $71,000 of Arthur’s money. While the court ordered Anna Mae’s daughter to pay back $40,000, Arthur was still at a loss for over $30,000.
No one expects such a betrayal of trust to come from family. However, that’s exactly why it’s necessary to plan for cognitive decline accordingly. Unscrupulous family members are just one risk; scammers also look to prey on the elderly. Proper cognitive decline estate planning includes controls to protect you from these risks.
How Estate Planning Can Prevent Financial Elder Abuse
Estate planning is not just about distributing your assets after you pass away. It’s also about managing your estate in old age when factors like cognitive decline can make you vulnerable to exploitation. Good estate planning can provide tighter control over your income while still providing you with the money you need, limiting the danger of fraud.
How Do You Prevent Elder Abuse?
Various estate planning steps can help protect older adults from financial elder abuse. The National Institute on Aging makes many recommendations, including:
- Plan for the Risk of Cognitive Decline: Update your estate if you’re at risk of cognitive decline. Institute clear, binding instructions to control your finances.
- Set Monthly Budgets: Establish a budget to help limit and detect fraud.
- Set Automated Monthly Payments: Automating as many routine expenses as possible reduces room for error and fraud.
- Assign a Proxy: Assign trusted individuals or professionals to oversee your finances.
Protect Your Loved Ones from Financial Elder Abuse
Understand the risks if you or someone you know is at risk of cognitive decline. Don’t wait until it’s too late; take steps to prevent financial elder abuse now.
Consult an elder law or estate planning attorney to protect your assets and loved ones. An attorney can provide peace of mind and take measures to guard your golden years against financial exploitation.
Key Takeaways
- Recognize the Risks: Financial elder abuse is a significant threat, particularly for those with cognitive decline. Awareness and recognition of the risks are the first steps toward prevention.
- Importance of Estate Planning: Effective estate planning is essential for asset distribution and protecting individuals during their lifetime from financial exploitation.
- Update Regularly: Always keep estate planning documents, like wills, up to date to reflect current life situations and relationships to prevent misuse of assets.
- Seek Professional Guidance: Consulting with an estate planning attorney can ensure that your estate plan includes all necessary protections, especially for those vulnerable to exploitation.
To learn more about estate planning in the East Valley, Gilbert, Mesa and Queen Creek, schedule your free consultation with Attorney Jake Carlson by using one of the links above.
References: National Institute on Aging (Oct. 23, 2023) “Managing Money Problems for People with Dementia” and Marketplace.org (Nov. 16, 2012) “One woman’s story of elder financial abuse”
