I’m turning 50 in September. Statistically, 50 is the optimal age or financial decision making. Then our skills tend to decline after that.
When I read this, I was shocked.
What’s more? 1 out of 10 people above 60 years old experience financial abuse and fraud.
What this means is that as we get older, our risk of running out of money goes up. WAY UP.
I’ve seen families get torn apart because one of the kids decide to take advantage of their parents – convincing them to change their estate plan, naming themselves the sole trustee, doing cash gifts to themselves, putting a house in joint tenancy.
Why they do this I don’t know. And as it turns out, this type of financial abuse is more common than you think. But you can avoid it.
In today’s episode, you’ll learn how to avoid being a victim of financial abuse and fraud.
You’ll discover what the 3 red flags HIDDEN in legal documents are – that allow for this kind of financial fraud and abuse to happen.
Once you can spot these 3 red flags, you’ll know how to PROTECT yourself and the people that you love from getting ripped off.
Red Flag #1: You are the only trustee in your Trust.
What I’ve seen most people naturally do is to have themselves and their spouse become each others’ trustee.
The problem with that is there’s still a 20-30 year period where, statistically speaking, people decline in their ability to make sound financial decisions.
The older we get, the less we’re able to make sound financial decisions. So that’s why we make those critical decisions before we become old and crippled :).
One of those decisions is to have a co-trustee in your Trust. This could be one of your children (the one that you trust has your and your loved ones’ best interest at heart).
No matter what though, never be the sole trustee. Always appoint someone younger that you trust.
Red Flag #2: You have “Power of Appointments” in your estate plan
Adding a “Power of Appointment” to your estate plan gives you the ability to select a person who will have the authority and responsibility to dispose or handle any and all your properly under your will.
It means if you have 5.5 million dollars, the day before you die, you can sign a document that gives everything to your child, caretaker, etc.
But that’s probably the worst time to give “power of appointment” to somebody, right before you die – when you’re not as sharp as you used to be.
Avoid putting the Power of Appointment clause in your estate plan. If your attorney tells you that you need it, make sure their reason makes 100% sense to you. And if you’re not sure, send it to me for review.
Red Flag #3 You Haven’t Reviewed or Updated Your Estate Plan
An estate plan is something most people do once and forget about. But as we get older, our circumstances change. And so will our needs.
Don’t make the assumption that your estate plan is complete and updated to meet your needs. Have an updated estate plan. Include a revocable trust, general durable power of attorney documents, and health care power of attorney documents.
If you have any questions about this topic or feedback, click here to send me an email.
Remember that how your Trust and Estate documents are drafted is key to making sure you and your loved ones are protected.
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