This is the time of year you should be having some pointed conversations with your elderly friends and relatives.
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Over the years I’ve found that far too many victims of financial swindles are older folks with diminished mental capabilities. They can’t fathom often-complex investments or legal agreements and get taken by brokers, trusted advisers and, sadly, family members.
I just heard yesterday that one of my wife’s relatives was fleeced by a clergyman who got her to sign power of attorney over her finances, even though she was clearly suffering from dementia. Some $200,000 was stolen by the man, who is being investigated by the authorities.
The good news is that these thefts don’t have to happen if you monitor people who are most likely to become victims. Here are some guidelines, provided by my friends at the National Endowment of Financial Education, a non-profit group that produces some excellent resources on financial and retirement issues:
* Look for some clear red flags. You need to ask some direct questions on their finances.
“The warning signs of diminished capacity in financial decision making can take on many forms. The NEFE survey finds that among those who have themselves or those who have family members that have experienced cognitive decline, 47 percent have had trouble with bills, paying them late or not at all; 36 percent have had difficulty calculating simple math problems; 35 percent have made irrational purchases; and 21 percent have depleted their savings accounts.”
* Keep an eye on family dynamics and conflicts. When I researched this subject in the past, I found that wayward, financially troubled, middle-aged children who suddenly “moved in” with their parents often sought power of attorney over their finances. That’s when the trouble often begins. If an elderly relative needs live-in caregiving, examine how it would work through a family discussion.
“Have an honest and open discussion with siblings about a parent’s cognitive decline, what needs to be done, and what caregiving roles each family member wishes to play. Set up a schedule for each sibling. Keep family members who do not live nearby updated with weekly emails or phone calls. Invite all siblings who wish to take on some responsibility to do so.”
* Set up a plan. Once you’ve had a family discussion, someone will need to manage the schedule and make sure basic duties get done.
“Once the time has come for a plan to be implemented, the family member in charge of overseeing the aging parent’s finances should create a calendar of bills to be paid each month, checking in to ensure that bills are being paid on time and for the correct amounts. Accounts of aging parents also should be monitored to check for any unusual activity and annual credit checks should be done to safeguard against identity theft.”
Most of all, be compassionate with your activities. No one wants to admit that their cognition isn’t what it used to be or that they can’t manage their affairs. We all want to be independent as long as we can, but at a certain point nature has taken a different route and one that we all need to be aware of as families gather this time of year.
John F. Wasik is an investor advocate, journalist, speaker and the author of Keynes’s Way to Wealth: Timeless Investment Lessons from the Great Economist and 13 other books.
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