• 23
  • August
    2011

Getting old can open up a Pandora's Box of potential issues. Some of them, such as orderly wealth transfer, can be planned for with the help of an elder law attorney. Others, such as avoiding becoming the victim of fraud or other foolish decisions, require constant vigilance.

In a recent case in California, Art Tenner, a 79-year-old man with a terminal illness, sank over $100,000 in savings into annuities sold by an unscrupulous insurance agent. The agent played on Art's fears that there wouldn't be enough money in his estate to pay for nursing home care for his wife. His wife didn't need this care yet, but she had Parkinson's disease and probably would one day.

The decision to buy the annuities turned out to be a costly one for Art. The transaction ended up costing him $11,000 in fees and penalties when he sought to withdraw the money early. As a result, he had to turn to his children to cover his daily living expenses.

Art's son Jim, 52, was candid in his assessment of what happened to his father. "He lost huge on this thing. Instead of enjoying what turned out to be the last nine months of his life, he didn't have $100 to spare."

Art Tenner's case is not an isolated one. The considerations are no different in New Jersey than in California or anywhere else in the country.

According to a study done in 2010 by the Investor Protection Trust, 1 of every 5 older Americans has faced a similar scenario. The dubious transactions include unwise investments, excessive fees for financial services, and outright fraud. One estimate of the collective losses from these transactions put the figure at $2.9 billion last year.

Seniors, and the adult children who interact with them, need to be more wary.

Source: "Protecting your parents: Keep the sharks at bay," CNN Money, 8-10-11