Financial Protection For Those Living With MS
Financial abuse is widespread and comes in every shape and color. While the Tabloids scream stories of the famous and wealthy that are abused, e.g., the Astor trial that has covered newspapers recently, anyone who is or could be viewed as a weak target is at risk. For those living with MS, an exacerbation, the advance of the disease, or merely the sometimes overwhelming demands of daily living, could make you a target. Yes, Virginia, it even happens in your nice circles, and even in good neighborhoods. How do you prevent financial abuse and protect yourself? Here’s a checklist of ideas, some free, none too pricey, some simple, some more complex. Hopefully, you’ll be able to pick the steps appropriate for you now, and add to them as needed in the future.
Acknowledge The Risk.
Unless you admit that you could be a target now or in the future, you won’t take the risks seriously and likely won’t protect yourself. This is step one for everyone. Even if your kids (niece, cousin, neighbor…) is too good to “do that”, temptation, especially if compounded by dire financial circumstances (like those afflicting many during the current recession), can push even “good” people to do bad stuff. Do you really know that family member/caretaker or your home health aide is more concerned about your financial well being than that of his or her financial gain?
Power of Attorney.
If you have MS and are age 18 or older, you must have a power of attorney. This is a legal document in which you appoint a person, called “agent”, to manage your financial, tax and legal affairs during an exacerbation or if you can no longer manage them for yourself. Your power should be “durable”, meaning it remains valid even if you become unable to manage your affairs. Many, if not most, powers permit the agent to make gifts. Gift language of various sorts is routinely included in many standard powers. Carefully weigh the benefits of permitting gifts versus the risks of temptation for the agent abusing the gift power. It might be best to expressly state that your agent has no authority to make gifts. Consider appointing co-agents and an independent “monitor” charged with providing some degree of oversight of your agent actions. These checks and balances are an important step to making a power of attorney protective rather than a tool for abuse.
One of the most protective steps you can take is to establish a funded revocable living trust with an institutional co-trustee. With a bank or trust company as co-trustee along with you, you will remain in control as long as feasible, and financially safe from abuse. Fund the trust – that means transfer most of your assets to the trust (other than IRAs, a professional practice, or certain other assets). This is more secure since the institutional co-trustee can help keep tabs on the assets held in the trust. Too many people erroneously assume naming a friend or family member as trustee is best. Often it is not. Be wary of standard (boilerplate) living trust forms. Most are overly simplistic documents designed to avoid probate that don’t really have the detailed provisions to protect you through a long term disability.You, and then several named successors should have the right to replace the bank/trust company with another bank or trust company. The best approach is to provide this power to an independent trust protector who cannot also serve as trustee.
The old saying “Keep it Simple and Stupid” should be a guiding principal to safeguard you financially. Consolidate assets to a few reputable and well known institutions. Yep, it sounds simple and costs nothing, but consolidating assets into one institution (or as few as feasible in light of reasonable concerns about financial institution viability and insurance limits) is one of the most powerful steps to avoid financial abuse. A secure public institution with adequate insurance is ideal. For those CD lovers, pick an institution that participates in the Certificate of Deposit Account Registry Service (“CDARS”) program. It allows investors to keep up to $50 million invested in CDs managed through one bank with full FDIC insurance, and under one agreement. Too many accounts and too complex a plan will make it harder to manage and update. If you have or develop cognitive issues, the simpler everything is, the easier for you to stay in control and avoid being abused financially.
Remember the Doublemint gum commercial. Double your pleasure and double your fun with duplicate copies of every monthly statement from each bank and brokerage firm being sent automatically to a trusted person (preferably not the agent under your power of attorney). If you have a long time independent CPA, that might be a great choice. The best and most cost effective arrangement, especially if you’re experiencing cognitive issues, is for a bookkeeper in your CPA's office to balance monthly statements and send out a periodic report. This assures that at least a bookkeeper at the CPAs office is reviewing everything. You might also name an adult child who is not your agent under your power of attorney (nor the current co-trustee under a revocable trust) to receive monthly statements. The consolidation, simplification, and independent review can minimize the temptation that agents and others in confidential and private relationships with you might feel. That creates real checks and balances.
Set up accounts for automatic bill payment from your checking account, payment of as many regular bills as possible automatically to your credit card, payment plans with utilities and others that equalize payments every month, etc. Anything that can simplify and create regularity can make aberrations due to theft, fraud or other abuse more obvious to spot. Anything on automatic payment will avoid your missing payments and will make budgeting simpler. You can determine what you receive each month (e.g., wages, interest, disability payments) and plan accordingly. Most importantly, if you have most bills and payments on automatic payment arrangements if you suffer an exacerbation you will have dramatically minimized the issues you, or someone helping you, will have to deal with.
Inspection and Oversight of Agents.
Include in your power of attorney (and revocable trust if you have one) a requirement for periodic mandatory reporting and reviews. This should include two types of oversight. One financial, such as discussed above with your CPA. The second should be a periodic interview by a social worker or independent organization with you, and a requirement that they report in writing to at least two fiduciaries. This can create another important check on personal, as well as financial security. You might not need this review now, you may never need it. But remember that once you put in place simple and protective procedures they will be functional when you do in fact need them.
Protect yourself. There are too many instances of people with infirmities being taken advantage of financially or physically abused. Michael Jackson and Anna Nicole Smith were abused by their medical providers. An inexpensive quarterly visit by a social worker might have preserved their lives. Brooke Astor appears to have been financially taken advantage of by her own son. Monthly reporting by a bookkeeper under the supervision of an independent CPA may have identified and avoid issues. If the famous and wealthy are at risk, think of how much more risk you might face. The protections are not that complicated or costly, but they do require you to be proactive. Be safe, not sorry. Hire professional advisers to guide you.
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