Dear Mr. Miller:
My Dad, mentally, is just not what he used to be. To the extreme! He has now lost over $100,000 to senior fraud. He received a call last month from a person who claimed to be an attorney in Canada. The person explained that my uncle was in jail for drunk driving and needed to make bail. The bail was $55,000. If my Dad could Western Union wire transfer that amount to him, the attorney would, by special arrangement with the judge, march my Dad down to the local Western Union shop to get the money so bail could be paid. If money were paid then the charges would be dropped. The month before, he gave away another $50,000 to a charity that showed up at the door.
My Dad knows this was wrong and agrees with me that something has to be done. But what? I can’t be with him 24/7 to prevent these financial disasters. Would a power of attorney help so I could protect each of his financial accounts?
What can we do?
Fraud Statistics: These types of fraud happen all the time. From fake medical insurance plans, tech support for password recovery, real estate scams, or free trial giveaways to obtain credit card information the approaches are only limited by the brain power of the bad guys. Although the amount involved with your Dad is well over the average, according to the FBI, in 2021 seniors lost almost $1.7 billion. The amount lost has been rising yearly and it is a growing problem. Here are the statistics.
Power of Attorney: There are a number of approaches. Each with their pros and cons. While I believe everyone should have a power of attorney, unfortunately, this device won’t help prevent fraud because it gives you both access to the funds in the accounts. Therefore, your Dad could still give away the money.
The following approaches will help. Obviously, many of them can be combined. From the least intrusive:
Fraud Protection Estate Planning: One service that we have begun to offer is for clients to retain us to review suspicious letters, calls, or online messages that the elderly parent received, and assist in setting up online monitoring and alerts. This approach actually helped my mother-in-law avoid a loss after she received a similar phone call to the one that you have described. She had the presence of mind to call me before she sent the Western Union money transfer to rescue her brother from a British Columbia jail. I called the perpetrator and had a long discussion with him, only disclosing that I was his potential victim’s (didn’t say it like that) son-in-law. In the light of day and in an environment of calmness, the story simply fell apart. I also requested my mother-in-law simply to call her brother and see if he was in Canada (after a bit of a delay in making contact, it turned out, he was not). So simply having someone to call to “talk it over with” and slow things down can be a life saver. Many seniors don’t feel comfortable in calling a family member as it makes them feel “stupid.” That’s where being able to call the attorney becomes helpful.
Place Accounts into Your Name: Your Dad could turn over all funds into your control at the Bank so that he has no control. You could then give him a stipend each month in a checking account, maybe with a debit card, of which he has total control. This would prevent any losses from being large. On the other hand, it would potentially place his funds in the middle of any lawsuits against you and, if you have any siblings (or if other people are involved who are supposed to inherit) interfere with them getting their inheritances.
Place Funds in Living Trust: Your Dad could place all of his funds in a Living Trust that he creates (with the help of his attorney). The Trust would name you as the Trustee (i.e. manager) so you would have total control. Your Dad could not withdraw from any of these accounts. Of course, he could simply revoke the trust or remove you as the Trustee and name himself. If he did that, then all control would be back to him and nothing would have been accomplished. I would suggest you not create this document yourself.
Place Funds in Irrevocable Trust: Your Dad could place all of his funds in an Irrevocable Trust (one that can’t be changed or can only be changed minimally) that he creates (with the help of his attorney). Again, this trust would name you as the Trustee. Since any powers/rights that he has over the Trust and the funds would be extremely limited (since it is irrevocable), this would accomplish the task. Of course, this is a somewhat complex and expensive option in terms of attorney fees. And I would caution you not to create this document yourself as doing so could cause various tax and other legal problems.
Conservatorship: You could go to court to have a conservatorship (i.e. guardianship) established for your Dad over his assets. Once the court appoints you, you would have total control over the assets and your Dad would have none. Again, this is a somewhat expensive option and the attorney fees generally continue as court appearances and reports are required periodically. Due to those requirements, a conservatorship is sometimes referred to as a Living Probate.
Call us: Of course, there are many in’s and out’s and pitfalls and potholes to each of these options. So call us at 760-436-8832 so we can discuss the options with both you and your Dad and create one that works for you two.