South Florida Senior and Retirement Financial Exploitation and Financial Fraud Litigation and Arbitration Attorney:
What is diminished financial capacity?
“Diminished financial capacity” is a term used to describe a decline in a person’s ability to manage money and financial assets to serve his or her best interests, including the inability to understand the consequences of investment decisions. While the inability to manage one’s money is clearly a problem in itself, when people of any age lose the capability to manage their finances, they may also become more vulnerable to investment fraud and other forms of financial abuse.
Preparing for Your Own Financial Future: Hope for the Best, But Plan for the Worst.
Losing the ability to manage your finances may be something you’d rather not think about. We often think about our financial capabilities, like our ability to drive, as an important measure of our independence. But planning ahead may help you stay in control of your finances, even if diminished financial capacity becomes a serious problem. Taking the steps listed below now may help avoid or minimize problems for you and your family.
Organize your important documents. Organize and store important documents in a safe, easily accessible location. That way, they are readily available in an emergency. Give copies to trusted loved ones or let them know where to find the documents. Typically, the following documents will be most relevant to your finances:
- Bank and brokerage statements and account information. Make a list of your accounts with account numbers. Keep a separate list of online bank and brokerage passwords and PINs and keep the lists in a safe place. In addition, make a list of the locations of your safe-deposit boxes, including where the keys to the safe-deposit boxes are located. Also, keep your recent bank and brokerage statements available, as well as information about how to get those statements online if you access them electronically.
- Mortgage and credit information. Make a list of your debts and regular payments, with account numbers and names of the financial institutions that issued the loans or credit cards.
- Insurance policies
- Pension and other retirement benefit summaries
- Social Security payment information
- Contact information for financial and medical professionals, such as doctors, lawyers, accountants, and securities professionals.
- Provide your financial professionals with trusted emergency contacts. If you have a financial professional, such as a broker or investment adviser, provide that person with emergency or alternate contact information in case he or she cannot contact you or suspects something is wrong. You may wish to discuss with your financial professional what you would consider to be an “emergency,” and specify when he or she may contact someone on your behalf. Discuss what information can be shared with your emergency contact. For example, you might provide your financial professional with a simple written instruction, such as: “Please call my son Mark at (222) 555-5555 if: (i) you are unable to reach me and there appears to be unusual activity regarding my account; (ii) you are unable to reach me for two weeks irrespective of any unusual account activity; or (iii) if you think I am confused or acting strangely.” Providing an emergency contact generally will not enable the person to make investment decisions on your behalf – so be sure to take other steps if you want someone else to manage your accounts if you cannot.
- Consider creating a durable financial power of attorney. A financial power of attorney gives someone the legal authority to make financial decisions for you if you cannot. That person is called your agent. The document is called “durable” because it remains in effect even if you become incapacitated. You retain the ability to change it or cancel it as long as you are still able to make decisions. A financial power of attorney differs from a health care power of attorney, which only covers health care decisions. You may want to consult with a lawyer to determine whether a durable financial power of attorney is right for you. After signing a durable financial power of attorney, you can still manage your money and property as long as you have the ability to make decisions. Also, it is important to remember that you always have the option to change who you choose to act as your appointed representative and the individuals you allow to access your financial information. As you are essentially giving financial decision-making authority to your agent, it is critical that he or she be someone you can trust.
- Think about involving a trusted relative, friend, or professional. Besides listing them as emergency contacts, you may wish to give a trusted relative, friend, or professional an overview of your finances (even if you don’t want to share all the details). For example, you might ask your broker or bank to send duplicate statements to your daughter or accountant. You might also consider asking a trusted friend or relative to join you on periodic visits to your financial professional. This would give someone you trust a sense of your financial situation and with whom you’ve been doing business. If you choose to involve a relative or friend, it is very important it is someone you are sure you can trust. Consider discussing the selection of the person with a number of other trusted friends or relatives.
- Keep things up to date. Be sure that if something changes (for example, you open a new account) you keep your information as current as possible. Also, your trusted contact may change over time. Keep your financial professionals informed of changes regarding who has authority to review your account or whom they should contact in case of an emergency.
- Speak up if something goes wrong. If you ever think someone is taking advantage of you, or that you’ve been the victim of a fraud, speak up. Sadly, sometimes even financial professionals and people we know commit financial crimes. There’s no shame in being a victim, and the sooner you let someone know about it, the better chance there is of putting an end to it. Contact information for reporting abuse appears at the end of this document.
With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.
At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.