As our parents age, many of us find ourselves stepping into new roles – offering support with doctors’ appointments, medications, caregiving, or financial management. With a variety of expenses related to living arrangements, health care, and long-term care, protecting our loved ones’ financial well-being becomes increasingly important as they age.
After years of hard work, many older adults have a portfolio of assets, including:
- Retirement accounts like IRAs, 401(k)s, or pensions
- Savings and checking accounts
- Primary residence and other real estate
- Investment portfolios like stocks, bonds, or mutual funds
- Vehicles like cars and boats (especially common in Florida)
- Valuable possessions like jewelry, art, antiques, or collectibles
- Life insurance policies
Planning ahead and being proactive are some of the best ways to protect your elderly parents’ hard-earned assets.
This guide will explore 8 effective strategies to protect your aging parents’ assets so they can enjoy their later years with peace of mind about their financial stability.
1. Consult an elder law attorney and financial planner
Enlisting an elder law attorney and a financial planner who specializes in elder affairs is one of the best first steps you can take in the journey of protecting your parents’ assets. Qualified elder law attorneys and financial planners can help with the following steps, as well as most of the other steps included in this guide:
- Sort out legal documents
- Set up trusts
- Plan for long-term care costs
- Create custom legal strategies
- Navigate Medicare and Medicaid
- Help avoid common pitfalls with taxes, probate, or guardianship
2. Get legal documents in order
One of the most important steps in protecting your senior loved ones’ assets is getting their legal documents in order. These documents allow you or another trusted person to manage their affairs if they become unable to. An elder law attorney can be invaluable in this process.
Some documents to have in place include:
- Durable power of attorney – Designates someone to manage finances and make financial decisions on behalf of the senior if they are unable to
- Health care power of attorney/health care surrogate – Designates a trusted individual to make healthcare decisions on behalf of the senior if they are unable to
- Living will – A type of advance directive that states the senior’s wishes for emergency and end-of-life care
- Will – Distributes the seniors’ assets to designated people (it is recommended to review the will every few years in case of changes in circumstances)
It is also advisable to locate and consolidate the following of your parents’ documents:
- Valid identification
- Birth certificate
- Social security card
- Marriage or divorce certificate
- Recent tax returns
- Passport
- List of banking and credit card information
- Property deeds
- Vehicle titles and registration
- List of medications
- Vaccination history
- Pension and/or retirement account information
- Savings bonds or stocks
- Documentation of loans
- Military discharge papers (if applicable)
3. Use trusts for asset protection
Certain trusts can help protect your loved ones’ assets from creditors or long-term care costs. Some trusts that can be beneficial for asset protection include:
- Revocable living trust – A trust created while the grantor (the senior) is alive, and can be altered or revoked at any time. A revocable trust allows for a smooth transfer of assets after death without probate.
- Irrevocable living trust – A trust that cannot be changed after it is set up without court approval or all beneficiaries’ consent. Assets placed in an irrevocable living trust are no longer considered the senior’s property. This can be useful for Medicaid and long-term care planning.
- Medicaid Asset Protection Trust (MAPT) – A type of irrevocable trust that helps seniors qualify for Medicaid without spending down all assets like homes, savings, or life insurance. You must set up a MAPT at least 5 years in advance due to Medicaid’s look-back period.
A qualified elder law attorney can help you determine which trust would be best for your personal circumstances.
4. Review and update beneficiaries
It is important to review your accounts and verify that they have up-to-date beneficiaries; otherwise, your assets may end up going to a deceased family member, ex-spouse, or someone who you never intended to include in your will. Some accounts to review periodically for accurate beneficiaries include:
- Life insurance
- Retirement accounts
- Bank accounts
- Any other relevant accounts
It is also wise to consider Transfer on Death (TOD) or Payable on Death (POD) designations to allow a smooth transfer of funds without probate. A financial planner can help you decide if these designations make sense for your situation.
5. Check for fraud and scams
Unfortunately, seniors are prime targets for fraud and scams – especially online. Phishing scams, technology scams, overpayment scams, and government official scams are just some examples of common scams targeting seniors.
Some ways you can help your elderly loved ones stay safe against fraud and scams are as follows:
- Help monitor their accounts regularly for suspicious activity
- Add extra layers of security, like 2-factor authentication, to their accounts
- Set up fraud alerts on bank accounts
- Teach them about identifying scams and not sharing personal information on the internet or over the phone
- Consider consolidating their bank accounts to simplify monitoring and management
- Consider freezing their credit (if they are not in need of new credit) to protect them from identity theft and fraud. This is free to do with the credit agencies Equifax, Experian, and TransUnion.
Click here for more information on common senior scams and ways to avoid online fraud.
6. Plan for long-term care costs
Quality long-term care is an investment and usually requires advanced planning to ensure you are making the best financial decisions possible. Some long-term care options include:
- Assisted living communities
- Skilled nursing facilities
- Independent living communities
- Memory care facilities
- Adult day care centers
- Home health care
Some ways to help your parents start planning for long-term care costs are as follows:
- Explore long-term care insurance options as early as possible.
- Start thinking about your options for paying for senior living, including selling real estate, renting your properties, taking out a reverse mortgage, or using savings and retirement funds.
- Get help with Medicare and Medicaid planning from a professional (Senior Consulting Advisors can help connect you with the best Medicare advisors in your area).
- Set up Veterans Aid and Attendance benefits if applicable
7. Consider a life estate or property transfer
For seniors who own property, it can be wise to consider a life estate or property transfer.
A life estate is a legal arrangement in which your parent maintains the right to keep and live in their home for the entirety of their life. After death, ownership of the property automatically transfers to a pre-selected beneficiary without going through probate. As an added benefit, if completed properly at least 5 years before applying for Medicaid, the property cannot be counted as a recoverable asset.
Similarly, with a property transfer – also known as a deed transfer – the senior can transfer full ownership of the property to their child early, but doing so can have tax and Medicaid implications. That is why it is recommended to enlist an elder care attorney to help you make the best decisions for your situation.
8. Enlist a senior living advisor
When emotions become high and decision-making feels overwhelming, one of the best things you can do to help your parents is to enlist the help of a senior living advisor. These professionals can recommend the best senior living or senior care arrangements based on your budget, and they can even negotiate the best rates at various communities.
Additionally, most senior advisors, including the experts at Senior Consulting Advisors in Florida and South Carolina, do not charge you or your parents anything for their services, as they get paid by communities instead. That means they are completely at your service to help you make the best decisions for your budget and your situation.
Conclusion
By taking steps to protect your elderly parents’ assets, you are also helping to preserve their independence, dignity, and peace of mind.
It may feel like an overwhelming process at first, but starting early and seeking help from professionals can make an enormous difference in your parents’ financial well-being.
Need assistance finding a trusted elder law attorney or financial planner in your area? Senior Consulting Advisors can help. We are connected to all the best professionals and can set up a referral for you today.
Not only that, but we can help you find the best long-term care option for your financial situation, whether it be senior living or aging in place.
Give us a call at (800) 969-7176 or visit SeniorConsultingAdvisor.com to discuss your situation with our local experts and get free guidance on your next best step.
