It’s an unfortunate fact that predators emerge during times of crisis to take advantage of people. That means the COVID-19 pandemic can leave your elderly parents vulnerable in more ways than one. But even when things go back to normal, this chronic problem of financial exploitation will still be a risk.

We see it happen far too often. Maybe your parents live several hours away, or in another state or country, and someone in their community gets close to them. Or maybe they have a close relationship with a financial advisor who isn’t really looking out for their best interests. This person could even be another family member, friend, business partner, hired caregiver, professional advisor, or just a casual acquaintance.

Sometimes, when bad actors become involved with your parents’ lives and assets, it can lead not only to a loss of money, but even a loss of personal freedom. One of the worst cases of this I’ve heard of is the case of Milo, a retired veteran living in Arizona, and his son Greg, who lives in California. It all started when Milo asked Greg to help him protect his small amount of money from a family member who was “borrowing” it freely. All Milo had was a savings of $140,000 and payments of $3,700 per month from social security, a pension, and veteran’s benefits.

To help his father out, Greg applied for guardianship of Milo’s money, and the court granted it. But at the same time, without notifying Greg, the court appointed a professional financial Conservator that neither Milo nor Greg knew. The Conservator quickly set to draining Milo’s small savings, with the court barring Greg from filing any more motions.

The situation escalated even further when the Conservator decided to move Milo from his assisted living facility to a cheap lock-down facility where he wouldn’t even have access to the outdoors. This would, of course, free up more money for the Conservator to access. Before this could happen, though, Greg hurried to pick his father up and bring him back to California with him.

Now, the two are essentially on-the-run from authorities, who are trying to bring Milo back to Arizona and under the control of the Conservator. Milo and Greg are out of funds and are now trying to raise capital to mount a legal battle and free Milo from this terrible situation.

The scariest part is that Milo and Greg had all the proper legal documents in place. Sometimes, though, that is not enough to protect your parents from being taken advantage of—even to this extreme. Especially in a time of stress and confusion like the COVID-19 pandemic we are currently living in, it is vital to be vigilant and get the best possible counsel to avoid something like this happening.

This isn’t meant to make you paranoid or distrustful of the people around you, or of how your parents handle their own lives. Well, maybe it is a little. Mostly, though, it’s a call to encourage you and your family to be aware, educated, and empowered in knowing what risks are possible for your parents, and for your future inheritance.

Look out for the following “red flag” actions from influencers:

  1. Preventing important communication between family members;
  2. Withholding documents from other family members;
  3. Encouraging financial gifts or economic benefits to recently met connections (usually in the same network as your parents’ “new friend”);
  4. Naming recently met connections as attorney-in-fact (under a financial power of attorney), or as a joint owner on financial accounts, real estate, and other assets;
  5. Giving financial advice that may not be in your or your parents’ best interests, but rather in the interests of the advisor.

We recommend you start talking with your elderly parents now about how they want their affairs to be handled. Also, you should immediately investigate any situation where you suspect your loved ones are being taken advantage of. There have been too many cases of financial abuse or inappropriate influence where family members are too late to stop the bad actor.

Ideally, you’ll know the value of your parents’ tangible assets (i.e., home, car, business, stocks) and intangible assets (i.e., generational stories, personal relationships, theological legacies). Additionally, you should be working with an advisor to help you understand how family dynamics and the law will impact you, and everything that matters to you and your parents when they’re gone.

Dedicated to empowering your family, building your wealth and defining your legacy,

If you or your parents have a retirement account, (or any investment accounts for that matter) now is a perfect time to get connected to how those accounts are invested. While you may have outsourced all of this to a broker, which is fine, I don’t believe you should ever allow your investments to be made without your clear understanding of exactly what you are investing in as well as how and whether your investments align with your plans for the future.  

Some brokers and advisors believe this, too. Unfortunately, because it takes more time to ensure you understand your investments, many brokers and advisors would rather keep you in the dark. Now is not the time (or ever, really) for you to be okay with being in the dark about your investments.

Educate Yourself
If you or your parents have a retirement account, and you are not intimately connected to how those assets are being invested, it’s time to get more involved.

