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Tips for Protecting Older Adults Against Scams
Patricia Bloom-McDonald • Sep 06, 2018

Unfortunately, the population that seems to be most at risk and most targeted by financial scams is older adults. In fact, an article in Reuters , citing the American Journal of Public Health, estimates that around 5.4 percent of older adults experience fraud or scams every year, meaning that millions of older adults are victims of scams.

Whether you’re an older adult yourself or the child or caretaker of an older person, here are some tips you need to know about protecting against scams–

  1. Be Aware that Scams Exist

Perhaps the first step in protecting yourself or an older loved one against fraud is to be aware that scams exist. As such, you should be critical of deals, offers, and requests for money (even if you believe that they’re coming from someone you know). Being skeptical and apprehensive about any financial maneuvers may sound cynical, but it is one of the most important things that you can do to protect yourself.

  1. Watch Out for Key Signs of Fraud

Not only should you question any requests or offers that involve money, you should also be on the lookout for some key signs of fraud. The AARP Foundation lists three major warning signs that serve as red flags for older adults:

  1. You are contacted randomly with an offer for free money or fast cash. Things like lottery winnings, fast cash to work at home offers, guaranteed returns on investments, and more are often scams. If you are contacted by a random person and they are promising fast cash or what amounts to “free” money, do not buy in !
  2. You are pressured to act quickly. Another sign of a scam to be on the lookout for is pressure from the seller to act quickly. If the offer contains the words “limited time offer!” or “act now” with a warning that if you don’t, you’ll miss out, be very skeptical .
  3. The offer seems too good to be true. Finally, if an offer seems too good to be true, it probably is not true! Real and legitimate offers almost never contain freebies and large giveaways, whereas scam artists are super skilled at making people–especially older adults–believe that they are making and getting a great deal.

3.  Always Double-check

Finally, the third tip to remember is that you should always double-check and verify any offers or requests that involve your finances .

For example, one scam that has targeted older adults involves a scammer calling an older person, pretending to be their grandchild, and requesting money to help them get out of an unfortunate situation. If you get a call like this, be sure to double-check the situation before you help! You should call other members of the family to verify the grandchild’s story before giving money.

The same is true for any other online or over-the-phone offers. ALWAYS ask for the details in writing and then ask for a trusted loved one or friend to review it for you first. There is no harm in double-checking offers and requests, and doing so could protect you against fraud.

Call Patricia Bloom-McDonald, Attorney at Law for Elder Law Questions

If you have questions about elder law and related matters, including creating an estate plan, and want to make sure that what you’re doing is legitimate and protects your best interests, you should work with a qualified elder law lawyer. For a consultation with a Massachusetts elder law attorney , call Patricia Bloom-McDonald, Attorney at Law, directly today or send her a message at your convenience. She will work hard for you!

The post Tips for Protecting Older Adults Against Scams appeared first on .

Using a Credit Card When You Have a Special Needs Trust

25 May, 2023
A special needs trust (SNT) allows you to meet your needs while receiving government benefits, such as Medicaid/MassHealth and Supplemental Security Income (SSI). When you have a special needs trust, you can use it to pay for goods and services government benefits do not cover, such as therapy, education,and housing. Since receiving income directly from your trust would jeopardize your eligibility for benefits, your trustee cannot give you cash from your SNT. When you use a credit card for permitted transactions, and your trustee pays off the balance with funds from your trust, these payments to a credit card company are not considered income. An SSI or Medicaid/MassHealth recipient who is capable of managing their own affairs can therefore use a credit card to make small purchases, and the trustee of the special needs trust need not micromanage every transaction. In the past, beneficiaries of SNTs sent their bills to their trustees for payment. Today, an individual with an SNT who qualifies for a personal credit card may find that using a credit card is more convenient. Credit cards have several benefits. Using a credit card to manage payments from your special needs trust allows you to maintain independence, gain access to some of the advantages of a credit card, and easily keep records while preserving your eligibility for Medicaid/MassHealth and SSI. Although credit cards can help people manage their special needs trusts, there are also several important restrictions and considerations to keep in mind. Consult with a special needs planner to ensure all transactions are acceptable under the trust's rules and comply with government regulations. The Benefits of Using Credit Cards When You Have a Special Needs Trust If you have a special needs trust, using a credit card has many benefits, including: Independence : Allowing you to maintain your independence. You can use your card to make qualifying purchases yourself. Your trustee does not have to make the transactions for you. Access to the Typical Advantages of a Credit Card : Using it responsibly can help you establish or build credit history, which may be important for your future financial needs. Record-Keeping : Credit cards provide easy record-keeping and a convenient way to monitor transactions from your special needs trust, which can also help special needs trustees fulfill their duty to maintain records. When you use your card, your trustee can observe your purchases and ensure that all expenses are allowable under the trust’s rules. Your statements can help your trustee keep track of funds leaving the trust. Benefits Eligibility : While adhering to Medicaid/MassHealth and SSI’s income and asset limits, you can access funds from your SNT. Credit cards can help prevent your trustee from accidentally providing you with cash payments that could affect your eligibility for government benefits. Considerations When Using a Credit Card for Your Special Needs Trust While you can use a credit card to access funds from your special needs trust for certain transactions , restrictions apply. If your trustee sees a charge on your card that could affect your benefits eligibility , they can flag it for review. You cannot use your credit card to pay for food and shelter, which SSI would cover. When administering your funds, your trustee must ensure that any expenditures are for your sole benefit if you have a first-party special needs trust. While using a credit card is appropriate, you should not use a debit card. Debit cards are considered cash income. Best Practices When using a credit card for a special needs trust fund, remember several best practices. Choose a card with low fees and interest rates. Set a clear budget and monitor transactions regularly. Keep thorough records and receipts of expenses. Consult with your special needs planning attorney. A special needs planning attorney can help you navigate the rules that apply to your trust and understand how to use a credit card to preserve your Medicaid/MassHealth and SSI eligibility. 

