How to Manage the Cost of Long-Term Care

A single woman has seen her annual premiums for long-term care rise by more than 60% over the last six years. Her cost in 2018 was $2,721, up from $1,626 in 2013. Despite the increase in cost, she’s keeping her policy, reports CNBC in the article “Long-term care insurance costs are way up. How advisors can help clients cope”

For her, the price she is paying is worth the cost. But even when someone believes that it’s worth it to pay the higher amounts for the benefits of insurance, these types of increases can take older individuals off guard, especially if they are living on a fixed income.

Last year, Genworth Financial received 120 approvals by state regulators to increase premiums on their long-term care insurance business. The weighted average rate increase was 45%. General Electric said earlier this year that it expects to raise premiums on its LTC policies by $1.7 billion in the next ten years. Insurers hold between $160 to $180 billion in LTC reserves, covering 6 to 7 million people, according to estimates from Fitch Ratings.

Eldercare services have also become increasingly expensive. The annual national median cost of a private room in a nursing home was $100,375 in 2018, according to Genworth Financial. The annual national median cost of a single home health care aide was $50,336 in 2018.

Insurers entering the business in the 1990s and early 2000s didn’t anticipate that so many policyholders would continue to pay their premiums and eventually file claims. Fewer than 1% of policyholders have let their policies lapse, and this caught many companies off guard.

Low-interest rates have also hurt overall profitability for the insurance companies.

About 40% of the bonds held in insurance companies’ general accounts had a maturity of more than 20 years at purchase, said the American Council of Life Insurers.

There are a few ways to tweak benefits to keep premiums more affordable while continuing to have this essential coverage.

Daily Benefit. Policies sold in 2015 had an average daily benefit of $259. Paring down the daily benefit could keep premiums down.

Benefit Period. Insurance contracts sold in the 1990s and early 2000 could payout for the remainder of a client’s life. Reducing that period to five or ten years could make premiums lower.

Inflation Protection. Inflation riders help stay ahead of the rising cost of care. For older policyholders, this might reduce the inflation protection.

Waiting Period. Most policies have a waiting period before benefits will be received. Adjusting this period of time might reduce benefits.

Policyholders are advised to speak with the insurance company directly, instead of relying on the premium increase notices. This may reveal more options that can be used to reduce the premiums, without sacrificing too much in the way of coverage.

Reference: CNBC (September 8, 2019) “Long-term care insurance costs are way up. How advisors can help clients cope”

Handling Your Aging Loved One’s Finances

Sometimes a loved one starts having trouble managing their money because of confusion, cognitive decline, Alzheimer’s disease, or some other form of dementia. When that happens, you might find yourself having to serve as their money manager. Here are some things you need to know about handling your aging loved one’s finances.

Changes to Make Now

Time is of the essence because your loved one must be cognitively able, or in legal terms, have “capacity”, to take the steps needed to have someone else help. In other words, they must understand that they are letting someone else take control of their finances. Things that require capacity include adding a trusted friend or relative to a bank account or creating a power of attorney the money manager can use to handle their financial matters. Once your aging loved one becomes incapacitated, they will not be able to hand the reins over to someone else.

At that point, the only option is to go to court and obtain a guardianship or conservatorship. These processes can take months or longer, and they often cost thousands of dollars in legal fees for the lawyer who files and handles the conservatorship, court costs, and payment to the person the court appoints to represent your loved one.

People often challenge changes that a person makes when in the early stages of Alzheimer’s or after a certain age. The way to counter this situation is to get a letter from your loved one’s doctor at the same time your relative signed the power of attorney or made the joint account. The doctor’s letter should say your relative was of sound mind at that time.