Log in to your retirement account or pull your last statement and look. Many brokerages select investment funds for their clients’ portfolios based on rates of growth. They’ll offer investment options based on a few tiers of growth and risk, and very often you have no idea what your assets are actually invested in.

Labels like “slow-growth” or “conservative” or “high-growth” or “income” aren’t enough to tell you exactly where your money is invested. So, what you want to do now is look at your statement, which should contain the names of the funds chosen for you, and you can go from there to do your research. Look up each of the funds on sites like Yahoo Finance to see what you are investing in, and whether you understand these companies, believe in their future growth, and want to stay invested there.

Go through this process with your parents, too. The money they have invested in the stock market is part of your overall family wealth. If it’s not there to support them through their senior years, that financial responsibility will eventually fall to you. Having these conversations with them now can be difficult, but it’s important.

If you have a broker you work with, call them now, and ask to get on a video conference. Then, have them help you review each investment, why it’s been chosen, and whether there may be better or other options for you or your parents.

Here’s the key: make sure you understand it, and don’t hang up the phone until you do. If your broker is using words you don’t understand, keep asking questions until you do understand. If you need a referral to an advisor give us a call.

With everything that is happening in the world—and with the volatility of the stock market and our current reality —knowing your options is vital to preserving the full legacy you and your parents have worked hard to build.

Dedicated to empowering your family, building your wealth and defining your legacy,

As you already know, the COVID-19 pandemic means there’s no more “business as usual”. So don’t just hope you can survive until things return to normal. Strategize, now, on how you can take what control is in your sphere of influence. Once you have attended to your (and your parents’) immediate needs, it will be time to consider more long-term plans.

In this time of stress and chaos, your parents may be resistant to talking about estate planning. It may feel too pessimistic to plan for the worst amid a scary situation. However, that’s exactly why it’s important right now to do so. Plus, since hopefully you are staying inside, you may have the time to dedicate to getting these tasks taken care of.

Here are actions you can, and should, take to ensure you and your family are fully protected legally.

Update Your Health Care Documents

Above all, you first need to ensure that both you and your parents have your health care documents in order. This will be an invaluable reference point for those who are assisting you, whether they be friends, family, or medical professionals.

There are three important and distinct documents you should have in place: Your advanced directive, HIPAA waiver, and living will. They are separate documents but all work together. Think of them like the legs of a stool. If just one is missing or defective, the stool will fall – with you in it!

Your advanced directive identifies and gives legal authority to whom you would like to make your medical decisions if you are unable to do so yourself. Many people think spouses automatically have this legal authority and therefore don’t need this type of document for each other. That is a mistaken belief which can cost married couples substantial time, money, and anguish when a medical emergency arises.

A HIPAA waiver is important because even though your advanced directive gives authority to someone of your choosing to make medical decisions for you, privacy laws will prevent your doctor from sharing your medical information with that person. I see a lot of advanced directives which include a HIPAA section, but this is not legally sound and often fails. For starters, the privacy laws mandate the HIPAA waiver be written in a certain font style and size. Trust me on this. You want your HIPAA waiver to be a standalone document.

Your living will is different from your last will and testament. While a last will deals with the decisions to be made after death, a living will pertains to decisions which are to be made while you are still alive. This is where you will provide guidance on when you would want to be placed on life support, removed from life support, whether you want to donate your organs, etc.

Even if you have already created your medical directives, I urge you to take out any existing documents now and review them. Have your circumstances changed? Do you have additions to make? Encourage your parents to do the same thing, and to communicate with you about what their documents say. If you are unsure whether your health care documents are in ship-shape, call us, and we’ll be happy to review them for you.

Ensure Your Estate Plan is Up to Date and In Order

Your healthcare documents are an important start, but you should also review (or create) powers of attorney, a last will, and perhaps even a living trust. Remember that it’s never an inappropriate time to plan. Getting this in order will provide you and your loved ones peace of mind. And we’re here to support you, virtually now, as well. We can take care of you, and your family, fully online. Call us, we’re here.

