Estate Plans Can Protect against Exploitation

According to experts, despite increased phishing emails and robocalls, it is far more common for financial exploitation to be committed by people who know the victim, such as relatives, caregivers, neighbors, or ‘friends.’
Estate Plans Can Protect against Exploitation

Having an estate plan can protect against financial exploitation, which is far more common than most people think. There are several types of individuals at greater risk for exploitation, according to a recent article from mondaq titled “How An Estate Plan Can Protect Against Financial Exploitation.” These include people who are elderly, have cognitive impairment, are in poor physical health, isolated, or have a learning disability.

The individuals doing the exploiting share common characteristics as well. They are often people with mental health or substance abuse issues. It’s also common for them to be financially dependent on the person they are exploiting. They are often related family members—but not always.

There are warning signs of financial abuse, including:

  • Changes in patterns of spending, transfers, or withdrawals from accounts.
  • Isolation from friends and family.
  • Unexplainable financial activity.
  • An inability to pay for routine bills and expenses.
  • Sudden changes to estate planning documents, beneficiary designations, or the addition of joint owners to accounts or property titles.

The best way to avoid financial exploitation is to have an estate plan prepared in advance with an eye towards protection. Instead of relying on a durable power of attorney, for example, a funded revocable trust may provide more robust protection. A revocable trust-based plan includes safeguards like co-trustees and a requirement for independent party consent to any trustee change or amendment.

A legal support system is also important to protect a person if someone is attempting to exploit them. Estate planning attorneys regularly team up with financial advisors, CPAs, and other professionals to create a plan to either avoid or stop an abusive financial situation. Other steps to be taken include:

  • Consolidating accounts with a trusted financial advisor, so all assets are easily observed.
  • Have a family member or trusted person receive copies of account statements.
  • Consider a credit freeze to avoid any possibility of being coerced into opening new credit card accounts or taking out loans.
  • Establishing a budget and sharing information with advisors and a trusted person, so any spending anomalies are easy flagged.

Among the elderly and people with disabilities or cognitive impairments, financial abuse is an all-too common occurrence. However, an estate plan can protect against exploitation and is a great strategy to safeguard a vulnerable family member from anyone intent on taking advantage of them. If you or someone you know is at risk of being financially exploited, please call or encourage them to call their estate planning attorney in Davie, Florida for assistance.

Reference: mondaq (Sep. 23, 2022) “How An Estate Plan Can Protect Against Financial Exploitation.”

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