Tag: Investment Planning

The Problem

The population in the U.S. is aging rapidly with the 65+ age group poised to double within the next 20 years. An unwanted, yet invariable side-effect is that the occurrences of (financial) elder abuse will also experience a remarkable increase. As the level of incapacity progresses among the seniors in our population they become more vulnerable to undue influence leading to financial elder abuse. An example is – dementia. With 10 million people suffering every year from symptoms including memory loss, diminished decision-making and trouble communicating, dementia is robbing our older population of both their daily functioning and their agency. Already, a massive demographic of citizens are vulnerable to undue influence. This concerning trend sets the groundwork for a deeper look into  “undue influence”, and how it affects incapacitated people.

What is “Undue Influence”?

Undue influence does not have a one size fits all definition. However, in every situation involving undue influence, common elements emerge: an incapacitated person, unable to make their own decisions, maintains a close relationship with an individual who possesses some level of authority over them. This enables them to make decisions on the incapacitated person’s behalf and ultimately manipulate the situation for their own benefit. 

In a legal sense, some states define undue influence as when a fiduciary or confidential relationship exists in which one person substitutes his own will for that of the influenced person’s will. This usually occurs when a mentally or physically incapacitated person creates their will before their health issues begin, and someone convinces them to change their wishes after they are incapacitated. This could happen when a family member isolates the incapacitated person from other relationships, influencing them to distrust others and eventually pressures them to make certain decisions that they wouldn’t make if not persuaded. However, Executors, Advisors and loved ones can do their part to ensure that the wishes of the incapacitated person are being respected and carried out.

What can financial advisors and executors do?

Executors and Advisors should be aware that the overwhelming majority of undue influence is motivated by family members seeking (financial) benefit from committing elder abuse – children and spouses/partners may often be the key offenders. As a financial advisor or an executor for someone beginning to show signs of incapacity, which is preventing them from making their own decisions, it’s important to be aware of the threat of undue influence. An example is – to notice when the person has become highly dependent on a specific person for help with daily functioning, emotional or financial decision-making. Also, be aware if this specific person is seemingly always supervising or accompanying them in a way that seems to be allowing the person to exert control. These could be red flags that undue influence can occur shortly, if not already.

There are measures that can be taken to prevent your client or loved one from becoming a victim of it. Financial advisors could leverage a comprehensive estate planning platform to properly document their incapacitated client’s wishes and financial goals that were discussed when they were still able to make their own decisions. Both financial advisors and executors of incapacitated individuals should be watchful for repeated signs of growing incapacity – memory, hygiene, judgment, mood among other factors and maintain consistent communication with the incapacitated person’s family members and trusted caregivers to watch for any signs of undue influence. 

How “smart” digital platforms can help

Another key observation is that prior to the introduction of online estate & inheritance planning platforms, undue influence was much harder to commit. It could take a long time to convince an incapacitated person to change their mind about their wishes and then visit the  attorney’s office to  get a modified will drawn up. In this new age of all-digital technology, online estate planning platforms make it simple and affordable for users to create estate plans and make unlimited changes (small and large) rapidly. 

As a result, it’s more important than ever for such digital technology platforms to embed “smart” safeguards to uncover and detect undue influence from becoming more commonplace for our elderly population. 

To prevent (financial) elder abuse from occurring in the first place, Executors, Advisors and loved ones are required to develop heightened awareness to safeguard seniors as they detect signs of oncoming incapacity. The Advisor Portal from OneDigitalTrust leverages “smart” technology to notify Advisors in cases where high(er) characteristics of (financial) elder abuse may exist. 

Schedule a demo to see the OneDigitalTrust  Advisor Portal in action. 

By Alia Hardy
Customer Success Team

For financial advisors, one truth stands out above all others–trust is paramount. Clients entrust their financial legacies to you, and it’s your responsibility to guide them in safeguarding their family’s future. A profound way to foster trust and demonstrate commitment is by helping clients develop and comprehend estate planning strategies. This blog post will explore how financial advisors can leverage estate planning to build trust and preserve their clients’ family legacies for generations.

The Essence of Estate Planning for Advisors

Estate planning extends beyond drafting wills or creating trusts. It’s a fundamental component of comprehensive financial planning that transcends age, income, and net worth. At its core, estate planning involves creating a structured strategy to manage assets, minimize taxes, and ensure the seamless execution of clients’ wishes following their passing.

For financial advisors, estate planning is not just a service but a way to underscore your commitment to your clients’ long-term financial security while helping them ensure their assets end up where intended. Estate planning allows you to empower your clients with knowledge and expertise, helping them make informed decisions about their financial legacies.

1. Understanding Clients’ Aspirations and Goals

Building trust begins with meaningful conversations to help you understand your clients personally and financially. Take the time to learn about their unique aspirations, concerns, and values. Some key aspects to explore include:

• Asset Distribution: Identify their preferences regarding the distribution of assets among heirs, charities, or other beneficiaries.
• Tax Efficiency: Discuss strategies for minimizing estate taxes and preserving a more significant portion of their wealth for their loved ones.
• Guardianship: Address concerns related to guardianship and financial support for minor children or dependents.
• End-of-Life Healthcare: Determine their healthcare directives, medical power of attorney, and preferences for medical decisions.

By actively listening and demonstrating empathy, you establish a foundation of trust that goes beyond mere financial advice.

2. Empowering Clients through Education

Estate planning can be complex, with various options and strategies to consider. As a trusted advisor, your role involves educating your clients so they can make informed decisions. Essential estate planning tools and techniques to discuss include:

• Wills and Trusts: Clarify the significance of wills and trusts in specifying asset distribution and minimizing probate complexities.
• Beneficiary Designations: Emphasize the importance of designating beneficiaries on financial accounts and insurance policies to streamline the asset transfer process.
• Power of Attorney: Highlight the value of granting power of attorney to a trusted individual to manage financial and legal affairs if needed.
• Healthcare Directives: Stress the importance of advanced healthcare directives to ensure their medical preferences are respected.
• Tax Planning: Explore strategies like gifting, charitable giving, and other methods to reduce estate tax liabilities.

By providing clear explanations and guiding your clients through their estate planning options, you empower them to make decisions aligned with their family’s best interests.

3. Collaboration with Legal Experts

While you offer valuable insights into estate planning, it’s crucial to collaborate with legal professionals, such as estate planning attorneys, to ensure the legal soundness and comprehensiveness of your clients’ plans. Encourage your clients to consult legal experts who can draft documents and provide precise legal guidance.

By advocating a collaborative approach, you demonstrate your dedication to creating comprehensive and legal estate plans for your clients, further cementing their trust in your expertise.

4. Continuous Review and Adaptation

Estate planning is not a one-time task; it demands periodic review and adjustments. Encourage your clients to revisit their plans regularly, mainly when significant life events occur, such as marriages, divorces, births, or changes in financial circumstances. Offer your support during these reviews to ensure their estate plans remain relevant and effective.

Estate Planning for Advisors

As a financial advisor, your guidance through the intricacies of estate planning is a potent trust-building tool. By comprehending your clients’ goals, educating them on their options, collaborating with legal experts, and providing ongoing support, you help clients preserve their family’s legacy and confirm your unwavering commitment to their financial well-being. Through this commitment, you build trust and guarantee a lasting legacy for generations to come—a legacy that reflects your dedication and expertise as a trusted advisor.

Is your firm ready to incorporate cutting-edge, turn-key technologies into your financial planning process? Get started today, and register for your free Advisor Portal!