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ESG Investments, Trick or Treat?

October 24, 2021

Two facts that cannot be denied are: (1) we need to be better stewards of our planet, and (2) all peoples deserve to be treated and represented equally. A niche market was developed in response to these critical needs – ESG investments.

“ESG” stands for Environment, Social, and Corporate Governance. ESG investing is the practice of considering ESG factors in financial analysis and investing in responsible companies. This is
similar to biblically responsible investing, which considers which companies align with one’s faith. ESG investing has seen substantial growth in recent years. These products come in the form of mutual funds, exchange-traded funds (ETFs), annuities, and individual stocks and bonds. It sounds like an easy way to do your part to make the world a better place, but before you treat your portfolio to an ESG allocation, let’s walk through some considerations to make sure you’re not getting tricked.

First and foremost, the financial services industry is just that – an industry. As with any industry, salespeople have incentives for promoting specific products. If your advisor is pitching ESG or biblically based investment products, the first question you should ask is, what do they stand to gain? Many ESG investments are also proprietary products, meaning the company that employs your advisor may be the same company that can earn commissions and fees from the sale of the product. It’s always important to ask about the existence of any conflicts of interest, commissions and fees, and to be skeptical of solutions offered by someone who doesn’t know your exact needs or goals.

Second, greenwashing exists in the financial industry. Just like food producers sell non-GMO orange juice at a premium (GMO oranges don’t even exist), investment product managers have been caught falsely promoting that their products are more socially responsible than others. Consider an ESG fund that invests only in companies which limit carbon emissions. It sounds socially responsible, so you invest. Unbeknownst to you, those “green” companies are selling their government-granted allotments of carbon dioxide output to other companies for a profit. Now, the commissions and fees attached to the fund have eaten away at your annual returns, the world is no greener for your sacrifices, and your good stewardship has been exploited. Regulatory agencies have prioritized this issue and are working to regulate ESG marketing to protect investors. However, the term “socially responsible” is subjective and means different things to different people. It’s been acknowledged that regulation might never come. So, what can you do?

Rest assured that honest, low-cost ESG products do exist if you know what you’re looking for and your advisor isn’t incentivized to promote specific products. As a CFP® Professional required to put my clients’ best interest ahead of my own, I would first recommend you identify your financial goals and have a solid financial plan developed. Then, I would select a nonbiased range of ESG investments if that was your desire, simulating varying exposures of each product in question to determine what your portfolio can tolerate without sacrificing long-term returns beyond your risk capacity. Only then would I advise you to treat your portfolio to an ESG allocation. If your advisor is skipping these key steps – you’re likely getting tricked.

Published in the Victoria Advocate

Hannah K. Gohmert is a CERTIFIED FINANCIAL PLANNER™ Professional and the Chief Compliance Officer for KMH Wealth Management, LLC.

 

https://kellercpas.com/wp-content/uploads/2021/10/blog-trickortreat.jpg 247 500 KMH Wealth http://kellercpas.com/wp-content/uploads/2022/04/keller-logo-290-1.png KMH Wealth2021-10-24 23:05:002021-11-06 17:39:48ESG Investments, Trick or Treat?

Don’t Fear the FAFSA

October 10, 2021

The start of October brings cooler temperatures, visits to the local pumpkin patch, scary movies, and all-you-can-eat candy on Halloween. October also marks a spooky but important date for those planning to attend college for the 2021-2022 school year: the opening of the Free Application for Federal Student Aid (FAFSA).

Do you have a college student or a high school senior in your household, or are you a college student yourself? If so, October 1st marked an important date for those who are planning to attend college or are currently enrolled in college. The FAFSA application for the 2021-2022 school year officially opened up to applicants at the start of October. Students should prepare or begin to prepare to file their FAFSA form as soon as possible. The FAFSA is an online application that allows students to request federal student aid, such as grants, loans, and work-study programs. Students should apply as early as possible in order to be considered for grants and loans, as some school and state funds are limited and often awarded on a first-come, first-served basis. Even if you don’t believe you will qualify for federal aid, you should still file a FAFSA application because you may be eligible for loans that are not based on income. Also, some schools require students to file a FAFSA application for merit aid.

