THE SUMTER ITEM ·
SUNDAY, JANUARY 8, 2017
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USA TODAY PERSONAL FINANCE ISTOCKPHOTO
Robert Powell Special to USA TODAY
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KNOW THE RISK FACTORS.
Social isolation and cognitive impairment are among the known risk factors for elder abuse. “Stay socially active and engaged,” said Martin. “Social isolation increases the risk of becoming a victim. If someone is isolating you from your friends, family or others in your community, seek help.”
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DON’T SUCCUMB TO PRESSURE.
Don’t let anyone rush or pressure you into signing a document, purchasing something, or giving away your money or property. “Take your time,” said Martin. “Consult with others. If you feel rushed or pressured to act, don’t act. Instead, talk to others including trusted friends and family members, your banker or attorney, or other professionals such as clergy members or social workers.” AVOID JOINT ACCOUNTS.
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Don’t’ set up joint accounts as a method of planning for incapacity or getting help with paying your bills. “Both parties are equal owners and have equal access,” said Martin. “Instead, talk to your banker about your options for getting assistance with your finances.”
WAYS TO PROTECT 4 YOURSELF FROM FINANCIAL ABUSE
KEEP YOUR HOME.
Don’t give your home away to someone in exchange for a promise to care for you or allow you to live there as long as you live. “These kinds of promises are broken every day and you could find yourself without a home or the help you need,” said Martin.
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lder abuse is a growing problem in the U.S. Or at least so say experts who testified before a Senate Special Committee on Aging hearing in November. In fact, one in 10 seniors age 60 and older who live at home experience abuse, neglect or exploitation, according to one expert, Jaye Martin, executive director of Maine Legal Services for the Elderly. And financial abuse – perpetrated by mainly by family members, many of whom are guardians – is one of the most common types of elder abuse, according to a Government Accountability Office (GAO) report released for the hearing. According to GAO, a guardianship may be necessary as an older adult becomes incapable of making informed decisions. The GAO wrote in its report: “While many guardians act in the best interest of persons under guardianship, some have been reported to engage in the abuse of older adults.” So, what can you do to avoid financial abuse by family members, guardians and others in power?
WAYS TO HELP YOUR LOVED ONES uPlan ahead to protect your assets and ensure that your wishes are followed. uConsult with a qualified financial professional or attorney before signing complex agreements or anything you don’t understand. uBuild relationships with professionals who are involved with your finances – they can assist in monitoring for suspicious activity. uLimit your use of cash – using checks and credit cards leaves a paper trail. uTrust your instincts and feel free to say “no” – remember, it’s your money. SOURCE: ALLIANZ LIFE
INVOLVE YOUR FINANCIAL TEAM IN YOUR AFFAIRS.
“The most important thing elders can do to address elder financial abuse is to involve multiple parties in helping them manage their financial affairs,” said Walter White, president and chief executive officer of Allianz Life Insurance Company of North America. “Having a third party involved can provide an additional layer of oversight, providing the necessary checks and balances that can help identify potential problems before they happen.” Read Allianz Life’s 2016 Safeguarding Our Seniors Study. Others agree. “Financial advisers can be very helpful,” said Robert Mauterstock, author of Passing the Torch, Critical Conversations with Your Adult Children. “They often can notice if money is being withdrawn from client's accounts surreptitiously.” For her part, Martin also recommends building relationships
with the professionals who advise you or handle your money, such as your banker and attorney. “They can help to detect changes in your financial activity that may signal exploitation and be available to advise you if you are being pressured to act,” she said. Mauterstock also noted that each state has a protective services department. “Financial advisers or family members can call in to protective services anonymously and report a problem,” he said. “Protective services will often then follow up with the family.” Elders can also hire a bookkeeper to pay their bills and manage their bank accounts, said Mauterstock, who noted there’s a bill before Congress called the Senior$afe Act of 2015 which would protect financial advisers who report an abuse. Among other things, those involved in watching over your affairs – be it a banker, CPA, attorney, or lawyer – should look for red flags such as unusually high guardian fees or excessive vehicle or dining expenses, according to the GAO.
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BEWARE OF FAMILY MEMBERS.
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SET UP A REVOCABLE TRUST.
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EXECUTE A DURABLE POWER OF ATTORNEY.
According to the Allianz Life study, a large percentage of elders that have suffered financial abuse were victimized by people that are close to them - either a family member, friend or another professional caregiver.
