By Ian Hoffman, CFP® 

Financial risks are everywhere. Unfortunately, many fraudsters have discovered that elderly people, especially those with considerable assets, are prime targets.

While some financial risks come from scammers, others can come from friends, family members, and other people you wouldn’t suspect. Let’s discuss some of the basics that can help safeguard your aging parents against significant financial risks.

What Financial Risks Do Aging Parents Face?

Staying informed about common financial risks can go a long way. Be aware of the following:

• Financial manipulation or exploitation by strangers, caregivers, family members, or friends
• Cognitive decline leading to illogical or poor financial decisions
• Scams and fake investment opportunities targeting seniors
• Lending money to family members and then forgetting about it

Discussing these potential problems with aging parents (and creating plans for if and when they occur) is a good place to start. For instance, if your parents get a call asking for money or telling them to invest, they might agree to contact you before moving any funds.

Your Legal Toolkit: POAs and Trusts

Discussing potential financial risks is part of the picture, but so is creating a plan designed to shield your parents and their assets. Two useful tools for doing so are a durable power of attorney (POA) and a revocable living trust.

Durable Power of Attorney 

A durable power of attorney nominates someone (called an agent or attorney-in-fact) to act on behalf of another person (called a principal). A POA can be a valuable resource in allowing a child to manage their parents’ finances, if the parents become incapacitated (or some other triggering event occurs). Notably, you must establish a POA before age-related cognitive decline sets in.

While a POA can take effect immediately, some families may choose “springing” POAs that only go into effect once a person is incapacitated. However, because a doctor generally must certify incompetence and that certification may be challenged in court, springing powers of attorney can sometimes lead to delays.

Revocable Living Trust

A revocable living trust can hold your parents’ assets to bypass probate. But there’s another potential advantage: if assets are in a trust, a trustee chosen by your parents can seamlessly step in and manage them in the event of incapacity.

Why Might You Need Both?

Powers of attorney and revocable living trusts are related, but they often cover different things:

• A trust would handle assets (e.g., homes, vehicles) titled in its name.
• A POA could handle everything else (e.g., bank accounts, taxes).

Having one of these things and not the other may leave gaps, so for many parents, it could be valuable to create both.

How to Coordinate Family Financial Planning Around an Aging Parent

You might already help your aging parents with financial planning. If you don’t, now is a good time to start.

Don’t wait for a crisis to happen before talking to older family members about financial risks. Consider leading with these agenda items:

• Storage places of key documents
• Account access information
• Healthcare directives
• A general estate plan overview

It may be wise to include a financial planner and an elder law attorney in this meeting. Professional advisors can help you come up with a personalized strategy intended to shield your parents from financial risks.

Need Help Addressing Financial Risks With Your Family?

Seeing your parents get older can be painful, and many adult children might not know how they can best offer support. When you take the time and make the effort to shield your aging parents from financial risks, you’re giving them a true gift.

At Thrive Wealth Management, LLC, we aim to support all of our clients and their families throughout their financial journeys. If you have questions about us and how we may be able to help, contact us online today. To schedule a meeting, call (215) 376-5530 or email ian@thrivewealth.com.

Frequently Asked Questions

What are some of the most common financial risks aging parents face?

Aging parents are often targeted by scams, fraudulent investment opportunities, and financial exploitation from both strangers and people they know. Cognitive decline can also lead to poor financial decisions, missed payments, or forgetting about loans made to family members. Staying aware of these risks is the first step in protecting against costly mistakes. If you’re looking for help identifying and proactively addressing these financial risks before they escalate, we at Thrive Wealth Management are here to help.

When should I start planning to protect my aging parents from financial risks?

Consider planning before any signs of cognitive decline appear. Establishing tools like a durable power of attorney and a revocable living trust early can help decisions to be made smoothly if needed later. Waiting too long could limit your options and create unnecessary stress during an already difficult time. Thrive Wealth Management’s goal is to put these safeguards in place early to help avoid reactive decisions down the road.

How can I talk to my parents about financial risks without causing tension?

We recommend starting the conversation from a place of support rather than control, and focusing on organization, clarity, and making things easier for everyone, not taking over. You might begin by asking where important documents are stored or offering to help review accounts together. Involving a financial advisor can also make the conversation feel more neutral and structured. Our Thrive Wealth Management team is able to guide these discussions and help families create a coordinated plan designed to safeguard both finances and relationships.

About Ian

Ian Hoffman, CFP®, is a Relationship Manager at Thrive Wealth Management who provides clear, holistic guidance to help clients stay grounded and on track with their long-term financial goals. Drawing on experience from The Vanguard Group and a background in psychology, he specializes in simplifying complex concepts to relieve financial worry and build lasting, fiduciary-based trust. Based in Blue Bell, Pennsylvania, Ian is a University of Pittsburgh alumnus who enjoys cycling and exploring Philadelphia with his wife and son.

Disclosure:

This material is provided for informational and educational purposes only, should not be viewed as an exhaustive discussion of the topics presented, and should not be construed as individualized advice for any reader’s personal circumstances. For guidance on how these matters may impact your financial plan or investment portfolio, please contact your Thrive Wealth Management, LLC representative. While the information presented is believed to be factual and up to date, Thrive Wealth Management, LLC does not guarantee its accuracy and, due to various factors, including but not limited to changing laws and regulations, this information is subject to change. All expressions of opinion reflect the judgment of the authors as of the date of publication.  Thrive Wealth Management, LLC is not a law firm or an accounting firm, and no content contained herein should be construed as legal or accounting advice. Please consult with the qualified professional(s) of your choosing for legal and accounting advice.

Please visit https://thrivewealth.com/disclosure for additional information regarding the professional designations and credentials discussed. Professional designations and credentials do not guarantee success or any particular investment or financial outcome.

Past performance does not guarantee future results. All investing comes with risk, including risk of loss.