How to Avoid Elder Financial Abuse

Sadly, the vast majority of people who steal from older adults are the people they trust the most. Family members, friends, clergy, and financial professionals commit the lion’s share of elder financial abuse. To prevent this outcome for your loved one, you have two options:

  • Have two people in charge of your loved one’s finances instead of only one. The two people can alternate the responsibility monthly or quarterly. This arrangement provides automatic oversight of each person’s actions. You could, for example, have a close relative and a dear friend serve as the two money managers.
  • Use a money management service. These companies can take care of things like paying the bills and balancing the checkbook for your aging relative. You should have a relative or friend go over the reports from the company every month, to check for fraud on the part of the company. Your local National Association of Area Agencies on Aging can provide names of money management programs in your area.

When a money manager starts handling your loved one’s finances, they should prevent identity theft and fraud by canceling and shredding your relative’s debit cards and credit cards. They should also close the accounts at online shopping services, such as PayPal or Venmo.

Keep All Transactions Above Suspicion

Because incapacitated people are so vulnerable to theft and fraud, the people who manage your loved one’s money and other assets should take precautionary measures to make it clear they are acting in your relative’s best interests. Always write the reason for the payment on the memo line of the check. Never commingle funds. Do not borrow from the account. Do not use your loved one’s assets for purchases that benefit anyone other than your relative. Do not use their assets for your own benefit, like driving their car to work.

Every state has different regulations, and this article covers the general law. You should talk to an elder law attorney near you to understand how the laws in your state apply to your specific relative.

References: AARP. “Managing a Loved One’s Money.” (accessed July 11, 2019) https://www.aarp.org/caregiving/financial-legal/info-2017/managing-someone-elses-money.html?intcmp=AE-CAR-LEG-EOA1

Did Groucho Marx Have Estate Planning and Elder Care Problems?

Julius Henry Marx, better known as Groucho, died 42 years ago on Aug. 19, 1977, at age 86. Groucho teamed with three of his four brothers—Harpo, Chico, and Zeppo—to become stars of vaudeville, Broadway, film, radio and television. (A fifth brother, Gummo, wasn’t part of the act).

PBS News Hours’ recent article, “How Groucho Marx fell prey to elder abuse” reports that the legal battles over Groucho’s money and possessions went on long after he died. The unrest of his last few years is familiar to adult children concerned with the well-being of their elderly parents.

Groucho’s relationships with his son Arthur and daughter Miriam (children from his first marriage) were also strained for various reasons. To add flame to the fire, Arthur wrote several books based on life in the Marx family, and Groucho threatened litigation over his portrayal in one of Arthur’s memoirs.

In the last few years of his life, Groucho had a companion, Erin Fleming, who was accused of elder abuse. Fleming was Groucho’s secretary-manager and was responsible for his popular comeback in the early 1970s. Fleming successfully campaigned for the Marx Brothers to receive a special Academy Award in 1974. In his acceptance speech, Groucho thanked “Erin Fleming, who makes my life worth living and who understands all my jokes.” However, some of Groucho’s friends thought that Fleming was pushing him too hard to perform, given his age and memory loss.

In 1974, Fleming was appointed his guardian and temporary conservator of an estate worth an estimated $2-$4 million. In 1975, Groucho even tried to adopt her, until a psychologist said he was not mentally competent.

Arthur Marx, Groucho’s son, sued Fleming for having a harmful and destructive influence on his father, including threatening his well-being and being abusive. He also claimed that she pushed Groucho to perform, against his best interest, for her own financial gain. In Groucho’s final days, a judge appointed the 72-year-old Nat Perrin, a close pal of Groucho’s and co-writer of the Marx Brothers’ 1933 film, “Duck Soup,” as temporary conservator of Groucho’s well-being and estate. Later, his grandson, Andrew, was named permanent conservator.

Even after he died, litigation concerning Groucho’s estate went on into the early 1980s. Groucho left most of his estate to his children but gave control of his name, image and movie rights to Fleming—an issue of dispute that led to substantial legal battles.

The court found in favor of Groucho’s children and ordered Fleming to pay $472,000, which she bilked from Groucho’s bank accounts, while she worked for him. Fleming committed suicide in 2003 at the age of 61.