 Dedicated to empowering your family, building your wealth and defining your legacy,

I’m dealing with working from home, managing my business and my team remotely, operating in shifts with my wife to take care of my children during the day, homeschool them, all while keeping a nervous eye on our stockpile of toilet paper. But perhaps my biggest challenge is feeling like my parents and in-laws are taking COVID-19 as seriously as I wish they would.

As of March 25th, the number of confirmed cases of COVID-19 across the United States was 54,453 cases across the United States with 737 confirmed deaths from the virus. And these numbers are still rising exponentially. 

When we first became aware of the novel coronavirus, there were several TV pundits and other authority figures saying that the virus was just another version of the flu. But in other parts of the world, we’ve seen COVID-19 overwhelm healthcare systems in a way the flu virus just hasn’t.

It seems, though, that many people of the older generation may still not be taking this seriously. And hey, they are the most battle tested of all of us. They’ve seen it all and survived it all and aren’t generally the types to give in to panic and stress. 

That said, they are also among the most vulnerable to the effects of COVID-19. And even with the stay at home order in place, I still feel like my parents are taking too many unnecessary risks. Here’s how I’m trying to express my concerns to them:

  1. Listening to them and determining the worries they have.
    I want to know what they have heard, what they are frustrated about, and what they are skeptical about. Everyone is frustrated with lines at the grocery store, toilet paper hoarding, and the hysteria of the crowds around them. I’m sure my parents do not want to feel like they are one of “those people.” I know I don’t. So I’m just trying to assure them that taking some precautions, especially staying home, is completely reasonable and can be done in a non-panicked way. I’m also trying to support them to make alternative arrangements during this time so they don’t have to go out.
  2. Emphasizing the risk in practical terms.
    I’m sharing articles and news with them that state the facts, soberly, like this one. My parents are bright and already have a good understanding about how viruses spread in general and they already know the basics of how important it is for them to wash their hands. But I want to ensure that is at the top of mind for them every day right now.
  3. Showing them I’m taking it seriously.
    I’m not getting together with my parents unless absolutely necessary, and when I do, I’m wearing a mask and keeping my distance as much as possible. I also shared the video created by Max Brooks, son of legendary comedian Mel Brooks, with them. Max created a PSA to convince younger people to be cognizant of how they might spread the virus to people who are the most vulnerable to it. It presents the situation in a succinct, somewhat lighthearted way. 

If you’re experiencing something similar with your loved ones, I’d love to hear your thoughts. Together, we can get through this. Let’s make sure our parents come through this with us.

Be well and stay safe.

Dedicated to empowering your family, building your wealth and defining your legacy,

Do your parents have an estate plan? Is it up to date? No matter how rich or poor you or your parents are, especially in the wake of the COVID-19 pandemic, you need to be asking these and several other questions. When your parents become incapacitated or die, their affairs will become your responsibility, and it will be impossible to ask them to clarify anything. So, if you do not know whether they have estate planning in place to help you best support them, read on.  

The Best-Case Scenario

In a best-case scenario, your parents have an updated estate plan, and they’ve walked you through it. They have provided an inventory of their assets that’s easy for you to find listing out everything they own and how it’s titled. Ideally, the plan also includes directions on how to handle their non-monetary assets, and a video, audio recording or written stories that pass on their values, insights and experience. On top of all that, it’s best if they’ve introduced you to the lawyer who set it all up, so you know who to turn to when the time comes.

Less-Than-Ideal Scenarios

If that’s not the case, you could have some holes to fill. If they’ve not done any planning at all, now is the time to encourage them to get it done and support them in any way you can. If they already have a completed plan, it’s likely that it has been sitting on their shelf or in a drawer for years, not updated, with no inventory of their assets and no way to capture and pass on their intangible assets. Even worse, their lawyer could have been using outdated systems that are no longer recognized, which can lead to trouble down the road.

It’s also possible that if they’ve never updated their estate plan, it no longer tracks with their current assets, and may even require complex actions that are no longer necessary upon their death. Worst of all, you may have no idea what your parents own or how to find their assets, and at their incapacity or death you’ll be left with a mess, even though your parents had good intentions and thought their planning was handled.