It was not too long ago that I was a student myself and filed my FAFSA applications. It can be quite the blood-curdling task, but don’t let the process scare you! Start by gathering the required information and documents now, so that you are prepared. If you haven’t already, you will need to create a Federal Student Aid (FSA) account at fafsa.gov. If you are a dependent on another person’s tax return, your guardian will also be required to create an account as well. You will need your social security number and your 2019 tax records, such as your federal income tax return and W-2s. If you filed your 2019 federal income tax return, you may be eligible to import your tax information into your FAFSA application by utilizing the IRS Data Retrieval Tool, which proved to be the easiest option when I filed my applications. If applicable, you will also need bank statements and records of investments and untaxed income, such as child support or welfare benefits received. Parents of dependent students will also need to submit the information mentioned above.

As you can see, submitting the FAFSA application requires a great deal of information regarding your personal and family financials. This can be overwhelming, but if you begin to gather the necessary documents now, the task won’t be so haunting. In my experience, you can also reach out to your college with questions, they were always more than happy to help me with the FAFSA application process.

Remember: you can’t trick or treat ‘til your FAFSA application is complete! Don’t let October pass by without filing or starting the process of filing yours or your dependent student’s FAFSA application.

Published in the Victoria Advocate

Carlee H. Gibbs, CPA is a staff accountant for Keller & Associates CPAs, PLLC.

https://kellercpas.com/wp-content/uploads/2021/10/blog-fafsa.jpg 247 500 KMH Wealth http://kellercpas.com/wp-content/uploads/2022/04/keller-logo-290-1.png KMH Wealth2021-10-10 23:21:002021-11-06 17:31:55Don’t Fear the FAFSA

Starting a Sturdy Business

September 26, 2021

Has your favorite hobby turned into a cash cow? Are you an independent contractor looking for the most tax advantageous entity for your income and expenses? Maybe you have put in the time with your employer and are ready to venture out on your own? No matter your reason, make sure you have the proper foundation for making your new business venture successful from the start. A popular analogy used in our industry is that of the “three-legged stool.” Without all three legs, your business, or stool, will not be sturdy enough to stand, so what are these legs?

The first leg; make sure you consult your Certified Public Accountant (or CPA) concerning the proper entity to accomplish your goals and limit your tax liability. Depending on expected income, the simple choice of entity could determine whether you are paying anywhere from 0% to over 50% in taxes. There are three main business structures to consider. A Single-Member LLC (Limited Liability Company), not electing corporation treatment, will be subject to both ordinary income and self-employment tax. While income reported on a K-1 to a shareholder of an S Corporation is not subject to self-employment tax, officers are required to take a “reasonable wage” for their services and report as ordinary income subject to FICA withholding. In a C Corporation, the profit is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends, creating a double tax. Depending on your entity, profession and income, there may also be a 20% Qualified Business Income Deduction available as well. These are all things to be considered by your CPA professional.

The second leg; make sure you hire a business attorney to establish and file all of the proper paperwork for your new business entity. Most entities will need to choose a name (and make sure it is not already used), file various paperwork at the state and federal levels to be properly registered, file for an Employer ID Number (EIN), and have proper entity agreements and formation documents. Depending on the entity, it may be necessary to have all contributions, ownership interest, shares owned, officer information, and general partners recorded before the ribbon cutting.

The third leg makes a wobbly stool sturdy. A CERTIFIED FINANCIAL PLANNER® (or CFP®) professional will be well versed in helping a new business owner decide on the proper financial considerations to further set the business up for success. This would include suggesting necessary insurance policies and plans, retirement benefits, the proper financial vehicles to save money for the business and working with the CPA to properly budget for the future.

You can see why it is important to choose the right entity when setting up a business, making sure everything is legally legitimate, and making sure the proper financial plan is in place. There are various ways to make income on your own and even more reasons to decide to do so. No matter your reason, make sure your stool has all three legs to keep you from falling on your face.