In the 1970s, the term “elder abuse” had not been used, even though it existed. Today, elder abuse is a growing problem. There’s a long list of harmful activities, including physical, sexual, emotional, and psychological forms of abuse and neglect, as well as the theft or withholding of financial assets needed to live.

In identifying when elder abuse may be happening, it is important to keep in mind that some elders may be more susceptible than others due to risk factors. These include functional dependence or disability, poor physical health, cognitive impairment and dementia, low income, financial dependence, race or ethnicity, gender, and age.

Perpetrators also have their own set of risk factors, which include mental illness, substance abuse, relationship status (spouse/partners are often the most common perpetrators of emotional and physical elder abuse), and the abuser’s potential dependency on their victims for emotional support, financial help, housing and other forms of assistance.

Get some expert legal and medical advice on estate planning and the creation of a living will so that your wishes are known, and you and your estate are protected properly.

Reference: PBS News Hour (August 19, 2019) “How Groucho Marx fell prey to elder abuse” 

Who Can You Really Trust for Your Financial Accounts?

Dramatically increased instances of elder financial abuse are behind a new question asked of seniors by their advisors these days: do you want to name a trusted contact on your account?

The financial industry’s regulatory authority now requires that member firms make an effort to have clients name a trusted contact person. It is not required that they do so, says Hometown Life in the article “Use a trusted contact to protect seniors from financial abuse,” but the question must be asked.

The older you are, the more seriously you should consider taking this step.

Let’s start by defining what a trusted contact is, and equally important, what a trusted contact is not. A trusted contact is not someone who can access or make financial decisions on your behalf. That is a person who has been named a Power of Attorney or POA. A trusted contact is a person that your financial advisor, brokerage house, or the financial company that holds your accounts can contact if they see signs that indicate that you are being financially exploited.

The trusted contact can also be a person who can confirm your mental or physical health status, a legal guardian, trustee, or your POA. Unless the trusted contact person is also the POA, the trusted contact person cannot see your account information or make trades for you.

Typically, people name a family member. However, research has sadly shown that family members are actually the ones most likely to be the abusers. Naming a trusted contact may call for you to think out of the box and consider someone who is not a family member. A trusted professional or a dear friend, preferably one who is younger than you, may be the best person for this task. You can also select two trusted contacts.

This is not a perfect solution to financial elder abuse. However, it is one more layer of protection. There is no 100% solution to a problem that affects seniors in every social and economic class. Nevertheless, naming a trusted contact is something that can be done to reduce the risk and is worth doing.

Other safeguards include having an estate plan, including a will, power of attorney, health care power of attorney and trusts. Your estate planning attorney will be able to explain the many different types of trusts and how they can be used to ensure that you remain in control of your assets while protecting you from financial abuse.

Reference: Hometown Life ( August 15, 2019) “Use a trusted contact to protect seniors from financial abuse”

Grandparents Lose Millions to People Pretending to Be Their Grandchild

Con artists steal an average of $9,000 per person from older victims, by convincing the seniors that their grandchildren are in a crisis. These imposters stole over $41 million from Americans in 2018. If you learn how grandparents lose millions to people pretending to be their grandkids, you can avoid becoming a victim of this scam and help others avoid this fate as well.

The losses from this scam are skyrocketing. In 2017, $26 million of losses were reported, with one out of 14 people age 70 and older reporting that they paid money to the fraudsters. However, in 2018, one out of every four of the people in this group reported having handed money over to the con artists. The grandchild impostor scam is getting much worse. We need to get the message out to prevent future financial abuses of seniors.