The Worst-Case Scenario

In a worst-case scenario (which we see more frequently than we’d like), your parents may have worked with someone who exerted undue influence over their decisions. This person may have led them to write something into their plan that they either didn’t really want to or wouldn’t otherwise have chosen if they understood all their options.  

Either way, it’s critical for you to know who your parents have worked with to create their estate plan, and how and why they made the choices they did. If you aren’t in the know, now is the time to find out. 

If your parents are already discussing these matters but have not yet included you, you can ask them to schedule a family meeting with their existing attorney. On your parents’ request, that attorney should look forward to walking you through your parents’ planning, the choices they made, and how you will be impacted in the event of their incapacity or death.

You want to develop a relationship with their estate planning attorney now. This advisor can be one of the most important supporters of you and your parents during your time of need. It’s a relationship you will want to establish before you need it, so you won’t be scrambling during a time of crisis.

Dedicated to empowering your family, building your wealth and defining your legacy,

On December 20, 2019, President Trump signed the Setting Every Community Up for Retirement Enhancement Act (SECURE Act). The SECURE Act, is effective as of January 1, 2020. The Act is the most impactful legislation affecting retirement accounts in decades. The SECURE Act has several positive changes: It increases the required beginning date (RBD) for required minimum distributions (RMDs) from your individual retirement accounts from 70 ½ to 72 years of age, and it eliminates the age restriction for contributions to qualified retirement accounts. However, perhaps the most significant change will affect the beneficiaries of your retirement accounts: The SECURE Act requires most designated beneficiaries to withdraw the entire balance of an inherited retirement account within ten years of the account owner’s death.

The SECURE Act does provide a few exceptions to this new mandatory ten-year withdrawal rule: spouses, beneficiaries who are not more than ten years younger than the account owner, the account owner’s children who have not reached the “age of majority,” disabled individuals, and chronically ill individuals. However, proper analysis of your estate planning goals and planning for your intended beneficiaries’ circumstances are imperative to ensure your goals are accomplished and your beneficiaries are properly planned for.

Under the old law, beneficiaries of inherited retirement accounts could take distributions over their individual life expectancy. Under the SECURE Act, the shorter ten-year time frame for taking distributions will result in the acceleration of income tax due, possibly causing your beneficiaries to be bumped into a higher income tax bracket, thus receiving less of the funds contained in the retirement account than you may have originally anticipated.

Your estate planning goals likely include more than just tax considerations. You might be concerned with protecting a beneficiary’s inheritance from their creditors, future lawsuits, or a divorcing spouse. In order to protect your hard-earned retirement account and the ones you love, it is critical to act now.

Review/Amend Your Revocable Living Trust (RLT) or Standalone Retirement Trust (SRT)

Depending on the value of your retirement account, you may have addressed the distribution of your accounts in your RLT, or you may have created an SRT that would handle your retirement accounts at your death. Your trust may have included a “conduit” provision, and, under the old law, the trustee would only distribute required minimum distributions (RMDs) to the trust beneficiaries, allowing the continued “stretch” based upon their age and life expectancy.  A conduit trust protected the account balance, and only RMDs–much smaller amounts–were vulnerable to creditors and divorcing spouses. With the SECURE Act’s passage, a conduit trust structure will no longer work because the trustee will be required to distribute the entire account balance to a beneficiary within ten years of your death. You many now need to consider the benefits of an “accumulation trust,” an alternative trust structure through which the trustee can take any required distributions and continue to hold them in a protected trust for your beneficiaries.

Consider Additional Trusts

For most Americans, a retirement account is the largest asset they will own when they pass away. If you have not done so already, it may be beneficial to create a trust to handle your retirement accounts. While many accounts offer simple beneficiary designation forms that allow you to name an individual or charity to receive funds when you pass away, this form alone does not take into consideration your estate planning goals and the unique circumstances of your beneficiary. A trust is a great tool to address the mandatory ten-year withdrawal rule under the new Act, providing continued protection of a beneficiary’s inheritance.

