Watching loved ones age—and knowing when and how to intervene to protect their health and safety—can be challenging. It is commonly understood that as we age, physical ability declines. Changes in mobility and dexterity often are the first sign that family and friends are aging.
As a result, many clients may be watching for the dreaded day when they must take away their loved one’s car keys in order to protect their physical safety. An issue that many are less prepared for, however, is the difficult day when they may have to take away their loved one’s checkbook as well.
The following best practices represent several ways that accounting professionals can help their clients prepare for this difficult event and help protect the financial health of their aging loved ones:
Assess Current Habits
Understanding an older adult’s financial habits is the first step in supporting their monetary wellbeing. Accounting professionals should encourage individuals to learn where their loved one banks and if there is a specific teller or branch they go to each time they visit.
Chances are that representatives there have a wealth of knowledge about the older adult’s spending habits—but they can only speak with the older adult’s agent under Power of Attorney or Guardian/Conservator. Individuals should also learn about the payment methods their loved one uses to pay their bills. Do they typically use checks, credit or debit cards, or an alternative online payment method? Gifting habits are another important consideration.
Additionally, does the older adult still balance their checkbook? Individuals might also assess their loved one’s spending habits and calculate if their income, assets, and insurance will cover anticipated long-term care and medical costs.
Lastly, accounting professionals should encourage their clients to have financial discussions like these with their aging loved ones on a regular basis so that changes in behavior are more likely to be detected.
Identify Potential Risks
The physical ability to sign a check might become an issue down the road due to a decline in mobility. However, cognitive decline could prevent a loved one from even understanding what checks they’re writing long before dexterity deteriorates. This could cause significant monetary damage.
The financial exploitation of older adults is growing increasingly prevalent and may take many forms – including phone scams, identity theft, contractor fraud, and power of attorney abuse. Accounting professionals should take care to educate their clients on these risks, ensuring that clients and their families understand how to prevent financial exploitation and what to do if their loved one may have fallen victim to such abuse.
Prepare for the Future
Accounting professionals should also encourage clients to ensure their loved one’s beneficiaries are appropriately designated, and wills are up to date. This can often be a difficult subject for families to navigate. They should keep in mind, however, that beneficiary decisions are the older adult’s alone to make. Individuals should also ensure their loved ones have a Power of Attorney (POA) and Health Care Proxy (HCP) signed.
Fortunately, one individual does not have to assume sole responsibility for managing their older adult’s affair when this time comes. Instead, older adults may appoint co-POAs and co-HCPs. Regardless of the individual(s) appointed as agent(s), it is critical that they fully understand the meaning of fiduciary duty and their specific responsibilities for recordkeeping and decision-making under the law.
The above tips represent only a few best practices that accounting professionals should share with clients looking to support the financial health of aging loved ones. For additional resources, individuals should contact a local older adult services organization or a trusted older adult law attorney.
Additionally, if suspected older adult abuse has occurred, families and friends should consider contacting their county’s adult protective services agency.
Karen Webber, CPA, CFE, is a partner in The Bonadio Group’s Advisory & Consulting group as well as leader of The Bonadio Group’s Fraud & Forensics team. Karen brings 14 years of experience in financial exploitation investigations, divorce consulting, and estate litigation support. Prior to joining the Firm, Karen founded Webber CPA, PLLC, and software product, FraudFindr.com, establishing an international reputation in the field of financial abuse intervention.
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