Elder Financial Abuse Is Increasing

A recent study shows elder financial abuse is rising in retirement planning. Working with trusted advisors, other professionals and family can help.

A September 2018 Forbes report said that elder financial abuse would only get worse as we age. With 10,000 people turning age 65 every day for the decade, the demographics include a growing pool of potentially fragile retirees and the elderly, many of whom are susceptible to financial exploitation.

alphabetastock.com’s recent article entitled “Elder Financial Abuse Is Rising” says that, although the criminals are out there, a lot of elder financial abuse actually begins in the retirement system, because individuals must accumulate and handle a large amount of money designed to last an entire lifetime. With $14.5 trillion in self-directed retirement accounts in the U.S., it’s a big, enticing target for financial predators.  This is on top of other forms of elder financial abuse that come from scams online, via phone calls or sometimes even from family.

Elder financial abuse includes all of the frauds and scams targeting seniors and because it’s a hidden crime, many victims opt not to report it. Those that do report the crimes, frequently don’t prosecute.

However, when it comes to trying to promote real changes that will provide some material protections, the investment, insurance, and financial services industries directly or indirectly have been showing some reticence about the potential compliance expense. Some of these companies are lobbying to maintain a status quo—one that’s on a course to see a steady rise in elder financial exploitation.

Many retirement investors think their professional financial advisors are fiduciaries who are legally bound to act in their best interests. However, that’s not always so. Many professional financial advisors need only adhere to a lower legal standard of behavior. They can’t outright tell you a lie—but they can make recommendations that don’t put the customer’s best interests as a top priority.

A GAO study found elder financial abuse to be a growing epidemic. Rather than being able to live out their golden years in safety and financial security, the lack of financial safeguards are leaving an entire (and growing) group of older Americans at risk. These seniors are often left on their own and confused as to how the advisors they entrusted with their financial security are permitted to make moves that are motivated by high commissions and self-interest. These so-called professionals aren’t required by the law to place interests of their clients ahead of their own.

Theft and illegal behavior is one small component of the elder financial exploitation. A bigger part comes from abusive financial practices, such as higher fees and complex and unsuitable advice and recommendations from professional financial advisors who aren’t fiduciaries.  It is helpful to occasionally have your financial picture reviewed by another advisor or your friends and family.  More eyes may reduce financial elder abuse.

Be sure that you are working with a financial professional who is trustworthy and has your best interests at heart.  At The Galligan Law Firm we have worked with many excellent advisors and would be happy to make a recommendation.

Reference: alphabetastock.com (January 11, 2020) “Elder Financial Abuse Is Rising”

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Five Estate Planning Mistakes to Avoid

Five common estate planning mistakes are easy to avoid with the right information and support, as well as a little creativity.

While it’s true that no estate is completely bulletproof, there are mistakes that people make that are big enough to walk through, while others are more like a slow drip, making things harder in a slow but steady process. There are common estate planning mistakes that can be easily avoided, reports Comstock Magazine in the article “Five Mistakes to Avoid When Planning Your Estate.”

  1. Misunderstanding Estate Law. Some people are so thrown by the idea of an estate plan, that they can’t get past the word “estate.” You don’t need a mansion to have an estate. An “estate” does not mean extreme wealth.  The term is actually used to refer to any and all property that a person owns, regardless of debts. Even people with modest estates need a plan to help beneficiaries avoid unnecessary costs and stress, and typically estate planning is even more critical for such individuals. Talk with an estate planning attorney to learn what your needs are, from a will to trusts to incapacity planning. Make sure that this is the attorney’s key practice area.  A real estate attorney, family law attorney or the friend or family member who is a lawyer won’t have the same knowledge and experience.
  2. Getting Bad or Incomplete Advice. It takes a team to create a strong estate plan. That means an estate planning attorney, a financial advisor and an accountant. Look for a firm that will tailor an estate plan specifically to your goals. The is no one size fits all approach, and many tools are needed for a complete estate plan. Buying an insurance policy or an annuity is not an estate plan, but may helps achieve those goals.
  3. Naming Yourself as a Sole Trustee without a Back-up. Naming yourself as a sole trustee puts you and your estate in a precarious position. What if you develop Alzheimer’s or are injured in an accident? A trusted individual, a family member, a longstanding friend or even a professional trustee, needs to be named to protect your interests, if you should become incapacitated.  This is also why you should have Durable Financial Powers of Attorney and Healthcare Powers of Attorney, among other documents, to ensure someone you trust may act on your behalf if you cannot.
  4. Losing Track of Assets. Without a complete list of all assets, it’s nearly impossible for someone to know what you own and who your heirs may be. Some assets, including retirement funds, life insurance policies, or investment accounts, have named beneficiaries. Those people will inherit these assets, regardless of what is in your estate plan. If your heirs can’t find the assets, they may be lost or there may be a long delay in obtaining them. If you don’t update your beneficiaries, they may go to unintended heirs—like children of prior relationships, someone other than your spouse and so on.
  5. Deciding on Options Without Being Fully Informed. When it comes to estate planning, the natural tendency is to go with what we think is the right thing. For example, people often say “I just need a will,” but learn later that the will requires probate, or doesn’t address the disability of a child.  However, unless you are an estate planning attorney, chances are you don’t know what the right thing is. For tax reasons, for instance, it may make sense to transfer assets, while you are still living. However, that might also be a terrible idea, if you choose the wrong person to hold your assets or don’t put them in the right kind of trust.  It may also make sense to leave income taxable assets to charities, and non-income taxable assets such as life insurance, to individuals.  You don’t know what you don’t know, so it is important to work with an estate planning attorney to craft the plan that’s right for you.   See here for some estate planning frequently asked questions to get you started.  https://galligan-law.com/estate-planning-questions/

