With the technology available in the 21st century—along with the COVID-19 pandemic—financial exploitation and fraud are at an all-time high. In fact, the FBI has determined that elder fraud has generally increased over the past year and that elder fraud is an FBI priority. Especially for the elderly, their diminished interaction with others during the pandemic makes it less likely to notice behavior that puts them at higher risk for exploitation. Despite this alarming news, the creation of a Texas estate plan can help reduce elder fraud and financial exploitation.
How to Prevent Financial Exploitation
Financial exploitation is fraudulent action committed by a caregiver, fiduciary, or other individuals where they use the resources of an older person for their own personal gain. This often includes depriving the elder of their money, assets, and other belongings. Common examples of elder exploitation include theft of money by a caregiver or family member, a power of attorney improperly acting on behalf of the elder, and investment scams selling unnecessary financial services and products.
While many individuals do not think of estate planning as a solution to this issue, it often is. By creating an estate plan and preparing for when a person gets older, it can help protect against financial exploitation—especially from family or other individuals close to the older person.
First, creating a revocable living trust protects individuals from exploitation. A revocable living trust is a legal document created by an individual to hold and own their assets during their lifetime. As a revocable living trust is not in the individual’s name—but instead the assets are technically owned by the trust—it is more difficult for strangers to access the assets in a revocable living trust. While this may seem like an unconventional method to prevent exploitation, it can often be beneficial for the elder and their family.
An important way to protect against exploitation in an estate plan is to create a durable power of attorney. A durable power of attorney acts on an individual’s behalf when they become incapacitated and cannot make decisions for themselves. It is important to select a power of attorney that can be trusted and knows the individual’s health and financial preferences. People can also place a requirement in their estate plan that the power of attorney report to another individual on the financial transactions they make on the person’s behalf. This is another way to minimize fraudulent purchases. In case a power of attorney becomes unreliable or untrustworthy, a person is always able to elect a new power of attorney to handle their finances and healthcare decisions.
Because preventing financial exploitation is extremely important—especially as individuals get older—families should consult an experienced estate planning attorney to create an estate plan and protect their aging loved ones.
Contact a Houston Estate Planning Attorney
If you or a loved one is interested in creating an estate plan that can help protect against exploitation, contact the attorneys at McCulloch & Miller, PLLC. With years of experience drafting Houston estate plans, we will create the plan that works for you and your family. Our knowledgeable attorneys have experience recognizing the common pitfalls in many estate plans, and we will work to minimize your family’s risk of elder exploitation. To schedule a free consultation and to speak with one of our attorneys today, give us a call at 713-333-8900.