Like many people, you’ve probably worked hard to leave a lasting financial legacy for your loved ones. The last thing you want is for that money or those assets to be swept away with no input from you.
Unfortunately, this is more common than you may realize. Inheritance theft is a rampant problem that can devastate an estate, but you can spot it early if you know how.
Don’t let yourself get blindsided by overhauls to your legacy planning! Here are six key ways that you can prevent inheritance theft, starting today.
1. Start Estate Planning Early
During your younger years, estate planning might be the farthest thing from your mind. Many people believe it’s not something to worry about until later in life, but that’s not always the best course of action.
Instead, start your estate planning as early as possible as your first step to avoid inheritance theft. This allows you to research professionals who can help you make informed decisions about what you need to care for your loved ones after your passing. There are financial advantages to estate planning, too!
Starting early also ensures you can make decisions when you’re of sound mind and judgment. While it may not be pleasant to think about, we can never truly predict the unexpected disasters that can suddenly affect your health and disrupt your plans.
Make sure you work with someone who will be patient and help you understand the importance of each and every document. They should be able to explain the nuances as well as assist you in setting up wills, trusts, and powers of attorney sooner rather than later. After all, you never know how much time you have left to get your affairs in order.
Not to mention, starting early allows you to spot some of the other red flags we will cover.
2. Watch for Sudden Document Changes
While establishing your documents early is essential, it is not necessarily a one-and-done process. You should regularly review all pertinent documents for changes, especially when a loved one is more vulnerable. When they experience illness or mental decline, there could be undue influence on your estate planning documents that requires course correction.
You should also review the finer details of each document. If someone previously uninvolved is suddenly added as a beneficiary or appointed as an executor, flag it right away and consult with the professional handling your estate. This may be a sign of inheritance theft.
3. Work with a Professional Neutral Party
It can be tempting to try to handle your estate documents among friends and family. After all, your loved ones are closest to the family and it's reasonable to believe they are best equipped to make the necessary decisions.
However, this scenario often backfires as discussions of money and assets can lead to rifts in families. If you do decide to work with family, you may be tempted to give in to their demands, even if it is not how you want to set up your legacy.
Instead of a familial arrangement, involve a neutral third party to advise you and draft the final pieces of your estate planning. This could mean an attorney, accountant, or a fiduciary whose job it is to oversee the planning process
Why is professional involvement so important?
Inheritance theft is not always carried out by a stranger. In fact, it can just as easily be a family member who you thought you could trust with your finances and legacy. Financial mismanagement, whether through malicious inheritance theft, lack of financial savvy, or simple irresponsibility, can quickly dry up the inheritance you left behind to beneficiaries.
Working with a neutral third party removes the possibility of coercion and theft, ensuring no bias in establishing, modifying, or even enforcing the estate plan. For example, they may assist in setting up a family protection trust to help safeguard your legacy and how your assets are used.
4. Identify Red Flags in Caregiver Relationships
Caregivers might play a significant role in your life or the life of a loved one as they age. While we would like to think the best of those taking care of others professionally, that is not always the case—and this is especially true if the caregiver is a close friend or family member. You should be able to identify and call attention to red flags.
The question is: what should you be on the lookout for?
First, you will frequently find that caregivers aiming to take advantage are overly involved in your financial matters. They might try to persuade you to make (or not make) big purchases that could benefit them down the line. They may even try to isolate the individual from other members of the family so it’s easier for them to carry out inheritance theft without being noticed.
Be cautious with who you give access to your financial matters and monitor those documents for changes that you did not approve.
5. Use Clear Language in Wills and Trusts
Is there anything worse than setting up a will and estate planning documents only for your family and loved ones to argue over the meaning of your verbiage? The best thing you can do to prevent confusion is to be specific and clear with your wording. Create clear and official documentation instead of relying on your loved ones to execute your desires on their own.
This is where working with a professional is imperative. They can ensure that all verbiage fits your intentions and desires, leaving nothing up to interpretation later on down the road.
6. Report Suspicious Activity Immediately
Don’t wait until it’s too late to do something about potential inheritance theft. If you suspect a scammer, family member, or caregiver is committing fraud or any type of financial coercion, take immediate action to get ahead of it. Consult with an attorney or contact Adult Protective Services to get the ball rolling as soon as possible.
Magellan’s Comprehensive Estate Planning
When it comes to setting up your estate, professional guidance is a crucial component to ensure that you get everything exactly right. Magellan offers comprehensive estate, financial, legal, and tax planning so that you can get a cohesive, holistic plan that leaves no gaps or missed opportunities. We specialize in charitable vehicles, such as Charitable Remainder Trusts, which can help you create a lasting legacy while benefiting from tax advantages.
Give us a call today to start working out your estate documents and prevent inheritance theft!
For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.
This material provided by Kevin Meaders was written by Axle Eight, a non-affiliate of Magellan Planning Group and Cetera Advisor Networks LLC.