Saving Your Elderly Parents from Financial Fraud and The Importance of TOD & JTWROS Designations and Earnings for All Seasons

Hope this finds you enjoying Spring.

 

In first article note the last paragraph “...The Senate Special Committee on Aging says that American elders lose $2.9 billion in fraud per year.  ……One in five of that population has some sort of cognitive issue….”

If you suspect an elder of losing cognitive abilities or that they are being abused, there are resources to help you, help them. 

 

Financial Planning in the Shadow of Dementia is one that we have available.  Let us know if you would like a copy.

Thanks and be well.

Rita

 

Saving Your Elderly Parents from Financial Fraud
Talk about precautions with the seniors in your family.

 

Provided by Rita Wilczek

 

Elders are financially defrauded in this country on a daily basis. Only a few of these crimes are made public. In fact, the National Adult Protective Services Association (NAPSA) estimates that only 1 in 44 cases of elder financial abuse are reported. NAPSA also reports that one in nine seniors had been financially “abused, neglected or exploited” within the past year.¹      

  

Friends, family, & caregivers perpetrate much of this financial abuse. They commit 90% of it, according to NAPSA. Major fraud damage might even result in a decline in an elder’s physical and mental health: victims of elder financial exploitation are four times more likely to go into a nursing home than their peers, and nearly 10% of the victims end up relying on Medicaid.¹

 

Frauds range from big scams to little schemes. You may already know about the common ones: the grandparent scam (“Grandpa, I’m in jail in _____ and I need $___ to make bail”), the utility company scam (one criminal keeps the elder busy in the yard as the other burglarizes their home), the lottery scam (a huge prize awaits, and the elder need only pay a few thousand upfront to take care of associated taxes). Others are subtler: home health aides severely overcharging an elder for their services; relatives or caregivers using a financial power of attorney to draw down an elder’s bank or investment accounts.

  

Talking about all this may help to prevent it. Sometimes, a good way to introduce the topic is by referring to what happened to someone else – a story coming up on the news or in the paper, or an article online, or maybe even a friend’s experience. Part of this conversation will be about the elder in your life taking you on as a sort of second line of defense, someone to help them watch over things. They may be resistant, at first, but advise them that this is a precaution not necessarily for today, but for a time when they may not be able to make decisions. From there, have a conversation about setting up powers of attorney and other legacy paperwork (will, living will, health care directives) in coordination with legal and financial professionals.²

 

Make it clear that you are there to back up the elders in your life and look after their wellbeing. Maintain good communication with these professionals – not just the aforementioned legal and financial professionals, but caregivers, health care professionals, and anyone else who works with them on a regular basis. Maintaining these conversations with seniors and the people who work with them, asking questions, and being present can go a long way to deterring financial fraud.²

  

Have the conversation; have a look at Mom or Dad’s financial situation. It’s a good idea to protect your family members from such a growing problem. The Senate Special Committee on Aging says that American elders lose $2.9 billion in fraud per year. That’s spread among 78 million Americans over the age of 65. One in five of that population has some sort of cognitive issue, a number that rises to more than half when narrowed to people 85 and older. Taking steps now might mean curtailing or avoiding bigger problems down the road for the seniors in your life, so it’s definitely worth having those conversations today.³
 

Rita Wilczek may be reached at (952) 542-8911 or rwilczek@hirep.net

www.ritawilczek.com

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 - napsa-now.org/policy-advocacy/exploitation/ [3/20/19]

2 - forbes.com/sites/teresaghilarducci/2018/09/13/how-to-protect-yourself-as-much-as-possible-from-financial-abuse [9/13/18]

3 - cnbc.com/2019/02/24/advisors-take-extra-steps-to-protect-elder-clients-from-fraud-or-abuse.html [2/24/19]

 

Earnings for All Seasons
What is it and why is it important?

 

Provided by Rita Wilczek

 

While nature offers four seasons, Wall Street offers only one – four times a year. It’s called “earnings season,” and it can move the markets. So, what is earnings season, and why is it important?

 

Earnings season is the month of the year that follows each calendar quarter-end month (January, April, July, and October). It is the time during which many public companies release quarterly earnings reports. Some public companies report earnings at other times during the year, but many are on the calendar year that ends December 31.¹

 

Reported Earnings. To understand the importance of earnings, we need to remember that the value of a company can be tied to the amount of money it earns. Some companies don’t have earnings, and they are valued based on their potential rather than their current earnings.

 

Wall Street analysts maintain a close pulse on a company’s quarterly report to help estimate future earnings. For example, these estimates may guide investors in determining an appropriate price for a company’s stock. Remember, a company is not permitted to discuss interim earnings with select individuals; earnings reports must be disseminated publicly to level the playing field for all investors.^1,2

 

An Inside Look. When an earnings report is released, it tells the market two things.

 

First, it offers an insight into how the company is performing and what its prospects may look like over the near term.¹

 

And second, the report can serve as a bellwether for similar companies that still have not reported. For instance, if the earnings of a leading retailer are strong, it may offer an insight into the earnings of other retailers, as well as other companies that similarly benefit from higher consumer spending.

 

What Time? Earnings reports are generally released when the market is closed in order to provide market participants adequate time to digest the results. Earnings reports may move markets. If earnings diverge from the expectations of professional investors and traders, then price swings – up or down – may be significant. Such a divergence is referred to as an “earnings surprise.”

 

If you are a “buy-and-hold” investor and feel confident in a company’s long-term prospects, earnings season may mean little to you, since short-term results may not impact your long-term outlook. However, earnings reports can be meaningful if an earnings shortfall reflects a structural problem with a business or represents the continuation of a downward trend in earnings.

