Hearing the words “financial fraud” can often send us into a panic. Last year, a scammer called my mother, claiming to be a tech company employee and offering to help her with upgrades to her computer. She followed their instructions, to the point of providing them with her bank credit card information! Fortunately, I called her, interrupting the conversation, and immediately told her to hang up the phone. She became terrified and confused but followed my instructions to end the scam. I then made a conference call with her and her bank to stop all charges. Once notified, the bank canceled her card, created new bank accounts, and put a red flag on her account. It was a scary event.
Against this growing threat of scammers, you must be ready to safeguard your parents by becoming their trusted advocate. Too many criminals take advantage of our elders, preying on their age and limited technical abilities. Unfortunately, not all older folks have trusted family members or advocates to help them understand these types of situations. Working with a CERTIFIED FINANCIAL PLANNER™ professional is a great start to safeguarding your elderly parents and yourself from financial fraud.
Here are seven steps you can take to begin the process of advocating for your parents and safeguarding their financial future:
- Talk About Money
If you will be the one to help with your parents’ financial life as they age, it’s time to start thinking about your responsibilities. It is important to start conversations with them now instead of later and explain that having someone younger help with financial decisions can help protect them from fraud. Be sure to ask about their spending, saving, and giving habits. Show that you care about their well-being, not just the numbers. Review their spending, and make sure no one has access to their bank account information.
- Gather a Money Team
As we age, we need trusted advocates to assist us with financial issues. It can be uncomfortable to talk with your parents about finances, so adding other members of the family to the team is often helpful and can make discussions easier. In the LGBT community, many elders have identified formal family arrangements and invite those trusted contacts into meetings with financial advisors to build this relationship. If your parents are working with a CFP® professional, ask them to include you in the meetings. Help your parent identify who they can trust and add those people to their Money Team.
- Schedule Regular Check-Ins
As your parents’ trusted advocate, I recommend you help them establish online access with their bank so that you can monitor banking and credit activity regularly. Also, set up automatic drafts from their bank account to handle their monthly fixed bills. Many elders still like their bank checking accounts balanced and reconciled monthly. I sit with my mom for dinner each month and review hers; we balance to the penny. This allows me to ask her about any expenses that look out of the ordinary. I keep on top of things, so that I can help build trust with her. I also keep my siblings up to date on a regular basis. This helps to create and maintain trust within the family unit.
- Update General Power of Attorney Document
At times, you may find yourself in a situation where you need to talk with your parents’ financial services institutions. I try to include my mom when I’m having conversations about her finances, but sometimes with our schedules, I must talk with an institution by myself. Therefore, you want to make sure your parents have an up-to-date financial power of attorney (POA) listing you and other trusted contacts. Most financial institutions like to have this document dated within five years of execution. I also recommend that your parent have more than one person listed on the document to follow in succession. This is in case the first person named predeceases the others or is not able to act as POA. Listing a successor (or two) provides a safeguard that someone will be able to act for your parent when the time comes for advocacy.
- Current Healthcare/Medical Power of Attorney Document
A medical power of attorney (MPOA) is equally as important to your parents’ financial well-being. Being able to have direct communication with healthcare companies, providers and so on, makes navigating overall care and finances easier. Not all states call this document a MPOA — some include the language in the healthcare directive or living will. These documents spell out the wishes of your parent in certain health events. They name the healthcare agent and guardian as well as your parents’ wishes on how and what treatments they would like in case they are not able to communicate at the time. I recommend you have these documents drafted prior to any health issues if possible and give a copy to all doctors as well as the hospital with which the doctors are affiliated. As with the POA, I recommend having more than one person listed in succession for the same reasons.
- Shred! Shred! Shred!
The Federal Trade Commission is another important site that helps consumers understand scams and ways to prevent them. On its website, you will find a list of documents that are best shredded rather than simply thrown away. Help your parent by going through old files and clean out outdated documents. If you don’t have access to a shredder at home, many libraries have annual shredding events. Make it fun and help them organize only the important documents they need to keep, such as birth certificates, marriage/divorce paperwork, taxes, passports and so on.
- Monitor Credit Reports
Lastly, make sure to review your parents’ credit report at least annually. By reviewing and monitoring activity on their credit report, you help ensure that no one has access to their private identification and can open credit in their name. You may also want to consider having your parents freeze their credit, which will limit the exposure of a breach of their identity and lock down the ability for anyone to open new lines of credit.
If you or a loved one experience fraud, contact the AARP Fraud Watch Network, which equips you with reliable, up-to-date insights and offers a free Fraud Network Helpline. The network also advocates at the state, federal and local levels to enact policy changes that protect consumers and enforce laws.
For more information about helping protect your parents from fraud, visit LetsMakeAPlan.org.