Start With Expecting and Protecting Yourself Against Scams.
We’ve had 2 cases come to our office in the last 3 months, each a victim of a scam. The first was a woman who gave $2 million to a scammer and the second was a gentleman who gave $7 million to a scammer, both operating out of the country. This prompted me to educate, educate, and educate some more to help you not fall victim to exploitation and scams and avoid financial ruin.
1. The most important tip I can give is to expect and protect yourself against exploitation as you get older. You must understand that your mind, no matter how brilliant and successful you have been in your life, changes making it more challenging for you to tell the difference between the truth and a lie. This is due to the thinning of the brain’s cortical insula and the result can be devastating-setting you up to be exploited and scammed. And for some, it may mean losing their life savings and financial ruin. What can you do to protect yourself from financial exploitation? In our office, with trust-based planning, we use the Ulysses clause which provides a safety net for your successor trustees to step in when you start making some questionable decisions. For example, you may state that if I want to spend $20K or more, my trusted advisor will review the transaction to make sure I am not being subjected to undue influence or a scam. You may also establish a Pre-need Consent against Exploitation that allows you to designate a trusted advisor in advance who can freeze or lock down your assets when you start giving them away leading to financial ruin.
2. Create an estate plan! This will protect your assets from problematic events. This also allows you to prevent estate taxes (with trust-based plan) and use a “coupon” from the IRS so even if estate tax values change you have the benefit of the coupons.
3. Select a durable power of attorney. This person will help manage your assets when you are unable. This will help you avoid the guardianship process which is horrifying.
4. Hire a financial advisor. A wise practice to help you invest your assets. Select 3 and have them give you a sample portfolio and then ask the most important question: How are they paid? Many are paid on a percentage basis of your assets. You want to know if they are taking commissions for investments. Commissions can be a little sneaky because you will not see them on statements–so you want to know before you hire one. You want full disclosure.
5. Make sure you have a long-term care plan. Long-term care is very expensive and you want to have a long-term care policy or you want to understand what Medicaid planning looks like in your state and what options there are. Meeting with an elder law attorney is the best way to review those options and also identify which assets may be exempt. In Florida, retirement assets and homestead (up to a certain amount) are exempt. $12-14K a month in long-term care expenses can bankrupt a couple or leave the surviving spouse impoverished for the next several decades. Plan ahead!
6. Do not use joint accounts. Instead you can title accounts with your spouse and list your durable power of attorney so they can help you with management of assets while not being allowed to use the money for themselves (as a fiduciary). Make sure you have pay on death beneficiaries listed.
7. Avoid Medicare Advantage programs–they can be financial ruin if you end up in a policy where you need to have pre–approval. They often do not approve leaving you to pay out of pocket or have to go out of network. Additionally, if you want to go back to traditional Medicare, you often cannot get the supplemental insurance policy.
8. Use pay on death deeds. in Florida, they are called enhanced life estate deeds. They are an amazing planning tool that allows us to avoid probate so we can save a lot of money. It’s also a good way to pass assets to our loved ones without delay. It does not disqualify you from receiving long-term care benefits from Medicaid because there’s not transfer of assets until you die.
Presented by elder law attorney Shannon Miller based on her experience working with hundreds of clients and identifying practices that can help you and your family have enough money to live comfortably through end of life. Experiencing financial ruin later in life can be devastating and seniors deserve to live their lives without financial stress.
If our Elder Law attorneys can help you with estate planning, wills and trusts, long-term care planning, or an exploitation issue, please call our office at 352.379.1900.