 

For that reason, it may be wise for you to keep an eye on earnings season. Information about growth, decline, and other changes to a company can be important in understanding the value of maintaining certain investments. Of course, it can also be important to have help in understanding data; a trusted financial professional can be of great assistance if you have questions and concerns as you invest.

 

Past performance does not guarantee future results. Keep in mind that the return and principal value of stock prices will fluctuate as market conditions change. Shares, when sold, may be worth more or less than their original cost. This is a hypothetical example used for illustrative purposes only. It is not representative of any specific investment or combination of investments.
 

Rita Wilczek may be reached at (952) 542-8911 or rwilczek@hirep.net

www.ritawilczek.com

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 - investopedia.com/terms/e/earningsseason.asp [3/19/2018]  
2 - barrons.com/articles/corporate-earnings-season-highlights-1539733720 [10/17/2018]

 

The Importance of TOD & JTWROS Designations

A convenient move that could ward off probate on your accounts.

 

Provided by Rita Wilczek

   

TOD, JTWROS – what do these obscure acronyms signify? They are shorthand for transfer on death and joint tenancy with right of survivorship – two designations that permit automatic transfer of bank or investment accounts from a deceased spouse to a surviving spouse.¹

 

This automatic transfer of assets reflects a legal tenet called the right of survivorship – the idea that the surviving partner should be the default beneficiary of the account. In some states, a TOD or JTWROS beneficiary designation is even allowed for real property.²

 

When an account or asset has a TOD or JTWROS designation, the right of survivorship precedes any beneficiary designations made in a will or trust.³

 

There are advantages to having TOD and JTWROS accounts – and disadvantages as well.

 

TOD & JTWROS accounts usually avoid probate. As TOD and JTWROS beneficiary designations define a direct route for account transfer, there is rarely any need for such assets to be probated. The involved financial institution has a contractual requirement (per the TOD or JTWROS designation) to pay the balance of the account funds to the surviving partner.⁴

 

In unusual instances, an exception may apply: if the deceased account owner has outlived the designated TOD beneficiary or beneficiaries, then the account faces probate.⁵ 

  

What happens if both owners of a JTWROS account pass away at the same time? In such cases, a TOD designation applies (for any named contingent beneficiary).⁴

 

To be technically clear, transfer on death signifies a route of asset transfer, while joint tenancy with right of survivorship signifies a form of asset ownership. In a variation on JTWROS called tenants by entirety, both spouses are legally deemed as equal owners of the asset or account while living, with the asset or account eventually transferring to the longer-living spouse.⁴

 

Does a TOD or JTWROS designation remove an account from your taxable estate? No. A TOD or JTWROS designation makes those assets non-probate assets, and that may save your executor a little money and time – but it doesn’t take them out of your gross taxable estate.

 

In fact, 100% of the value of an account with a TOD beneficiary designation will be included in your taxable estate. It varies for accounts titled as JTWROS. If you hold the title to a JTWROS account with your spouse, 50% of its value will be included in your taxable estate. If it is titled as JTWROS with someone besides your spouse, the entire value of the account may go into your taxable estate, unless the other owner has made contributions to the account.⁶

    

How about capital gains? JTWROS accounts in common law states typically get a 50% step-up in basis upon the death of one owner. In community property states, the step-up is 100%.⁶

 

Could gift tax become a concern? Yes, if the other owner of a JTWROS account is not your spouse. If you change the title on an account to permit JTWROS, you are giving away a percentage of your assets; the non-spouse receives a gift from you. If the amount of the gift exceeds the annual gift tax exclusion, you will need to file a gift tax return for that year. If you retitle the account in the future, so that you are again the sole owner, that constitutes a gift to you on behalf of the former co-owner; they will need to file a gift tax return if the amount of the gift tops the annual exclusion.⁶

 

TOD & JTWROS designations are designed to make account transfer easy. They simplify an element of estate strategy.

 

TOD or JTWROS accounts are not cheap substitutes for wills or trusts. If you have multiple children and name one of them as the TOD beneficiary of an account, that child will get the entire account balance, and the other kids will get nothing. The TOD beneficiary can of course divvy up those assets equally among siblings, but in doing so, that TOD beneficiary may run afoul of the yearly gift tax exclusion.⁶

    

As you create your estate, respect the power of TOD & JTWROS designations. Since they override any beneficiary designations made in wills and trusts, you want to double-check any will and trust(s) you have, to make sure that you aren’t sending conflicting messages to your heirs.⁶

    

That aside, TOD & JTWROS designations can represent a convenient way to arrange the smooth, orderly transfer of account balances when original account owners pass away.

  

Rita Wilczek may be reached at (952) 542-8911 or rwilczek@hirep.net

www.ritawilczek.com

   

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.

       

Citations.

1 - finra.org/industry/terms-and-acronyms [9/26/18]

2 - investopedia.com/terms/j/jtwros.asp [12/20/18]

3 - thebalance.com/why-beneficiary-designations-override-your-will-2388824 [12/19/18]

4 - washingtonpost.com/business/2018/11/12/transfer-death-deed-may-be-good-instrument-leaving-your-home-your-child-beware-flaws/?noredirect=on&utm_term=.3162fd5503c9 [11/12/18]

5 - thebalance.com/what-is-a-transfer-on-death-or-tod-account-3505253 [12/30/18]

6 - investopedia.com/articles/pf/08/joint-tenancy.asp [3/20/18]