Review Intended Beneficiaries

With the changes to the laws surrounding retirement accounts, now is a great time to review and confirm your retirement account information. Whichever estate planning strategy is appropriate for you, it is important that your beneficiary designation is filled out correctly. If your intention is for the retirement account to go into a trust for a beneficiary, the trust must be properly named as the primary beneficiary. If you want the primary beneficiary to be an individual, he or she must be named. Ensure you have listed contingent beneficiaries as well.

If you have recently divorced or married, you will need to ensure the appropriate changes are made because at your death, in many cases, the plan administrator will distribute the account funds to the beneficiary listed, regardless of your relationship with the beneficiary or what your ultimate wishes might have been.

What Happens Next

If you are a client, we’ll be reaching out to you over the coming weeks if your plan is affected by the SECURE Act. If you are not a client, and don’t have an ongoing relationship with a trusted advisor, we’d be happy to review your plan to determine if it is affected by the SECURE Act. And if you have yet to get an estate plan in place, there’s no better time to get that process started. Let us know if we can help and happy new year!

Dedicated to empowering your family, building your wealth and defining your legacy,

In the first part of this series, we discussed the early warning signs of diminished financial capacity in the elderly. Here, we’ll discuss planning strategies that can protect your loved ones from incapacity of all kinds. 

With more and more Baby Boomers reaching retirement age each year, our country is undergoing an unprecedented demographic transformation that’s sure to challenge our society in many ways. There’s been lots of talk about whether Baby Boomers will have enough savings for retirement and the strains the generation will put on Social Security and Medicare.

But there’s another issue that’s getting far less attention—the coinciding increase in the prevalence of dementia.

Along with swelling senior population, the nation is expected to see a corresponding rise in those suffering from age-related dementia—cases of Alzheimer’s alone are expected to double by 2050. While the cognitive decline from dementia affects nearly every mental function, many people aren’t aware that one of the first abilities to go is one’s “financial capacity.”

Financial capacity refers to the ability to manage money and make wise financial decisions. A decline in financial capacity not only makes seniors more likely to mismanage their money, but it also makes them easy targets for financial exploitation, fraud, and abuse.

Last week, we listed six warning signs of a decline in financial capacity. Here we’ll discuss estate planning strategies that can help protect your elderly loved ones and their assets from the debilitating effects of dementia and other forms of incapacity.

Reducing the risks
Taking steps to reduce the risks of diminished financial capacity is vital, but stepping in to help manage an aging parent’s money without threatening their sense of independence and privacy can be a real challenge. Even if they’re aware of their own impairment, many are reluctant to ask for help, and some may even deny there’s a problem.

Ideally, you should address the potential for dementia and other forms of incapacity with your senior family members well before any signs of cognitive decline appear. Waiting until they start showing signs of dementia will only exacerbate the complications and could even invalidate planning efforts.

Start by having a heart-to-heart conversation with your loved ones about the risks involved with incapacity, and how estate planning can help protect them. Approach the subject with care and compassion. Reassure them that your goal is to make certain they retain as much control over their lives as possible—and talking about the issue early on is the best way to do that.

For example, you should let your aging parents know that if they become incapacitated without proper planning, you’ll have to go to court and petition to become their legal guardian. This process is not only quite costly and emotionally taxing, but there’s a possibility that the court could appoint a professional guardian, rather than a loved one such as yourself.

A court-appointed guardianship would mean that a total stranger would control all of their affairs—financial and otherwise—which is something they likely wouldn’t want. Professional guardianships also open the door for potential exploitation and abuse by unscrupulous guardians, which is something that’s on the rise given the sharp uptick in the senior population.

However, unless you have the legal authority to make your parents’ financial decisions, your ability to manage their money will be seriously limited. You might be able to work together with them for a while without such authority, but at some point, their cognitive impairment will likely reach a stage where you’ll need to assume full control—and that’s where estate planning comes in.


Put a plan in place
The best option would be for your aging loved ones to put in place a comprehensive plan for incapacity as soon as possible. This way, they can choose exactly who they want making their financial, medical, and legal decisions for them if and when they’re no longer able to do on their own.