The scam usually starts with a telephone call to the grandparent. Here are some of the common tactics the fraudsters use to steal from grandparents:

  • The caller pretends to be injured and fakes uncontrolled sobbing to disguise the caller’s voice. Most grandparents would recognize the voice of a grandchild, so the pretend crying masks the difference in the caller’s voice and that of the grandchild.
  • The caller pretends to be a friend of a grandchild and says they have been arrested or are in some other form of legal trouble and cannot call for themselves. The con artist says the grandchild went on a quick trip to another country and got into trouble there. This tactic makes it less likely the grandparent will travel to where the grandchild supposedly is, to render help in person. About half of the incidents that result in grandparents sending cash payments involve a claim of legal trouble.
  • The con artist claims the grandchild was in a car accident and needs money for the hospital or doctor. Sometimes the crook will claim the grandchild was at least partly at fault or had been drinking, to motivate the grandparent to keep the matter private.
  • The crook says the grandchild told him the grandparent is the only person who can help or the only one whom the grandchild trusts. Another common allegation is the grandchild is embarrassed about the situation and does not want anyone to know. The purpose of these claims is to decrease the likelihood the grandparent will check with any other relatives to see if the story is true.
  • The scammer provides some personal information about you or your family in an attempt to verify the call is legitimate. You cannot trust this information, because the con artist probably got the details about you and your family from social media postings.

What to Do If You Get a Family or Friend Emergency Phone Call

Security experts say if you get a phone call like this, it is almost certainly a scam. You should pause and think before acting. Write down the information from the caller, but do not provide any of your information over the telephone. Absolutely do not provide your address, date of birth, credit card number, bank account information or any other personal data.

Contact family members to verify whether the grandchild is indeed traveling or has gotten into trouble with the law. If you suspect the call was a scam, you should report it to the Federal Trade Commission.

References: AARP. “Family Emergency Scams Cost Victims $41M.” (accessed August 1, 2019) https://www.aarp.org/money/scams-fraud/info-2018/cash-grandparent.html 

Cybercrime Causes Billions of Dollars of Losses

On an average day, the FBI receives nearly 1,000 complaints of internet crimes. The FBI says that cybercrime is up by 91 percent over the last several years, and people over the age of 60 are frequently the targets of these rip-offs. Internet crimes increased by 17 percent in 2018 alone.

During that year, cybercrimes cost Americans over $2.7 billion. Imagine what positive things that money could have done in the pockets of seniors, instead of in the hands of the crooks. You could buy a lot of groceries, pay utility bills and purchase needed medications with that much money. With billions lost to cybercrime, seniors need to understand the magnitude of this growing criminal enterprise.

Types of Cybercrime

There is almost no limit to the ways con artists can take other people’s money online. Here are but a few examples of cybercrime:

  • Goods and services. This category includes when people pay for products or services online but never receive the items, or when people ship things to people who do not pay for them. More than 65,000 people filed complaints with the FBI for this type of theft in 2018.
  • More than 50,000 people were victims of extortion. A common tactic is that a virus gets into your computer. The crook threatens to destroy all the data on your computer, if you do not pay a ransom. Even after some people pay the ransom, their data gets erased.
  • Personal data breaches. More than 50,000 Americans had their personal data stolen. A common way this crime happens is that you enter your name, address, and credit card information into a form on a website to purchase something, only to find out later that the website was not a legitimate business. The crooks now have all the information they need to buy things using your credit card.
  • Compromised business email addresses accounted for nearly half of the total dollar value of cybercrime losses. When a crook hijacks your company’s email address, it can perpetrate frauds and tarnish your business reputation. The con artist sends out fake emails in the name of a high-level executive directing people to wire money to the crook, who is masquerading as the company official.
  • Investment scams cost Americans more than a quarter of a billion dollars.
  • People lost more than $360 million in confidence or romance frauds.

How Internet Crooks Find You

You do not have to use a computer to get ripped off by these crooks. Your cell phone, tablet, notebook, or any other internet-connected device can give thieves an open door to scam you.

What an Internet Crime Victim Should Do

You must act immediately when you suspect that someone has committed cybercrime against you or a loved one. Think of internet crime as an injury that causes massive bleeding. You have to stop the bleeding right away.

Contact your bank and credit cards at once. You should also put a fraud alert on your credit report to prevent the crooks from using your personal information to set up new accounts. Report the crime to the FBI’s Internet Crimes Complaint Center (IC3). The FBI recently created a Domestic Recovery Asset Team as part of the IC3, to get money back for fraud victims. The FBI was able to recover around 75 percent of the money stolen from cybercrime victims in 2018.