Consider a revocable trust with a corporate trustee. “There is no better protection for a (senior),” said Mauterstock. “Corporate trustees are the most regulated financial entities in our industry; they’re regulated by the OCC, the FDIC, and the state banking commission.”
A durable power of attorney is an important estate-planning tool, said Mauterstock. In essence, it’s a legal document that gives someone you choose the power to act in your place should you become mentally incapacitated. Note, however, the person with the durable power has unlimited access to your finances. So, make sure the person with the durable power sends copies of all transactions, as well as duplicate banking, investment and credit card statements, to your financial team each month. For her part, Martin said powers of attorney are useful and important tools, but can be misused. “Only execute a power of attorney after consulting with an attorney and only appoint someone you trust completely,” she said. “Beware of gifting clauses in power of attorney documents. You can and often should limit the power you give your agent. Grant no more authority than is needed.”
Got questions about money? Email Bob at rpowell@allthingsretirement.com.
Lack of young homebuyers fuels wealth gap Housing values soar, but renters haven’t shared in the windfall Jeff Reeves Special for USA TODAY
It’s a tale that has been told over and over — Millennials just aren’t buying homes and instead are sticking to renting. The absence of Millennial homebuyers is a big story for the economy, because housing sales and construction are big drivers of jobs. But it’s also an equally big story for the personal finances of Millennials, who are missing out on the real estate wealth that bolstered the balance sheets of previous generations. “The most impactful contributor to consumer wealth since the great financial crisis has been growth in home equity,” said Brad Friedlander, managing partner at Angel Oak Capital Advisors. “Similarly, there has been a growing wealth gap between homeowners and renters, largely due to home equity.” According to the Federal Reserve, U.S. owners held more than $12.7 billion in home equity at the end of the second quarter of 2016. That’s the highest since the end of 2006, before the housing bubble burst, and more than double the crisis-era low of just under $6 billion in home equity. In other words, housing values
TO RENT OR NOT TO RENT Costs associated with both renting and homeownership have been soaring since the 1980s. Ownership became 10% more expensive than renting, compared with their relative costs in 1982. They are now even, indicating high demand for rental properties. Consumer Price Index for:
Owner equivalent rent of primary residence Rent of primary residence
282.5
300
$13.4 billion Q1 2006
$15.0
$13.0 billion Q3 2016
$12.0 $9.0
250
282.1
200 150
OWNERS’ EQUITY IN REAL ESTATE U.S. owners held more than $13.0 billion in home equity at the end of the third quarter of 2016. That’s the highest level since the end of 2006, before the housing bubble burst. Equity in billions1:
$3.0
100.6
100
$0 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16
50 98.0
’83 ’85
$6.0
’90
’95
’00
’05
’10
’15
NOTE 1983 index number as of Jan. 1; 2015 as of Feb. 1
have soared, but renters haven't shared in the wealth. Worse still, consider that as the economy recovered around 2010, rents have climbed steadily. The typical renter is now paying about 20% more than in September 2010. This trend comes at a time when median household incomes still remain below 2007 levels, which means the dip in homeownership rates couldn’t have been timed worse for Millennial finances. And without home equity to bolster their family balance sheets, these younger Americans are significantly behind older generations — in homeownership
and the future financial security associated with it. HOPE FOR YOUNG HOMEBUYERS
However, it doesn't have to stay that way. Millennials still have the opportunity to tap into the housing market’s potential. While underwriting standards are indeed stricter than prior years, “some people could qualify for a mortgage who don’t even try,” said Lawrence Yun, chief economist at the National Association of Realtors. Yun points to FHA mortgage products that require only 3.5% down, just $8,750 pay-
1 — Quarterly amounts, not seasonally adjusted SOURCE Federal Reserve Bank of St. Louis GEORGE PETRAS, USA TODAY
“The last few years have been an opportunity to make equity and grow wealth, but it’s not too late for Millennials.” Brad Friedlander, managing partner at Angel Oak Capital Advisors.
ment toward a $250,000 mortgage, as well as interest rates near historic lows that reduce the cost of borrowing significantly.
If young homebuyers embrace the idea of a “starter home” the way previous generations have instead of simply lamenting how their dream home is out of reach, they often will have ample opportunity to enter the market, Yun said. “Maybe they need to lower their expectations of what that first home should be or settle for a smaller home in a different neighborhood,” he said. But if they do, these young homebuyers can build equity over time. “The last few years have been an opportunity to make equity and grow wealth, but it’s not too late for Millennials,” Friedlander said.