There are a number of planning tools that can be used in an incapacity plan, but a will alone is sufficient. A will only goes into effect upon death, so it would do nothing should your elderly parents become incapacitated by dementia.

While a will is important in planning for death, your parents should also put in place planning tools specially designed for incapacity. One such tool is durable financial power of attorney. This document would give you (or another person of their choosing) the immediate authority to make decisions related to the management of their financial and legal affairs in the event of their incapacity.

The downside of financial durable power of attorney is that it sometimes is not accepted by banks and other financial institutions, and you might still end up needing to go to court to get control of your parents’ affairs.

A revocable living trust is a MUCH better estate planning tool to transfer control of your parents’ financial assets to you without court intervention should they become incapacitated. A revocable living trust, created while your parents have capacity, can plan for the transition of their assets to your care and control in a way that feels safe and secure to them. Bring your parents to meet with us for a Family Wealth Planning Session to learn more about how this would work.

Yet having the legal authority to make your parents’ financial and legal decisions is just part of an overall incapacity plan. They’ll also need to put in place planning strategies designed to address their healthcare decisions and medical treatment like medical power of attorney and a living will. 

We can help your aging parents and other senior family members develop a comprehensive incapacity plan, customized with the specific planning vehicles to match their unique needs and life situation.

Don’t wait until it’s too late
While incapacity from dementia is most common in the elderly, debilitating injury and illness can strike at any point in life. For this reason, all adults age 18 and older should have an incapacity plan. Moreover, such planning must be addressed well before cognitive decline begins, as you must be able to clearly express your wishes and consent for the documents to be valid. Given this urgency, you should discuss incapacity planning with your aging parents right away.

Dedicated to empowering your family, building your wealth and defining your legacy,

With more and more Baby Boomers reaching retirement age each year, our country is undergoing an unprecedented demographic transformation that’s been dubbed “The Greying of America.” This population shift stands to affect many aspects of life, especially your relationships with aging parents and other senior family members.

By 2060, the number of Americans aged 65 and older is projected to nearly double from 52 million in 2018 to 95 million, which will account for 24% of the total population. And as early as 2030, the number of those 65 and older is expected to surpass the number of children (those under age 18) for the first time in history.

Coinciding with the boom in the elderly population, the number of Americans suffering from Alzheimer’s and other forms of dementia is expected to increase substantially as well. The Centers for Disease Control (CDC) estimates that the number of Americans with Alzheimer’s disease will double by 2060, when it’s expected to reach 14 million—more than 3% of the total population.

A decline in financial capacity
Although Alzheimer’s is the most common cause of dementia in older adults, it’s not the only one. In fact, the National Institute on Aging estimates that nearly half of all Americans will develop some form of dementia in their lifetime. And while the cognitive decline brought on by dementia affects a broad array of mental functions, many people aren’t aware that one of the first abilities to go is one’s “financial capacity.”  

Financial capacity refers to the ability to manage money and make wise financial decisions. Yet cognitive decline brought on by dementia often develops slowly over several years, so a diminished financial capacity frequently goes unnoticed—often until it’s too late.

“Financial capacity is one of the first abilities to decline as cognitive impairment encroaches,” notes the AARP’s Public Policy Institute, “yet older people, their families, and others are frequently unaware that these deficits are developing.” 

Ironically, studies have also shown that the elderly’s confidence in their money management skills can actually increase as they get older, which puts them in a perilous position. As seniors begin to experience difficulty managing their money, they don’t realize they’re making poor choices, which makes them easy targets for financial exploitation, fraud, and abuse.

Watch for red flags over the holidays
Now that we’re in the peak of the holiday season, you’re likely spending more time with your aging parents and other senior relatives. This provides an ideal opportunity to be on the lookout for signs that your loved ones might be experiencing a decline in their financial capacity. The University of Alabama study “The Warning Signs of Diminished Financial Capacity in Older Adults” identified six red flags to watch for:

1. Memory lapses: Examples include missing appointments, failing to make a payment—or making multiples of the same payment—forgetting to bring documents or where documents are located, repeatedly giving the same orders, repeatedly asking the same questions.