References:

AARP. “Cybercrimes cost Americans $2.7 Billion in 2018.” (accessed May 15, 2019)

https://www.aarp.org/money/scams-fraud/info-2019/fbi-cybercrimes-increase.html

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Elder Abuse Charges Brought Against Stan Lee’s Former Manager

District Attorney of Los Angeles County Jackie Lacey has leveled elder abuse charges against Stan Lee’s former business manager, Keya Morgan.

MSN’s recent article, “Stan Lee’s Ex-Manager Hit With Elder Abuse Charges; Arrest Warrant Issued” reports that Morgan is facing one felony count of false imprisonment of an elder adult, three felony counts of theft, embezzlement, and forgery or fraud against an elder adult, as well as the initial elder abuse misdemeanor count.

Morgan took control of Lee’s business affairs and personal life in February 2018. Lee, the creator of Spiderman, the Black Panther, and other comic book heroes, had assets of more than $50 million in the last years of his life. Lee passed away on November 12, 2018. Morgan is said to have isolated his client from family and friends. Morgan also embezzled or misappropriated $5 million of assets, according to documents filed in Los Angeles Superior Court in 2018.

The five counts of elder abuse filed on May 10 could put Morgan in prison for 10 years, if he’s found guilty.

The public first learned of the troublesome relationship between Morgan and Lee last summer, when the then 95-year old Marvel comic book legend sought a restraining order against his ex-aide over elder abuse. The request was made just three days after Lee put out a June 10, 2018 video on social media insisting that he and Morgan were working “together and are conquering the world side-by-side.”

Because of the video and the elder abuse filing, Lee’s financial advisor was arrested by the Los Angeles Police Department on suspicion of filing a false police report, allegedly concerning a supposed break-in incident at Lee’s residence.

A three-year restraining order against Morgan was granted by a county judge last August. He was found guilty of the false police report misdemeanor charge in April 2019 and was ordered to stay away from Lee’s family and residence among other conditions.

After years of making cameos in all the Marvel blockbuster movies, Lee’s last appearance was in the record smashing Avengers: Endgame, which was released last month.

Reference: MSN (May 15, 2019) “Stan Lee’s Ex-Manager Hit With Elder Abuse Charges; Arrest Warrant Issued”

Kids Going to the Mom and Dad ATM One Time Too Many?

Parenting is supposed to be a process of teaching children how to be self-sufficient. However, it’s not always easy to go from being dependent on parents to being independent. If you think you’re still doing too much, says Newsday, you need to ask “Good to Know: Are your grown-up children taking advantage of you?”

Plenty of parents don’t know what to do when they are asked too many times for too many financial favors and being treated as a “Mom and Dad ATM.” They may feel pressured to agree, worried that they may see their grandchildren or their children less, if they say no. That’s a bad reason for generosity. If the parent is asked to co-sign for a large purchase, like a home or a car, they need to put the brakes on and discuss this thoroughly with their child. It may also be a good idea to speak with an estate planning attorney, for an objective viewpoint.

There needs to be recognition of the child’s creditworthiness. Have they borrowed money from their parents or other family members and failed to pay it back completely, or made only partial payments, and only after being reminded repeatedly? Don’t expect behavior to change. Parents facing this example also need to discuss this between themselves. They should only “lend” money that they can afford to lose.

If the child has been turned down for credit through regular financial channels and the bank of Mom and Dad is the only option, find out why. Ask them for a credit report and be transparent about your concerns. Can you afford to pick up the mortgage payments, if the child fails to make them? What about car loan payments?

Taking advantage of parents can extend past money. Some families welcome their grandchildren with open arms for unlimited times. However, if you find yourself babysitting on weekends and several week nights during the week (and you don’t want to), it’s time for a discussion. For one family, whose son was interested in spending time with a new fiancé more than with his two toddlers, the situation went on for nearly a year, until the parents gathered the courage to speak up.

