Protect Yourself, Your Identity, and your Assets by Taking the Time to Name a “Trusted Contact”

Humans have a bad habit of thinking we’re invincible, that nothing can touch us. It’s one reason why we tend to put off doing those important things we know we really should do. But here at AgingOptions and Life Point Law, we try to make sure we gently remind everyone that having a plan in place for as many contingencies as possible can save you a whole world of heartache.

As an appropriate example, one of our frequently-quoted writers, Liz Weston of NerdWallet, wrote this article last year, in which she explains the importance of naming a “trusted contact” to keep your financial assets safe. Curious about what a trusted contact is? Let’s take a look at this simple but profoundly important recommendation.

Putting Protections in Place

Weston begins by admitting that she never really thought much about naming a “trusted contact” – that is, until tragedy struck a close friend.  

Like most of us, Weston was vaguely familiar with the idea of a trusted contact. “Banks, brokerages and insurers increasingly want to have someone to call or email in case they notice suspicious activity and can’t reach the account holder,” she writes. “I ignored these requests. Trusted contacts are a great idea for older people experiencing cognitive decline, I thought, but that’s not me.”

But then, a younger friend developed early-onset dementia, and it made her realize “we don’t always get enough warning to put such protections in place.”

In her NerdWallet article, Weston makes the case for naming a trusted contact as soon as possible. “Anyone’s financial accounts could be vulnerable if they’re displaced by natural disaster, wind up in the hospital, suffer a brain injury or are traveling and hard to reach,” she explains. “Helping your brokerage, bank or insurer connect with someone who knows what’s going on in your life could protect your money and prevent financial catastrophe.”

Trusted Contacts Can’t Make Changes

One misconception about trusted contacts – which may be part of the reason people resist the idea – is that the person you name will have power over your assets. But Weston explains, “Naming a trusted contact doesn’t give that person authority over your accounts or the ability to see balances or make changes. Instead, your trusted contact can help financial services companies reach you (if you’re reachable) or identify others who might help.”

This means that if you are unreachable because of injury or even death, your trusted contact can connect the company with your legal guardian, your power of attorney, your executor, or your successor. That could be hugely important in the event of a crisis.   

Is naming a trusted contact required? Weston says no, but “financial services companies — along with regulators and consumer advocates — recommend it. You can change your trusted contact whenever you want, or name more than one. Ideally, a trusted contact is someone you’re confident will protect your privacy and act responsibly.” For example, Weston suggests choosing a responsible adult child, a close friend, or an attorney.

A Trusted Contact Could Thwart Fraud

So, like many, you’ve put off naming a trusted contact. Why is it so important now? The one-word answer: fraud. “More than 369,000 cases of financial fraud of older adults are reported to authorities each year, causing an estimated $4.84 billion in losses,” Weston writes. But the worst part is this type of fraud is “notoriously underreported” because the victims often feel ashamed, or because the perpetrators were their own loved ones. Weston says, “[T]he real toll may be 8.68 million cases and more than $113.7 billion in losses each year.” That’s a devastating statistic.

But she adds, “To help reduce that toll, two new [Financial Industry Regulatory Authority, or FINRA] rules were approved in 2017. The first allows brokerages to put temporary holds on withdrawals when financial exploitation is suspected, and the second requires brokerages to ‘make reasonable efforts’ to get customers to name trusted contacts.” Banks, credit unions, and insurers don’t have the same rules—yet. But most still offer the opportunity to name trusted contacts on accounts even though it’s technically optional.

Beware of Fraudulent Email Requests

“One thing you shouldn’t do is respond to emails that seem to be from your financial institution asking you to name a trusted contact,” Weston says. “Those may be scams to steal your passwords or create other havoc.” Instead, Weston suggests calling your financial institution directly, or looking on its official website for a trusted contact form you can fill out.

Naming a trusted contact takes only a few minutes of your life, but it can save you big in tragic consequences down the line. In her conclusion, Weston quotes Abby Schneiderman, an estate-planner and author: “People should take two minutes out of their day and name a trusted contact.” If we can assist with this simple but vital task, contact us – we’re happy to help.

Breaking News: Rajiv’s New Book is Coming Soon!

We have big news! The long-awaited book by Rajiv Nagaich, called Your Retirement: Dream or Disaster, will launch in March 2023.  As a friend of AgingOptions, you have the option to preorder now.

You’ve heard Rajiv say it repeatedly: 70 percent of retirement plans will fail. If you know someone whose retirement turned into a nightmare when they were forced into a nursing home, went broke paying for care, or became a burden to their families – and you want to make sure it doesn’t happen to you – then this book is must-read.

Through stories, examples, and personal insights, Rajiv takes us along on his journey of expanding awareness about a problem that few are willing to talk about, yet it’s one that results in millions of Americans sleepwalking their way into their worst nightmares about aging. Rajiv lays bare the shortcomings of traditional retirement planning advice, exposes the biases many professionals have about what is best for older adults, and much more.

Rajiv then offers a solution: LifePlanning, his groundbreaking approach to retirement planning. Rajiv explains the essential planning steps and, most importantly, how to develop the framework for these elements to work in concert toward your most deeply held retirement goals.

Preorder today and get a free bonus video of Master Your Future, Rajiv’s first public television special. Click here to PREORDER NOW.  And remember, Age On!

(originally reported at www.nerdwallet.com)