Published in the Victoria Advocate

Adam H. Baucom CPA/CFP® is a Senior Tax Manager for Keller & Associates CPAs, PLLC and is an Associate Advisor for KMH Wealth Management, LLC. He has over 10 years of experience in tax planning, tax return preparation and accounting.

https://kellercpas.com/wp-content/uploads/2021/09/blog-newbusiness.jpg 247 500 KMH Wealth http://kellercpas.com/wp-content/uploads/2022/04/keller-logo-290-1.png KMH Wealth2021-09-26 00:02:002021-11-06 17:32:01Starting a Sturdy Business

A Different Type of Child Credit

September 12, 2021

In an (almost) cashless society, credit is king…or so it can often feel this way. A credit score is linked to a person just like their driving record or GPA. From applying for a loan to applying for a job, a decent score is necessary to thrive or at least not be squashed by outrageous interest rates. After conquering the feat of earning your own great credit, possibly learning the hard way, you may now face the question of how you can help establish and raise your child’s or children’s credit score to help set them up for financial success.

If you are interested in pointing your children in the right direction, begin with education. Smart money decisions are learned characteristics that begin at home. Money does not grow on trees and purchases made with credit cards must be repaid. As your child watches you swipe your “magical card” to pay for things, cultivate the knowledge of what credit is and that it must be repaid, or face consequences. Explain how you will receive a bill for the purchased items/services at the end of the month. Then you will spend your real money to pay the bill. It might be fun to associate lines on your statement with physical items purchased during that period. A way to practice this concept is having your child become a library member. They can “swipe” their library card to borrow books/DVDs/games at their leisure, but will have a due date and penalties for late fees, similar to a credit card.

Remember the “piggyback” rides you gave when your child was a toddler. Do some stretching, they are back! Adding your older child as an authorized user on your credit card can help the minor “piggyback” on the good credit behavior of the original card member. However, be warned, the authorized user approach works both ways. All users’ credit history can be enhanced or hurt. This is only recommended if you can be confident you will make regular and on-time payments on the card. You don’t even have to supply your minor access to the credit card, but entrusting them with the ability to purchase certain items (like gasoline or school supplies), can help promote independence and responsibility.

Another way to help your child maintain unscathed credit, is by monitoring their credit report annually for fraud and identity theft. Children 13 years and older can check their credit the same way as an adult, by visiting ANNUALCREDITREPORT.COM annually and requesting a FREE credit report. Unfortunately, children are an easy target of credit fraud and identity theft, since they typically have an unused credit until later in adulthood. Keeping your child’s personal information safe and reviewing their credit is invaluable.

Having a good credit score is almost as essential as having a valid ID. When your child faces the ultimate requirement of having a credit score, help ensure their credit worthiness by early education, utilizing your great credit history, and reviewing their credit report annually.

Published in the Victoria Advocate

Beth M. Koonce CFP® is a Lead Advisor for KMH Wealth Management, LLC.

https://kellercpas.com/wp-content/uploads/2021/09/blog-child-credit.jpg 247 500 KMH Wealth http://kellercpas.com/wp-content/uploads/2022/04/keller-logo-290-1.png KMH Wealth2021-09-12 16:31:002021-11-06 17:32:07A Different Type of Child Credit

Required Minimum Distributions Update

August 22, 2021

As the year flies by I have noticed more and more questions of uncertainty revolving around one particular subject, Required Minimum Distributions or RMDs. More specifically the question is, “Are RMDs required for 2021?” I believe the reason this has become a topic of uncertainty is due to the fact that for 2020 RMDs were not required. This relief was one of the many items included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act was passed into law in March 2020.

Before I answer the question of topic, let us refresh our memory on the basics of RMDs. RMDs were established by the U.S. Tax Law as a means to collect taxes on tax-deferred retirement accounts. Like most of the tax code there are various exceptions and specific circumstances that convolute the RMD rules. For the sake of simplicity, RMDs establish a set dollar amount that a person 72 or older is required to withdraw annually from their tax-deferred retirement account. This amount is determined by taking the prior year-end balance of the tax-deferred retirement account and dividing it by a Life Expectancy Factor that can be found using the IRS Uniform Lifetime Table located in IRS Publication 590.