They added up all the time they were spending each week taking care of the children. It turned out that they were watching the children for fifteen hours or more each week. This was discussed calmly. They then made it clear that they were happy to continue caring for the children, but for a far more reasonable period of time.

If you feel that your children are taking advantage of you, you’ll need to have a discussion in a calm and reasonable manner. If there are financial matters that are spinning out of control, speak with your estate planning attorney about how to create a plan to stop the flow of money. Elder financial abuse sometimes begins as a “favor.” However, it can escalate, if it is allowed to grow unchecked.

Reference: Newsday (April 14, 2019) “Good to Know: Are your grown-up children taking advantage of you?”

Stolen Social Security Scam Reaches Epic Proportions

The volume of calls being made by scammers and the sheer audacity of their demands, seems to have reached record highs. This past December, the Federal Trade Commission issued a warning about the Social Security scam, noting that they have received more than 35,000 complaints. The calls keep coming in, as reported by AARP Bulletin in the article “How Social Security Scammers Tried to Swindle a Fraud Expert.”

The typical scam starts with a robocall that says that an enforcement action has been executed by the U.S. Treasury against your Social Security number, and that ignoring this would be an intentional attempt to avoid appearances before a judge for a federal criminal offense. The tone is very serious, and it’s a convincing script. A phone number is provided so that people can call someone to help avoid being arrested.

One security expert put the scammers through their paces, calling the number and going through the process, with false names and account information, to learn first-hand how the scam operates.

The sophistication and calm demeanor of the scammer works well. The security pro gave a fake name, and his “file” was found immediately on the scammer’s system. He also provided a fake address and a fake Society Security number. Somehow the scammer confirmed all this information.

The scammer told the security expert that law enforcement agencies had found fraudulent bank accounts and crimes including money laundering, drug trafficking, and IRS scams linked to them. The expert was asked to confirm ownership of the 25 bank accounts, with a stern question: “Do you own these accounts, yes or no?”

The question is meant to cause fear and confusion. It works. When the security expert pretended to be flustered by the question, the scammer’s tone became helpful and kindly. He just needed to know exactly how much money his victim had and the numbers for the bank accounts. In that way, he would be able to help identify which of the accounts were real, and which were fake.

Once the supposed victim gave phony account numbers and told the scammer he had more than $85,000 in one of his bank accounts, the tone changed to attack mode. They told the security expert how many crimes there had been and how many federal counts there were against him. The possibility of 30 years of prison time was emphasized. There was another stern question, asking “Do you accept all of these allegations under your name?” The tactic makes an unsophisticated or frightened person feel, as if they are being scolded by an authority figure.  It works many times.

The social security scammer’s tone then shifts to that of a kindly friend, offering an opportunity to make things right. Part of that is the request for the caller to give the scammer the phone number for Social Security and the authority for the scammer to “clear his name.” The scammer even told his alleged victim that there are a lot of scams out there, and he didn’t want him to be a victim!

The alleged victim was told to go to the bank, withdraw all his money, and convert it to “government-certified bonds.” This was followed by a discussion of “government-certified stores” like Apple, Walmart, Target, CVS, as the source for gift cards. The “bonds” would never leave the victims hands. He just had to give the scammer the serial numbers on the cards, so they could “update your file.”

That’s where the money goes. The balances on the cards are transferred by number to the scammer’s accounts. The victim goes to the bank to “deposit” the cards, as they have been directed to do by the scammer, only to learn that they are worthless.

At this point, the security expert hung up, only to be called back more than a dozen times. He had learned what he needed to know, and now you do too.

When a robocall comes in, hang up. The government never demands payment in gift cards. If there was a warrant out for your arrest, there would be a police officer or federal marshal at your door, not on the phone. Unfortunately, many people, particularly seniors, do fall prey to this social security scam and many other scams. This is why they continue. Be on guard, because even smart people are taken by these Social Security scam artists.

Reference: AARP Bulletin (March 22, 2019) “How Social Security Scammers Tried to Swindle a Fraud Expert.”