2. Disorganization: Mismanaging financial documents, and losing or misplacing bills, statements, or other records.

3. Declining checkbook management skills: Forgetting to record transactions in the register, incorrectly or incompletely filling out register entries, and incorrectly filling out the payee or amount on a check.

4. Mathematical mistakes: A declining ability to do basic oral or written math computations, such as making change.

5. Confusion: Difficulty understanding basic financial concepts like mortgages, loans, or interest payments, which were previously well-understood.

6. Poor financial judgment: A new-found interest in get-rich-quick schemes or radical changes in investment strategy.

Managing diminished financial capacity

If you notice your parents or other senior family members displaying any of these behaviors, you should take steps to protect them from their own poor judgement. It’s vital to address their cognitive decline as early as possible, not only to prevent financial mismanagement and exploitation, but also to ensure their overall health and safety.

There are several estate planning tools that can be put in place to help your aging parents and other senior family members protect themselves and their assets from the debilitating effects of dementia and other forms of incapacity. In part two of this series, we’ll discuss the specific planning tools available for this purpose, and provide some guidance on how to address this sensitive subject with your elderly loved ones. 

Dedicated to empowering your family, building your wealth and defining your legacy,

In the first part of this series, we detailed how criminally minded individuals can take advantage of an overloaded court system and seize total control of seniors’ lives and financial assets by gaining court-ordered guardianship. Here we’ll dive deeper into how seniors and their adult children can use proactive estate planning to prevent this from happening.

It’s important to note that any adult could face court-ordered guardianship if they become incapacitated by illness or injury, so it’s critical that every person over age 18—not just seniors—put these planning vehicles in place to prepare for a potential incapacity.

Keep your family out of court and out of conflict
Outside of the potential for abuse by professional guardians, if you become incapacitated and your family is forced into court seeking guardianship, your family is likely to endure a costly, drawn out, and emotionally taxing ordeal. Not only will the legal fees and court costs drain your estate and possibly delay your medical treatment, but if your loved ones disagree over who’s best suited to serve as your guardian, it could cause bitter conflict that could unnecessarily tear your family apart and open the door to potential abuse.

Planning for incapacity
The potential turmoil and expense, or even risk of abuse, from a court-ordered guardianship can be easily avoided through proactive estate planning. Upon your incapacity, an effective plan would give the individual, or individuals, of your choice immediate authority to make your medical, financial, and legal decisions, without the need for court intervention. What’s more, the plan can provide clear guidance about your wishes, so there’s no mistake about how these crucial decisions should be made during your incapacity.

There are a variety of planning tools available to grant this decision-making authority, but a will is not one of them. A will only goes into effect upon your death, and even then, it simply governs how your assets should be divided. To this end, a will does nothing to keep your family out of court and out of conflict in the event of your incapacity—nor does it help you avoid the potential for abuse by professional guardians.

Your incapacity plan shouldn’t be just a single document. It should include a variety of planning tools, including some, or all, of the following:

  • Healthcare power of attorney: An advanced directive that grants an individual of your choice the immediate legal authority to make decisions about your medical treatment in the event of your incapacity.
  • Living will: An advanced directive that provides specific guidance about how your medical decisions should be made during your incapacity.
  • Durable financial power of attorney: A planning document that grants an individual of your choice the immediate authority to make decisions related to the management of your financial and legal interests.
  • Revocable living trust: A planning document that immediately transfers control of all assets held by the trust to a person of your choosing to be used for your benefit in the event of your incapacity. The trust can include legally binding instructions for how your care should be managed and even spell out specific conditions that must be met for you to be deemed incapacitated.
  • Family/friends meeting: Even more important than all of the documents we’ve listed here, the very best protection for you and the people you love is to ensure everyone is on the same page. As part of our planning process, we’ll walk the people impacted by your plan through a meeting that explains to them the plans you’ve made, why you’ve made them, and what to do when something happens to you. With a team of people who love you, watching out for you and what matters most, the risk of abuse from a professional guardian is low.