Without RMDs in the tax law, these funds could, in theory, remain in tax-deferred accounts growing annually and delaying taxation for generations. As a means to make sure this did not happen and allow the IRS to collect taxes in a timely fashion on these funds, RMDs were established.

Now, back to the question at hand and to settle any uncertainty on 2021 RMDs. For the 2021 tax year, there has been no relief issued and RMDs ARE REQUIRED to be distributed by 12/31/2021.

There are a few points to be made regarding RMDs that I would like to note. First, RMDs must be taken directly by the account owner and be included in the account owner’s 2021 Adjusted Gross Income. Alternatively, if certain criteria is met, the RMD of up to $100,000 may be paid directly to a qualified charity of your choosing. If paid directly to a charity, this is considered a Qualified Charitable Distribution (QCD). With QCDs the amount distributed directly to the charity will not be includable in your Adjusted Gross Income and will still satisfy the annual RMD requirement.

Hopefully, the requirement of RMDs for 2021 is of no surprise to you but if it is, there is still time to act. Begin discussions with your CERTIFIED FINANCIAL PLANNER™ professional and Certified Public Accountant to properly plan for both the timing of the distribution and an appropriate strategy for payment of any associated tax that may be generated

Published in the Victoria Advocate

Christopher Laughhunn CPA/CFP® is the Tax & Accounting Principal for Keller & Associates CPAs, PLLC and an Associate Advisor for KMH Wealth Management, LLC.

https://kellercpas.com/wp-content/uploads/2021/08/blog-min-dist.jpg 247 500 KMH Wealth http://kellercpas.com/wp-content/uploads/2022/04/keller-logo-290-1.png KMH Wealth2021-08-22 16:39:002021-11-06 17:33:00Required Minimum Distributions Update

Creating Family Financial Awareness

August 8, 2021

August 14 is Financial Awareness Day. While you’ll probably see plenty of articles about getting your finances in order or raising financially literate kids, there’s another layer to financial awareness that often gets forgotten: planning for aging parents. I’m an only child of two middle-aged parents (don’t tell them I called them that) so it’s extremely important that I am aware of what their plans are for the future. I’d recommend you do the same with your loved ones.

I know what you’re thinking – No, you don’t need to ask the exact balance in your parent’s bank account to be more aware of their financial situation. Asking the right, sometimes uncomfortable, questions now can help all parties involved feel better prepared for the future.

Long Term Care – Knowing what, if any, long-term care coverage your loved ones have is a key part of planning for the future. The cost of long-term care can be astronomical, especially for an illness that could span out over several years. Another important piece of this conversation is understanding what your loved one’s wishes are. Are they open to moving into a nursing home or assisted living facility? Or, are they planning for you to be their primary caretaker?

Estate Documents – Cognitive and physical decline can happen quickly. Having the power of attorney documents in place for financial and medical decisions sooner rather than later are a crucial part of planning for the future. Ask questions like, ‘Who would you want to make hard medical decisions for you if needed?’ and, ‘Is there someone you would trust to handle your finances if you were unable?’

Final Wishes – While no one wants to imagine a world without their parents or loved ones present, there is value in discussing their final wishes. Maybe it’s a family heirloom that should be passed down to a niece, or a specific song that they want played at their funeral service. Having these conversations early can ensure that their wishes are known and planned for.

Financial Accounts – As mentioned earlier, having conversations with family about finances doesn’t mean that you’re asking for the balance of each bank or investment account. Rather, it’s important to ask where things are located and/or if there is someone specifically that your family member has worked with. In an age where everything is electronic, it is not as simple as it once was to track down statements or account holdings. Ask your parent or loved one if they keep a list of all of their accounts and log in information somewhere safe for you to find later when needed.

These conversations may seem uncomfortable, but they don’t have to be. Start with the basics, remember to start these conversations from a viewpoint of wanting to be more aware for the future, and as always, reach out to a CERTIFIED FINANCIAL PLANNER™ Professional if you need more guidance along the way.