How an ILIT can help offset estate taxes

12 May, 2023
With the Federal estate tax exemption possibly about to be lowered, it may be time to think about steps you can take to keep your estate from being taxed. An irrevocable life insurance trust allows you to pass on money to your heirs while avoiding both the federal estate tax, as well as any applicable state estate tax which is currently $1 million in the Commonwealth of Massachusetts. Senate Democrats have proposed lowering the current estate tax exemption from $11.7 million for individuals and $23.4 million for couples to $3.5 million for individuals and $7 million for couples. While it is unclear if this proposal will pass, it is likely that some change to the estate tax is coming. Even if Congress does not take any action, the current rate will sunset in 2026 and essentially be cut in half, to about $6 million per individual. In the Commonwealth of Massachusetts, the current estate tax exemption is $1 million for individuals and is taxed at dollar $1.00. A proposal to raise it to $3 Million and the tax to start at $3 Million (not at $1.00) has been submitted in the legislature but has not yet been voted on or enacted. One way to make up for any estate tax your estate may have to pay is by setting up an irrevocable life insurance trust [ILIT]and funding it with a policy that has a death benefit that would pay your heirs some or all of the amount your estate will be taxed. If you purchased such a life insurance policy directly, it could end up being taxed as part of your estate. But if a trust owned the policy, it could pass outside your estate. While a life insurance trust can be highly beneficial, it is also complicated to set up and maintain properly. The following are some of the requirements: Trustee . If you are setting up the trust, you cannot also serve as a trustee. If you are the trustee, you have control of the trust, which could lead to the trust being included in your estate. You will need to name another trusted person or financial institution to act as trustee. Policy ownership . The trust must own the life insurance policy. If you transfer an existing policy to the trust and die within three years, the policy will still be considered a part of your estate. To avoid this risk, the trust can purchase a policy directly rather than receive an existing policy. Premiums . You need to transfer funds to the trust to pay the policy premiums, which creates an issue with gift taxes. A transfer to a trust is usually not subject to the $15,000 yearly gift tax exclusion. For a gift to qualify for the exclusion, the recipient must have a "present interest" in the money. Because a promise to give someone money later does not count as a present interest, most gifts to trusts aren't excluded from the gift tax. To avoid this, you can use something called a “Crummey” power which gives beneficiaries the right to withdraw the funds transferred to the trust for up to 30 days. As part of the process, the trustee needs to send them a letter, known as a Crummey letter, letting them know about the trust funding and their right to withdraw the funds. After the 30 days have passed, the trustee can use the funds to pay the annual insurance premium. You run the risk of the beneficiaries withdrawing the funds, but if they know that by allowing the money to stay in the trust they will receive more money later, it shouldn’t be a problem. Beneficiaries . The beneficiary of the life insurance policy is usually the trust. Once the funds are deposited in the trust, the trustee can distribute the assets to the beneficiaries in the way specified by the trust. For example, if your beneficiaries are minors, you can wait to have the trustee distribute the assets. Keeping the assets in the trust will also protect them from your beneficiaries’ creditors. The downside of an irrevocable life insurance trust is that you do not have the ability to change it once it is set up, although the policy would effectively be canceled if you stopped paying the premiums. If you are considering this type of trust, discuss it with your attorney.
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