Monday, April 22, 2013

Elder Abuse: How to Spot it, What to do About it

Just typing the words "child abuse" makes me sick, and just plain mad. As I'm assuming it does for most. But what about "elder" abuse? Do you even know what it is?

We treat children specially because we have determined, as a society, that they are not responsible enough to be left alone, make their own decisions on important matters, or handle finances. Thankfully, the Texas Department of Family and Protective Services is there for the old folks too.

The department offers services for "any adult who has a disability or who is age 65 or older over that is in a state of abuse, neglect, or exploitation." Lets break this down into what this means, and how to look for it.

Scenario 1.
You have a (neighbor/friend/family member/parent hereafter "Papa") who is getting on in years and/or suffering from a disability. As a result, they require home health care. You have never really paid attention to Papa's finances, but have noticed that home health care attendant (hereafter "Anna Nicole") is coming around more often, and Papa is speaking about them more. You notice one day that Anna Nicole is driving a new, different car, and generally looks like she has new jewelry.

Then you ask Papa, and he tells you they are getting married.

What to do:

You can take a guardianship out on Papa to control his finances, but they are expensive. If he is competent, get a Power of Attorney over Papa. You likely just need to sit Papa down, tell Anna Nicole to get lost, and hope she hasn't done too much damage. Check Papa's bank accounts, insurance policies, and any brokerage or financial accounts, and see if Anna Nicole's name is there or if she has somehow become a beneficiary. Tell the police, but usually the best bet is to get Papa away from the damage and stop the bleeding. Also, report Anna Nicole to the Texas DFPS at 1 800 252 5400 so they will have her on record.

Scenario 2.

You have a (neighbor/friend/family member/parent hereafter "Nani") who lives alone and has no kids. Nani passes away, and leaves you, the favorite niece, in charge of the estate. You start going through Nani's finances and realize that something is amiss. You find in her personal papers, amongst her will, is a Power of Attorney naming someone you are not familiar with (hereafter, "John"). You do a little more digging and check the banking records, and realize that John has cleared out a significant amount of money from Nani's accounts. For a real life example, see here.

What to do:

Call the police. They prosecute this stuff. Hopefully you can try and get some of the money back, but you never know. The best way to fight it is prevention: talk with your elderly friends and make sure they have their estate and powers of attorney in order. You can't stop all fraud and exploitation, but you can prepare and try to limit the potential damage.


I try and bring levity to most topics, but elder abuse is not funny on any level. Often, the above scenarios are much worse, and physical abuse, threats, and emotional abuse are going on as well. The point is that abuse is abuse, and we all deserve a voice. There are resources out there to stop this terrible practice. Lets educate ourselves, know the warning signs, and do something about it.

Wednesday, April 3, 2013

Its all about Trust

Who can you trust?  What can you trust? Can you trust your assets to a Trust?

People hear the word "trust" and think lots of things. Trust me. Trust fund. Trust fund baby. Bank and trust. Trust account.

I have previously written on the perils of the probate avoidance "living trust" and how people get scammed into making one.

So I will not belabor that. What I will focus on is a growing problem of choosing your trustee.

Scenario 1.
You are your own Trustee.

Ok, you out smarted the system. Who needs to trust anyone except themselves? Well, the government has figured that one out. They look at someone who created a trust, for their own benefit, who named themself as a a nothing. You just put your wallet from your back pocket to the front, as you still have control. Your trust is pointless, and you probably were convinced you needed one by someone who didn't know what they were talking about.

Also, as an individual taxpayer, you have to earn $400k in 2013 dollars to hit the top, 39.6% tax rate. Got your business in a trust? You get there at $11,950.  That is a huge, huge tax hit, and that applies to all of these scenarios.

Scenario 2.
You pick a close family member as Trustee.

Ok, a little better. Don't pick a beneficiary, or their share loses any creditor protection like in scenario 1. Further, if you picked your wife/brother/son, what happens if they get mad at you? What if they get too busy? What if, they decide to invest all your assets in a great stock tip they heard, only to have it turn out to be a bust? Do you have any recourse? Are you going to sue your wife/son/brother? I didn't think so. Choose wisely here, and make sure they are not a beneficiary of the trust.

Scenario 3.
You pick a bank or institutional Trustee.

A pro trustee, banks are a safe bet. They are insured, know what they are doing, and have access to investment leverage and knowledge that most do not. However, they do not know your family (likely) and are not emotionally invested, so you might not be able to call them at midnight or on the weekend for an emergency. Also, they cost.


Picking a trustee, like picking an executor for your will, is a big decision. If you are in over your head and know a family member or friend would be too, then trust a professional. If it doesn't make financial sense to pay someone, then pick someone whom you trust, who has the time, and will do a good job. Finally, unless you have talked to a professional about the limited instances you should be trustee over your own trust, don't. Just don't.