Published in the Victoria Advocate

Sara Potts is a CFP® Professional and Operations Manager with KMH Wealth Management, LLC.

https://kellercpas.com/wp-content/uploads/2021/08/blog-ffa.jpg 247 500 KMH Wealth http://kellercpas.com/wp-content/uploads/2022/04/keller-logo-290-1.png KMH Wealth2021-08-08 16:44:002022-02-04 17:01:38Creating Family Financial Awareness

Planning Amid Uncertainty

July 25, 2021

As a Certified Public Accountant and CERTIFIED FINANCIAL PLANNER™ professional, I deal with uncertainty on a daily basis. Clients progressing through different life stages, volatile financial markets, and keeping up to date with ever-changing tax laws are a few examples of this daily uncertainty. Our Keller/KMH staff field a steady stream of pertinent questions and concerns from our clients on a daily basis. I’d like to share with you some of the more relevant and relatable questions below.

Perhaps the most prevalent question pertains to the status of tax laws. My colleague, Lane Keller, wrote about this very topic almost a month ago in an article titled “More Tax Talk 2021” where he advised you to be prepared for coming change on the tax law front. I would expand on that by recommending you visit soon with your tax professional to have them prepare a 2021 tax projection for you. Did you receive the full $1,400 payment from the third stimulus package? What strategy did you choose for Advance Child Tax Credit payments? Should you consider Roth conversions to utilize historically low tax rates? Gaining clarity on your 2021 tax situation will help build certainty moving into the back half of 2021.

Sticking with the theme of uncertain tax laws, our office is also fielding multiple inquiries about the President’s proposals to dramatically change the estate tax landscape. Most of the discussion and consideration focuses on whether or not to utilize the high lifetime gift exemptions (currently $11.7 million per person). We have many clients who have recently utilized or are in the process of creating partnerships, trusts or other entities to facilitate these gifting transactions. The important takeaway is to meet with your estate planning team sooner rather than later to evaluate your plan. This will set you up to be able to proactively manage any tax law changes that may develop.

Another popular question relates to the stock market and what its future may hold. Undoubtedly, the stock market has experienced excellent returns in the past few years. It is also just as certain the market will experience another correction at some point in time. Our philosophy is that portfolio management should be driven by your financial plan. Each client’s situation, station of life and goals are unique to them and their portfolio should be constructed and managed to accommodate those factors. This allows your portfolio to inherently be built with a long-term perspective in mind. The value we add to our clients is to maintain rigorous discipline in both good and bad markets to keep them on track to achieve their goals. My advice would be to focus on a long term asset allocation that works for you and in unison with your overall financial plan, then drown out the day-to-day noise about the markets.

While there is no solution to totally eliminate these uncertainties, I hope these answers will reassure you that you are not alone with your questions. Begin working with a CPA and/or CERTIFIED FINANCIAL PLANNER™ professional to gain some certainty on your financial situation.

Published in the Victoria Advocate

Kyle W. Noack CPA/CFP® is Chief Financial Officer for Keller & Associates CPAs, PLLC and KMH Wealth Management, LLC.

https://kellercpas.com/wp-content/uploads/2021/08/blog-uncertainty.jpg 247 500 KMH Wealth http://kellercpas.com/wp-content/uploads/2022/04/keller-logo-290-1.png KMH Wealth2021-07-25 16:50:002021-11-06 17:33:55Planning Amid Uncertainty

Living in the Moment Versus Saving

July 11, 2021

There is a fine line between living in the moment and saving for retirement.  The balance is the challenge.  Fleeting thoughts, or maybe not so fleeting, are vacations abroad, a dream car, a ranch, and/or helping the adult children with the purchase of their first homes.

This balancing act begins at any age.  My adult children are saving for houses and I am saving for travel coupled with educational opportunities.

My parents taught me saving habits that began as a small account at our local Savings and Loan bank. College courses, being married to a CPA, CFP® Professional, and working at an RIA firm have certainly enhanced my savings savvy.  Now my savings are more traditional with the typical 401k plan, IRAs, and other accounts consisting of mutual funds, stocks, bonds, and cash.

The juncture is here of adding a hard retirement date to my calendar.  How much money do I want to spend in my digital nomad life?  Do I want to leave money for my children to inherit?

