Supporting aging parents: A guide to financial planning and preventing senior exploitation

Becoming a caretaker for aging parents is a role reversal for many adults – and often a challenging one. Taking on this caregiving role may feel overwhelming, especially if you’re juggling those responsibilities with caring for your own children.

 

If that wasn’t daunting enough, seniors face a rising risk of financial exploitation, with elder fraud complaints rising 14% in 2023, according to the FBI Internet Crime Complain Center 2023 Elder Fraud Report. It is expected that cases will continue to climb as the U.S. population ages. Ensuring your parents’ financial wellbeing requires not only financial and estate planning, but also protection against theft and other schemes targeting seniors.

 

Our new white paper on supporting aging parents offers caretakers a guide to help with strategic financial planning and preventing senior exploitation. Here are some of the key takeaways.

 

Financial planning for aging parents

 

Helping your parents manage their finances starts with ensuring they have a comprehensive financial plan. This can help you identify your parents’ assets and spending goals, as well as any regular bills with which they might need assistance. If your parents are comfortable sharing their financial information, you can help by:

 

• Taking inventory. Where are their assets located? Who has access to the accounts? Are the designated beneficiaries aligned with what your parents want?
• Setting realistic financial goals, such as budgeting funds for health care needs or maintaining their lifestyle.
• Protecting assets and intentions through estate planning. Creating or updating key legal documents – such as wills, trusts, powers of attorney and health care proxies – is vital for ensuring that your parents’ wishes are honored and their assets are managed according to their intentions.

Things to watch out for

 

Navigating the complexities of caregiving can be especially daunting with the looming threat of senior financial exploitation. You can help your parents with their finances by helping protect them from fraud, even if they don’t have a comprehensive financial plan.

 

Seniors are at greater risk for financial fraud and exploitation – especially those who live alone, are widowed or socially isolated, or depend on others for care. Research indicates that the majority of victims of financial fraud and exploitation tend to be between the ages of 80 and 89, with women affected more frequently than men.

 

The impact of such fraud can be particularly devasting for seniors, who tend to suffer greater financial losses compared to younger victims. Unfortunately, this exploitation can be perpetrated by anyone, including individuals trusted by the victim – sometimes even their children.

 

To protect against potential exploitation, be cautious about sharing financial information with family and non-family caregivers, especially if your parents have significant resources.

 

Common tactics and schemes targeting seniors include:

 

• Theft of assets such as valuables, medications, cash or one’s identity. Identity theft is a common crime perpetrated against seniors, with thieves using stolen information to empty bank accounts, open credit cards, apply for loans, file false tax returns, seek medical services or alter property records under the victim’s name.
• Fraud, or the misuse of a senior’s assets for personal gain by those entrusted to manage them. This can include unauthorized check writing, falsifying records or running Ponzi schemes.
• Scams designed to trick seniors into giving away money or personal information. One common example is a phishing scam, where the fraudster uses emails, texts or phone calls to impersonate a legitimate entity, like a bank, to ask the victim for passwords or financial details.
• Threats, or using intimidation to control seniors. For example, an exploiter could threaten to deny necessary medical care to manipulate seniors into giving them money.

 

Fundamental steps to prevent senior financial exploitation

 

• Implement safeguards. Some effective strategies to help secure your parents’ financial assets include freezing their credit at the major credit reporting companies, automating and monitoring bill payments and other financial transactions, and securing access to their financial accounts. In addition, you can help safeguard your parents’ finances by ensuring their financial and estate plans are in order. Those financial plans should be regularly reviewed and updated in response to changing circumstances, such as health issues, life events or regulatory changes.
• Educate and empower. Together with your parents, build your financial literacy by exploring resources on managing budgets, avoiding scams, understanding financial documents and recognizing fraudulent tactics. In addition, familiarize yourself with behavioral and financial indicators that could suggest your parents are being exploited. Some common indicators include sudden changes to legal documents, uncharacteristic credit card charges or account withdrawals, or parents becoming increasingly distant or avoiding discussing their finances.
• Build trust and communication. Create a safe space for your parents to discuss their financial concerns and goals. Take the time to understand their specific circumstances or vulnerabilities, including any physical or cognitive limitations. If they allow, conduct a regular review of their assets to spot any changes or signs of exploitation.

 

What to do if you suspect financial exploitation

 

If your parents notice unfamiliar charges, have them sign into their account to locate and review the transaction details. If they still don’t recognize the charges, try contacting the merchant to dispute the transaction. In addition, report the unauthorized transactions to your parents’ banking provider.

 

In cases of identity theft, take immediate action to close fraudulent accounts and remove unauthorized charges. In addition, contact credit reporting agencies to put a fraud alert on your parents’ account. To prevent further exploitation, notify other relevant agencies, such as the IRS and Social Security Administration.

 

Reminder: You are not alone

 

Becoming a caretaker for aging parents can be overwhelming – but support is available, whether you turn to family members or professionals such as health care providers, eldercare lawyers and other experts.

 

A J.P. Morgan advisor can be an invaluable partner in coordinating your support team and navigating the planning process. They can share the workload and help ease your concerns, allowing you to focus on what truly matters – caring for your loved ones. To read our full white paper on the topic, click here.

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