Helping Family Members as They Age

 

KEY TAKEAWAYS

  • One in ten Americans over 60 has been a victim of elder abuse – more often than not by a child or spouse.
  • Consider designating a “Trusted Contact” – someone we can contact on your behalf if we suspect something is not right in life.
  • Having a Trusted Contact in place is an early, but important step in your overall estate planning.

As we age, the potential for diminished capacity, both physical and mental, increases. This deterioration can develop gradually over time – a lost house key here, a forgotten Visa bill there – or it can occur much more rapidly. In addition to the likelihood of diminished capacity, seniors are far more likely than the average adult to be taken advantage of. According to the National Council on Aging (NCOA), one in ten Americans over the age of 60 has experienced some form of elder abuse.

Grace (not her real name) was a long-time client of mine. When I first met her, she was smart, vivacious and very social, with a wide circle of friends. But, after her husband passed away a few years later, her son began to isolate her, both physically and emotionally from the rest of the family. The isolation started slowly at first. For instance, he recommended that Grace move closer to him (and farther away from her other children and friends). Then he took more and more control over her life, to the point that he would not allow her to see people she enjoyed spending time with. Another red flag went up when we noticed that the son insisted on being present every time Grace contacted her bank or had calls with our firm.

On the surface, it looked like he was just being a caring, conscientious son, but he began sending Grace increasing requests for money. As the mom, she felt pressured to comply with his requests and believed she had no recourse. Over time, the son had successfully eroded his mom’s self-esteem and isolated her from friends and family members who could have intervened on her behalf. Fortunately, Grace kept in contact with us and we eventually referred her to Adult Protective Services.

While Grace was not suffering noticeably from cognitive impairment, she was clearly suffering from psychological abuse. And here’s the most disturbing statistic: According to the NCOA, approximately two-thirds of elder abuse perpetrators are the adult children or spouse of the victim.

As advisors, we stay in frequent contact with clients and often notice before their family members do when something may be awry with them. For instance, they no longer seem engaged during meetings with us, when they would normally be highly attentive. Maybe a new person in their life starts contacting us or accompanying our clients in meetings at our offices. Perhaps they become increasingly forgetful or sometimes exhibit subtle changes in behavior.

At Soundmark, we have seen many clients and their family members rapidly lose cognitive function. Fortunately, we have an extensive network of professionals we can refer them to who specialize in legal and housing issues for elders – not just money matters.

SENIOR PROTECTION

The state of Washington has laws to protect seniors, such as the Act to Protect Vulnerable Adults from Financial Exploitation. As advisors, if we suspect something is not quite right with a client, especially a senior, we can delay disbursements from the client’s account to allow us time to review the requested transaction before executing it (as long as we follow the procedures detailed in the law). And, we would like to take this level of protection one step further.

VALUE OF A TRUSTED CONTACT

This year, during your financial review meetings, we will be asking our clients to provide us with a trusted contact – someone, other than another account holder, we have permission to contact on your behalf if you’re exhibiting signs of cognitive impairment or abuse.

In addition to keeping a trusted contact on file, we can facilitate family meetings, and can add a Springing Power of Attorney (POA) to your accounts. Unlike a Durable Power of Attorney, a Springing POA does not give another person (i.e. agent) the ability to make decisions or act on your behalf, unless something specific happens to make those decisions necessary.

Financial and Healthcare POAs may be written in the same manner as Springing POAs, in that they only become effective upon your incapacity. If you are seriously injured in an accident, the person named on the POA would be empowered to make the necessary financial or medical decisions on your behalf. Until something happens, the principal (i.e. owner) of the account has total control over their finances and the designated agent cannot make transactions on their behalf.

A Springing POA may be triggered for a brief period of time or for an extended period of time. Also, a Springing POA may be triggered multiple times, if needed.

In addition, the Securities and Exchange Commission (SEC) has approved the FINRA rule addressing Financial Exploitation of Seniors, effective in February of 2018. As a result, our custodian, Charles Schwab, has rolled out new forms asking clients to add a trusted contact to their accounts. In addition, Schwab has created a new centralized Senior Investor Support Team to assist us, so in turn, we can support you and your family better.

WHAT YOU CAN DO

We encourage you to discuss with your spouse, your family and your friends, steps to take if they notice a marked difference in your behavior. Sure, these conversations are often difficult to have and it’s easy to procrastinate. Knowing that you have a trusted contact person in place who can work with us directly to take care of your finances, is a valuable safety net to keep you and your family protected.

As always, the team at Soundmark is here to help if you or someone close to you has concerns about elder abuse. If you would like us to arrange a family meeting, please let us know.

 

 Liz McQueen, CRPC® is an Associate Advisor at Soundmark Wealth Management, LLC. Liz works closely with physicians, business owners, Directors and Executives at Amazon, Microsoft, and Boeing, and other successful and accomplished individuals to help them define their financial goals and implement an ongoing financial planning process.