A basic withdrawal rate of your investments falls in the 4%-5% range.  However, inflation can complicate this rate. Consider this example:  Ignoring taxes for simplicity’s sake, if a $1 million portfolio earns 5% each year, it provides $50,000 of annual income.  However, if annual inflation pushes prices up by 3%, more income of $51,500 would be needed the following year to preserve purchasing power.  An additional $1,500 must be withdrawn from the principal to meet expenses, which reduces the portfolio’s ability to produce income.  This can accelerate the depletion of the portfolio and you could find yourself not having the savings you need for the 20 or more years you live in retirement.

The average 65 year old can expect to live for 19 more years according to the National Center for Health Statistics Data Brief.  Additionally, 1 in 5 men who have reached age 65 will live to 90 and among women, it is 1 in 3.

We just met with our CFP® Professional, as we prefer an independent opinion.  He built into our retirement model our current salaries.  This is an extremely important cornerstone.  What major expenses are in our future?  We could have two more weddings, increased travel, and more real estate ventures.  Additionally, there is the abyss of healthcare.  However, some of our expenses such as work-related expenses, (commuting, clothing, dry cleaning, payroll taxes, and retirement savings contributions), will decrease.  So, will it take our current annual salaries to live the type of retirement we want or can we live on 60-80% of our current salaries?

My first goal is to cut some expenses so I can increase my travel budget.  I also do not want to make the mistake of spending extravagantly early in retirement, as the market will continually have its ups and downs.  However, I will live a bit more in the moment, as time is passing quickly.

The bottom line:  You want to maximize the ability of your personal savings to provide annual income during your retirement years, close the gap between your projected annual income needs and the funds you will receive from Social Security.

Published in the Victoria Advocate

Phyllis Keller, MBA is the Chief Information Officer for KMH Wealth Management, LLC and Keller & Associates CPAs PLLC. 

https://kellercpas.com/wp-content/uploads/2021/07/blog-moment-vs-saving.jpg 247 500 KMH Wealth http://kellercpas.com/wp-content/uploads/2022/04/keller-logo-290-1.png KMH Wealth2021-07-11 23:47:242022-02-04 16:45:07Living in the Moment Versus Saving

More Tax Talk 2021

June 27, 2021

My last article was released to the Advocate on February 14th of this year. Here we are, over four months later with very little real clarity on what income and estate taxes will look like for 2021 or 2022. What we do have is the President’s “American Families Plan” presented to Congress and released on April 28th for spending and the proposed tax changes to pay for it. The “Plan” includes tax cuts and extended credits for lower-income taxpayers and increased rates and IRS enforcement for taxpayers earning over $400,000.

The President’s Plan expects to raise $700 billion over ten years through “revitalized enforcement” of existing tax laws “to make the wealthy pay what they owe.” It would require financial institutions to report information on account flows, increase investment in the IRS and ensure that the additional IRS resources go toward auditing those with the highest incomes. How long will it take to revitalize the IRS and financial institutions to update reporting?

The highest income tax rate will increase to 39.6%, rescinding the 2017 tax cut. For households making over $1 million, all income will be taxed at 39.6% equalizing the rates paid on capital gains and dividends.

In addition, the Plan will eliminate step-up in basis upon death over $1 million ($2 million per couple). Transfers at death or by gift will result in a deemed sale for capital gains purposes.

Other pending plans include Bernie Sanders’ “For the 99.5% Act.” The Act reduces annual exclusion gifts to a total of $20,000 per year (that’s total, not per recipient), reduces the estate and gift tax exemption to $3.5 million and will raise the top gift and estate tax rates up to 65% for the top bracket. Bernie’s plan also attacks Grantor Trusts, Generations Skipping Trusts, and valuation discounts.

Elizabeth Warren’s “Ultra-Millionaire Tax of 2021” includes a 2% annual tax on the net worth of households and trusts valued over $50 million and another 1% over $1 billion. Now I know what an “Ultra-Millionaire” is! Thanks Elizabeth. No one knows how this would be accomplished every year.

It certainly seems that Biden’s Plan took some of the original platform proposals to Congress and left the rest of the original proposals to Senators Bernie and Warren.

It is likely to take several months for tax legislation to work its way through Congress. Most of my reading indicates that effective dates for legislation will likely be between date of enactment and January 1, 2022. While it is possible the enacted reforms could be made retroactive, it would be uncommon.