Estate planning is still a highly personal process that depends upon every person’s unique experience. Your family situation is different than anyone else’s. An experienced estate planning attorney will be able to create a plan and help you to avoid the big, most commonly made mistakes.  Please contact our office to discuss how your plan can avoid these estate planning mistakes.

Reference: Comstock Magazine (Dec. 2019) “Five Mistakes to Avoid When Planning Your Estate”

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Social Security Survivor Benefits for Spouses

Clients often think of Social Security for retirement planning, but Social Security survivor benefits, especially for spouses, should be considered as well.

Social Security is the main retirement income source for more than 60% of Americans, which is why it is usually the focus of news about retirement income. However, there’s more to Social Security survivor benefits, including how it helps surviving spouses. Social Security survivor benefits can be a critical part of retirement securities when families lose a loved one, says the article “Understanding the Basics Of Social Security Benefits for Surviving Spouses” from Forbes.

The rules about Social Security survivor benefits for spouses can be complicated. There are four basic categories of survivor benefits. Here’s a closer look:

Survivor benefits at age 60. At their full retirement age, the surviving spouse can receive full survivor benefits based on the deceased individual retirement benefit. The amount from the survivor benefit is based on the deceased spouse’s earnings. At full retirement age, the survivor receives 100% of the deceased individuals’ benefit or their projected benefit at full retirement age. If they collect benefits before full retirement age, you’ll get between 70% to 99% of the deceased spouse’s benefit.

You cannot receive both your benefit and your deceased spouse’s benefit. In most cases, it makes sense to defer whichever is the higher benefit, taking the lower benefit first while the larger benefit continues to increase.

Lump sum payment. This was originally intended to help survivors with certain funeral and end-of-life costs. However, the amount has never been indexed for inflation. Therefore, it won’t cover much. To get the payment, the surviving spouse must apply for it within the first two years of the deceased individual’s date of death.

Disabled benefit. If you qualify as disabled, you can receive survivor benefits as early as age 50. Divorced spouses can also receive survivor benefits, if the marriage lasted for at least ten years. If you remarry, you cannot receive survivor benefits. However, if you remarry after age 60, or age 50 if disabled, you can continue to receive survivor benefits based on your deceased spouse’s benefit, if you were married for at least ten years. You can even switch over to a spousal benefit based on the new spouses’ work history at age 62, if the new benefit would be higher.

Caring for children under age 16. A surviving spouse of any age caring for a child who is under age 16 may receive 75% of the worker’s benefit amount. The child is also eligible for a survivor benefit of 75% of the deceased parent’s benefits. A divorced spouse taking care of the deceased ex’s child younger than 16 is also entitled to 75% of the deceased spouse’s benefit. In this case, the ex does not need to meet the ten-year marriage rule, and they can be any age to collect benefits.

You can also see this article from Mary Galligan that discusses the timing of these benefits.  https://galligan-law.com/social-security-benefits-what-happens-when-a-spouse-dies/

One thing to consider: the rules surrounding Social Security benefits are complex, especially when it comes to coordinating benefits with an overall financial plan. Contact our office and your financial planner to learn how these rules may help protect your family and children.

Reference: Forbes (Dec. 30, 2019) “Understanding the Basics Of Social Security Benefits for Surviving Spouses”

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