The only guarantee we truly have in life is that at some point our lives will come to an end. Most of us spend our lives working hard so that future generations do not have to. We work to cover our obligations throughout our life. The one thing most people do not do is plan for the inevitable ending that is coming. Because of that there are many people that take advantage of others when it comes to the remaining finances and assets we leave at the end of our lives.
A February 2019 Consumer Affairs report stated that the Center for Disease Control estimates that approximately 60 percent of adults in the United States have no plan in place for the end of their lives. This leaves family and heirs in the inconvenient position of combing through what is likely unorganized information to locate accounts, policies, and wishes of the deceased. We often hear the phrase “well, that’s what he or she would have wanted”. However, without formal written instructions in place the heirs and family are only guessing as to what the deceased would have wanted.
These guesses often lead to disputes amongst the surviving family members and heirs. Usually, nobody wants to take the lead in taking responsibility for the arrangements and affairs of the deceased. Once someone is persuaded to, or steps up to do so, the other parties involved voice their initial support, then do everything they can to undermine this person. Eventually, the lead party may make tough decisions without consulting the other parties because of the hassle and arguments that come with these discussions. This leaves the other parties feeling their voices are not being heard, and leads to more complaining, undermining and even legal action that may or may not be necessary.
According to Miranda Marquit in an article written on budgetlife.com stranger owned life insurance is one of the largest scams in the insurance industry. How this works is that after owning a life insurance policy for two years a policyholder may sell it to another party. The other party may pay money up front, usually in the $5 to $10 million range which is actually a loan. If the insured dies within the first two years, the beneficiaries receive the death benefit and uses it to repay the “loan” sold to the other party.
Of course, health insurance and Medicare fraud are on the rise. It is important for heirs and family to review the Explanation of Benefits received for end of life care to ensure they are accurate. The health insurance industry is notorious for over billing customers and usually an end of life situation is an expensive medical endeavor. Oftentimes, the cost of medical treatment due to end of life situations cause the estate of the deceased to go insolvent leaving heirs and family scrambling to sell assets to cover unexpected medical costs not covered by insurance. Collection agencies may start leveraging heirs to cover the costs owed to medical institutions that is not covered under insurance.
When a family member dies, sometimes a long-lost relative may come out of nowhere and claim that they were expecting to inherit something from the deceased. It is usually a financial figure or something vague that is a common asset that may have some sort of financial value if sold. They may claim to be the relative of a family member that most of the heirs were vaguely aware of or that the deceased had lost contact with some time ago. Putting these family trees together is fairly easy nowadays if someone is willing to put the work in. The same goes for verifying the authenticity of this fraudster. Not just searching that the name matches, it will. Heirs need to go further and may need to contact other family members for photographs, contact information, etc. to verify the identity of this long lost relative.
When setting up an end of life plan it is important to choose the executor of one’s last will and testament. Many people choose a family member, often a surviving spouse, oldest child or a sibling. Sometimes they may choose a family member that has a professional services background in something like Legal, Accounting, Finance or Banking as these types of professions are often familiar with administering end of life contracts. Other times one may choose a professional outside the family to serve as trustee to administer the wishes of the deceased. Keep in mind though, a professional administrator/trustee will likely be charging for their services against the estate. While this fee and the decisions made by the trustee will likely make the heirs and family unhappy, those decisions will probably be made without emotional attachment and provide a more equitable distribution of funds and assets. However, it is important for the family and heirs to monitor the trustee to ensure they are operating in good faith and as the deceased intended. There are numerous cases where a third-party trustee or administrator has taken advantage of the trust placed in them. Fortunately, there are often ethical and legal guidelines for these types of services.
The best advice we can give anyone to prevent end of life fraud is to put the written plan in place long before anything happens. Many States will honor hand written wills. However, the deceased will need to put someone in place to administer their wishes prior to departing this world. Many wills are placed in safe deposit boxes, so it is important that the deceased provide their appointee with access to that box or home safe or wherever the will is being stored. It is also important to update the will on an annual basis to account for changes in financial position or assets that may have been acquired or sold. While engaging a legal or financial professional will have additional costs associated with it, it is beneficial to all parties so that all legal aspects are covered, and no surprises appear. Many States require that the assets and finances of the deceased go through probate if they are not administered by a trust. There are court fees associated with both probate and trusts. There are also time delays associated with probate that may delay in paying outstanding medical bills and funeral expenses.
Because of inevitability, the end of life industry is huge. Costs can soar to tens of thousands of dollars for those that do not plan ahead in order to control expenses. While it is an uncomfortable conversation to have, it is one that everyone needs to have with their families so that they know what to expect and what your wishes are.