As I said in my first article, no one really knows where this will all shake out and this article is not all inclusive and only hits the highlights. I suspect a lot of negotiating has already taken place and there are a few Democrats in Congress that will not go along with the Draconian effect this will have on agriculture and family owned businesses.

Change is coming and it is very important that you spend some quality time with your CPA, attorney and financial advisor. At the very least, you need to have a good handle on where you stand today and consider what planning options are available.

Published in the Victoria Advocate

Lane Keller CPA/CFP® is a managing member of Keller & Associates CPAs, PLLC and KMH Wealth Management, LLC with over 30 years of experience in tax preparation and planning.

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Elder Financial Abuse and Exploitation

June 13, 2021

June marks Elder Abuse Prevention Month. At a time when 70% of the nation’s wealth is controlled by Americans over 50 years old, fraudsters are using new tactics to take advantage of retiring baby boomers and the growing number of older Americans. And while some of these criminals are strangers, most often elder financial abuse is committed by family and friends.  So, what can you do to protect yourself and your loved ones from elder financial abuse?

Protect Yourself – In many cases, exploiters and abusers are often people you interact with regularly. They can be charming, yet forceful in their attempt to gain control of your finances. If you feel intimidated or manipulated, trust your instincts and avoid anyone who makes you feel this way. Some proactive measures you can take now are:

  • Add a “Trusted Contact” to your bank and investment accounts. A Trusted Contact is someone your bank or financial advisor can call if they suspect fraud or financial exploitation.
  • Build a relationship with your attorney and your CERTIFIED FINANCIAL PLANNER™ Differentiated from other financial advisors, CFP® professionals are known for their commitment to high standards of competency and ethics. These are two professionals you will want available to you and familiar with you in the event you suspect financial abuse.
  • Shred receipts, bank statements, and unused credit card offers before throwing them away.
  • Never give personal information like Social Security numbers, account numbers, or financial information over the phone, unless you initiated the call and the other party is trusted.
  • Never rush financial decisions. Ask for details in writing and get a second opinion.
  • Never pay a fee or taxes to collect sweepstakes or lottery “winnings.”
  • Check references and credentials before hiring anyone. Don’t allow workers to have access to information about your finances.
  • Avoid sharing personal information on social media. Information, like your favorite actor and your mother’s maiden name, can be pieced together with other publically available information to hack your online accounts.
  • Be wary of predatory lenders and salespeople pressuring you into an inappropriate reverse mortgage or pushing an expensive annuity that may not mature until you are in your 90’s.
  • Remain extra vigilant after the loss of a spouse. Bad actors browse obituaries and prey on widows and widowers, often under the guise of an unpaid creditor.
  • Don’t sign documents that you do not fully understand.
  • Feel free to say “NO.” It is your money!

Protect Your Loved Ones – Many older adults live alone and depend on others for care. This can put them at a greater risk for financial abuse and exploitation. Be their champion by recognizing red flags, which can be spotted in changes to established financial and behavioral patterns.

  • Unusual activity in a bank account and unpaid bills
  • Frequent expensive gifts to caregivers
  • Adding caregivers to bank accounts
  • Frequent checks made out to “cash”
  • A series of loans to a friend or family member with no repayment
  • Sudden change in beneficiaries
  • Doesn’t want to talk openly about your concerns
  • Caregiver prevents others from visiting

Like other forms of abuse, the consequences of financial abuse are long-lasting and deprive the victim of resources, peace of mind, and in many cases their independence. While some seniors may need help with their finances unless they willfully hand control over to another person, they have the same right as anyone else to receive, spend, invest, save or give away their money. By law, Texas residents are required to report known or suspicious elder abuse. You can report elder financial abuse by contacting Adult Protective Services at 800-252-5400 or online at TxAbuseHotline.org.

Published in the Victoria Advocate

Hannah Gohmert is a CFP® professional and IACCP (Investment Advisor Certified Compliance Professional) with KMH Wealth Management, LLC. She specializes in investor protection and is the Chief Compliance Officer of the firm.

 

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