Don’t wait to put your plan in place
It’s vital to understand that these planning documents must be created well before you become incapacitated. You must be able to clearly express your wishes and consent for these planning strategies to be valid, as even slight levels of dementia or confusion could get them thrown out of court.

Not to mention, an unforeseen illness or injury could strike at any time, at any age, so don’t wait to get your incapacity plan taken care of.

Finally, it’s crucial that you regularly review and update these planning tools to keep pace with life changes, including changes in your assets or the nature of your relationships. If any of the individuals you’ve named becomes unable or unwilling to serve for whatever reason, you’ll need to revise your plan.

Dedicated to empowering your family, building your wealth and defining your legacy,

Elder abuse can take a wide variety of forms, but I think the worst of the worst is caused by unscrupulous adult guardians appointed by a court to care for seniors who are no longer able to care for themselves. And though you may not want to believe such a thing could happen, you need to know that without the right planning in place, even the seniors in your own family could be at risk.

In fact, there are currently 1.5 million American adults under guardianship, with an estimated 85% of them over age 65. All told, these guardians control nearly $273 billion in assets. And a 2010 report by the Government Accountability Office (GAO) found hundreds of cases where guardians were involved in the abuse, exploitation, and neglect of seniors placed under their supervision.

Exploitation disguised as protection
Although most of the reported abuse was committed by family members, an increasing number of elder abuse cases involve professional guardians.

These predatory guardians search for seniors with a history of health issues, and they’re often able to obtain court-sanctioned guardianship with alarming ease. From there, they can force the elderly out of their homes and into assisted-living facilities and nursing homes. They can sell off their homes and other assets, keeping the proceeds for themselves. They can prevent them from seeing or speaking with their family members, leaving them isolated and even more vulnerable to exploitation.

What’s more, though it’s possible for a guardianship to be terminated by the court if it can be proven that the need for guardianship no longer exists, a study by the American Bar Association (ABA) found that such attempts typically fail. And those family members who do try to fight against court-appointed guardians frequently end up paying hefty sums of money in attorney’s fees and court costs, with some even going bankrupt in the process.

An open door for potential abuse
Obviously, not all professional guardians exploit the seniors (known as wards) placed under their care. But with the combination of the exploding elderly population—many of whom will require guardians—and our overloaded court system, such abuse will almost certainly become more common. Indeed, as the swelling aging population strains court resources, strict oversight of professional guardians is likely to become increasingly more difficult, enabling shady guardians to more easily slip through the cracks.

Facing these facts, it’s critical for both seniors and their adult children to take proactive measures to prevent the possibility of such abuse. Fortunately, there are multiple estate planning tools that can dramatically reduce the chances of you, or your elderly loved ones, being placed under the care of a professional guardian against your/their wishes.

What’s more, because any adult could face court-ordered guardianship if they become incapacitated by illness or injury, it’s crucial that every person over age 18—not just seniors—have planning vehicles in place to prepare for their potential incapacity.

Should you become incapacitated and not have the proper planning vehicles in place, your family would have to petition the court in order to be granted guardianship. And it’s this lack of planning that leaves you vulnerable. In most cases, the court would appoint a family member as guardian, but this isn’t always the case.

If you have no living family members, or those you do have are unwilling or unable to serve or deemed unsuitable by the court, a professional guardian would be appointed. And in certain cases, particularly when your family doesn’t live close by, guardianship can be granted without your loved ones—or even you—being aware of it. 

A total loss of autonomy
Once you’ve been placed under court-ordered guardianship, you essentially lose all your civil rights. Indeed, whether it’s a family member or a professional, guardians have complete legal authority to control every facet of your life.

Given the extreme power guardianship affords, courts are supposed to exercise tight oversight over adult guardians, yet the reality is that only cursory supervision is provided. What’s more, courts often don’t even keep complete records of guardianship cases, and those that do typically keep those records sealed from public view.

With no real system in place to prevent abuse by professional guardians, it’s up to you to protect yourself and your elderly parents through proactive estate planning.

Dedicated to empowering your family, building your wealth and defining your legacy,