As your parents age, it is pretty standard for them to develop early signs of dementia. For example, it may become difficult to remember simple dates. They may also experience challenges keeping track of their finances. This renders them susceptible to incidences of theft or loss of assets.
With approximately 16.5 % of American residents being 65 years and above, proper financial planning is essential. Unfortunately, fraudsters like to target older adults with a low sense of cognition. These key steps will help safeguard your aging parent’s assets.
Set Up a Living Trust
A living trust is a significant way of managing your parents’ finances as they age. It is a legal document that outlines your parents’ assets and finances. However, it should not be mistaken for a will. The two are polar opposites.
A will outlines how assets and finances shall be managed in the event of your parents’ demise. Whereas a living trust speaks of property management and finances as they grow older.
There are two types of living trust you can pursue:
Revocable Living Trust
This type of trust assigns responsibility to you to manage your parent’s assets as a trustee. This type of trust is revocable, meaning your parents can revoke the responsibility and transfer it to another. This provides a layer of security since it prevents funds mismanagement by family members.
Irrevocable Living Trust
Similar to the former, this type of trust assigns responsibility to a trustee. The overlying difference is that the asset owner cannot revoke the responsibility. This trust is pretty limiting.
This type of trust is mainly used during a parent’s application for Medicaid.
Estate Planning
As you set up a trust, it is essential to have a list of all assets and adequately document each. If your parents live independently, you can find out if their house is still on mortgage. You can find out from fha faqs how to settle the payment.
It is best to ensure your parents are debt-free as they age. This lessens the burden on the successors with regard to repayment.
Talk To Your Parents
As technology advances, so do scammers and fraudsters. According to a study, older adults are top targets for fraudsters and scammers. This results in them losing about $2.9 billion to $36 billion annually.
Talking to your parents and educating them about these scams can prevent incidences of financial exploitation. You can also look for traces of scam activities as you speak to them. For example, go through their emails and inquire about out-of-the-ordinary phone calls. Warn them against disclosing their credit card information and exchanging money for goods or services they haven’t asked for.
Dementia is inherently present among the elderly. Therefore, if your parents exhibit any signs of dementia, it would be best to discuss financial management options. Without knowing it, your elderly one can put themselves at risk of financial exploitation.
These steps can help you safeguard your parents’ assets as they gracefully age. If they are not comfortable relegating their asset management, you can re-initiate the conversation later.
