With the rise in online scams, protecting our aging loved ones’ finances has never been more critical. As highlighted in the New York Times article, “They’re Giving Scammers All Their Money. The Kids Can’t Stop Them”, the story of Chris Mancinelli and his father, Alfred, is a striking example. Alfred, a retired New Yorker, was deceived into giving away nearly $1 million to a scammer he believed himself to be in a romantic relationship with. Alfred’s family tried everything to stop him, from financial planning to lawsuits, but he continued depleting his entire retirement savings. Even his family relationships fell victim to this tragic fraud.
Online fraud targeting older adults is a growing crisis. According to the FBI’s Internet Crime Complaint Center, Americans lost an estimated $12.5 billion to scams in 2023, and seniors are frequently the main targets. For families in New York, asset protection planning services provide a valuable shield for loved ones’ savings from the reach of scammers. By incorporating trusts and legal safeguards, New Yorkers can create barriers between their assets and potential threats.
Why Are Seniors Targeted by Scammers?
Older adults are often considered prime targets for scams because they tend to have more savings, and some may be less familiar with rapidly evolving digital technology. Additionally, social isolation and cognitive decline can increase the vulnerability of seniors to scams. Even fully competent older adults can be emotionally manipulated through romance scams, fake investments, and impostor schemes, as they seek companionship, purpose, or financial security. According to AARP and other studies, scammers exploit these needs by creating urgency, fear, or excitement to distract victims from rational decision-making.
Seniors can even be targeted by professional guardianship services who ostensibly are trying to help them. The movie I Care a Lot is a fictional portrayal of an unscrupulous guardianship company, but its premise is very real.
Asset Protection Planning to Protect Seniors from Financial Scams
Protecting assets is essential in today’s high-risk environment, especially for New York City seniors who may be more susceptible to fraud.
Asset protection planning can help by structuring finances in a way that makes it harder for fraudsters to access funds. Here are some effective methods available to New Yorkers:
1. Asset Protection with Revocable Living Trusts
While Revocable Living Trusts do not protect assets against a lawsuit, they can help protect assets from con artists and others who prey on the elderly. A Revocable Living Trust allows an elderly person to entrust management of assets in the trust to an adult child or other trusted individual by appointing them as a trustee or co-trustee. The trustee can, at the least, have visibility into spending patterns so that they can intervene if they see something going awry. A trustee can also be given the ability to veto expenditures. The trust can include provisions making it irrevocable if the senior becomes mentally incapacitated.
2. Irrevocable Trusts
An Irrevocable Trust can provide even stronger protection, since the person creating the trust doesn’t have the ability to revoke it and regain control. This can be a good idea if someone has been diagnosed with Alzheimer’s disease or dementia. This strategy can prevent scammers from draining funds that are intended for essential needs or future beneficiaries.
3. Spousal Trusts
Widows and widowers are prime targets for scammers. Any inheritance they’ve received from a late spouse can be vulnerable. By leaving assets intended for your spouse to a trust for them, you can protect those assets from a new romantic interest – whether real or imagined. Even if your spouse doesn’t voluntarily give the inherited assets to a new romantic partner, that new partner may stake a claim to the assets in a divorce or estate proceeding.
Leaving assets to a trust for your spouse ensures that those assets will be available for their needs and for your children in the future.
Building an Asset Protection Plan for Aging Loved Ones
When setting up an asset protection plan, a few key steps can help make your loved one’s finances more secure:
- Establish a Financial Power of Attorney: By assigning a trusted family member or friend as a financial power of attorney, you can help a loved one monitor their finances without removing their independence. However, it’s crucial to select someone who will prioritize their well-being.
- Open Communication About Financial Scams: Regularly discussing financial safety and the latest scam tactics can empower older adults to spot and avoid fraud. Providing resources, like those from the Federal Trade Commission, can be invaluable.
- Use Monitoring Alerts: Setting up alerts for unusual transactions on bank and credit accounts allows family members to catch suspicious activity early. Many financial institutions offer customizable alerts that can notify both the senior and a trusted person of irregular activity.
- Incorporate Legal and Financial Protections: Asset protection planning services in New York, NY, can help you implement tools to protect the family legacy.
Protecting Family Relationships and Finances
The heartbreak of elder scams, as seen in Alfred’s story, is often compounded by strained family relationships. By taking proactive steps in asset protection planning, families can help aging loved ones secure their finances while reducing the potential for scams to cause lasting damage to family ties. Protecting an older loved one from scams requires more than just educating them about potential threats. Through carefully planned asset protection strategies with an attorney at The Village Law Firm, New Yorkers can build a defense that supports both financial and emotional well-being. Book an Initial Call with our team to discuss how we can help keep your loved ones’ assets safe from financial scams.
