Imagine your elderly friend or family member receiving a heartfelt call. The voice on the other end claims to be their loved one, urging them to act quickly to avoid financial disaster. This is the all-too-familiar scenario where criminals use Elder Financial Exploitation (EFE) to prey on vulnerable individuals, often in their later years when they are most susceptible to scams and fraud.

According to the Financial Crimes Enforcement Network (FinCEN), analysis of EFE shows banks reported over $27 billion in suspicious activity between June 2022 and June 2023. The financial impact can be devastating—often leaving families not only financially drained but also emotionally drained by the betrayal of trust.

Types of Elder Financial Exploitation

• Elder Theft – schemes that involve the theft of an elderly person’s assets, funds or income by a trusted person. Typically, criminals will repeatedly abuse their victims by liquidating savings and retirement accounts, stealing Social Security benefit checks and other income, transferring property and other assets, or maxing out credit lines/cards that are in the victim’s name.
• Elder Scams – scams that involve the transfer of money to a stranger or impostor for a promised benefit or good that the older adult will never receive. These scams defraud victims into sending payments and disclosing their personally identifiable information under false pretenses. Common scams include government impostor scams, romance scams, emergency/person-in-need scams, lottery and sweepstakes scams, tech and customer support scams and more. Find out more about these kinds of scams.

Signs of Elder Financial Exploitation

• Behavioral red flags may include the following:
  • Sudden or unusual changes in contact information or new connections to emails, phone numbers, etc.
  • Seeming nervous or leery while taking direction from someone over the phone.
  • Fear or submissiveness toward a caregiver.
  • Person is agitated about sending money immediately in the face of a supposed emergency of a loved one, but the money would be sent to the account of a seemingly unconnected third-party.
• Financial red flags may include:
  • Dormant accounts with large balances beginning to show constant withdrawals.
  • Purchases of large numbers of prepaid or gift cards.
  • Multiple checks or wire transfers with descriptors such as “tech support services,” “winnings,” or “taxes.”
  • Sudden or frequent insufficient fund activity.

Protecting Against Elder Financial Exploitation

The Consumer Financial Protection Bureau offers many suggestions to take that can help protect elderly friends and family members from EFE including:

• Use automatic bill pay.
• Have checks directly deposited.
• Encourage advanced financial planning.
• Protect documents and personal/financial information.

At Heartland Bank and Trust Company, we understand the unique challenges faced by senior customers and are committed to providing tools that support financial security. If suspicious activity is spotted on your account, we’ll notify you promptly through email or text messages—free of charge, any time day or night. During verification, our fraud team may ask for details to confirm your identity but will never request your account number. Instead, they’ll ask you to review and verify any unusual transactions. This process is designed to be quick and efficient, ensuring we address potential threats without unnecessary inconveniences. For questions or concerns about suspicious activity, feel free to reach out—we’re here to help protect your financial well-being.

This article may reference and link to third party information that has been verified to the best of our abilities. There is no guarantee of accuracy. Heartland Bank does not endorse companies, services, or products referenced in its articles and is not responsible for the content, links, privacy or security policies of these third parties. Information in the above article may include material from FinCEN (https://www.fincen.gov/sites/default/files/advisory/2022-06-15/FinCEN%20Advisory%20Elder%20Financial%20Exploitation%20FINAL%20508.pdf#page=6), (https://www.fincen.gov/news/news-releases/fincen-issues-analysis-elder-financial-exploitation) and the Consumer Financial Protection Bureau website (https://files.consumerfinance.gov/f/documents/cfpb_ymyg_native-communities_preventing-elder-financial-exploitation.pdf#page=2).

According to a 2024 research report from the Investment Company Institute, 62% of U.S. households have Individual Retirement Accounts (IRAs) that have been funded with rollovers from employer plans. An estimated $595 billion worth of such rollovers occurred in 2020. Care needs to be taken that these transactions are handled properly to avoid unexpected tax traps.

Once a taxpayer reaches age 73, he or she must take Required Minimum Distributions (RMDs) from tax-advantaged retirement accounts. The first dollars being distributed from the account are considered to be RMDs.

Example: A taxpayer turns 73 this year and plans to retire. In anticipation of this happy event, the taxpayer arranges to have his entire 401(k) balance rolled over into an IRA. He makes the smart choice to have a direct rollover to the IRA custodian, avoiding the need for withholding taxes on the transfer. However, the taxpayer inadvertently has now rolled his RMD into his IRA, which is an excess IRA contribution.

The better way: The taxpayer determines that his RMD will be $40,000 this year. He orders a distribution to himself of the entire amount of the RMD, then orders the rollover of the balance of the account. With this approach, there is no question of even a temporary excess IRA contribution.

© 2025 M.A. Co. All rights reserved.

Securities and Insurance products are NOT deposits of Heartland Bank, are NOT FDIC insured, are NOT guaranteed by or obligations of the bank, are NOT insured by any government agency, and are subject to potential fluctuation in return and possible loss of principal.

Legal, Investment and Tax Notice: This information is not intended to be and should not be treated as legal advice or tax advice. Readers should under no circumstances rely upon this information as a substitute for their own research or for obtaining specific legal or tax advice from their own counsel.

Parents who are building a college fund for their child or children have two tax-advantaged alternatives, the 529 plan and the Coverdell Education Savings Account (CESA). Contributions to 529 plans and CESAs are not tax deductible, but there is no tax as the income builds up in the account. Distributions from the plans are tax free if they are used for qualified education expenses. The definition of what qualifies is not the same for the two approaches.

CESAs have one advantage over 529 plans. Where 529 plans are typically limited to just a few investment choices, with the money managed by the plan sponsor, there are no similar limitations for CESAs.

However, there are CESA disadvantages to consider also, where the 529 plan is superior. Most importantly, no more than $2,000 per year per student may be contributed to an Education Savings Account (ESA). Second, contributions must end when the beneficiary reaches age 18. Therefore, no more than $36,000 total may be set aside for one student, which almost certainly will fall far short of the financial need. Still, having a dedicated capital source that is growing tax free as one begins higher education is nothing to sneeze at.

A third problem is that contributions to CESAs are not permitted for those whose income is too high—modified adjusted gross income of $110,000 for singles and $220,000 for a married couple. No similar limitation applies to the 529 plan.

Successor beneficiaries

What if the beneficiary decides against college? The CESA accumulation may be rolled into another CESA for a family member of a beneficiary, or a new beneficiary may be designated for the 529 plan. The new beneficiary must be of the same or higher generation as the original beneficiary. Alternatively, subject to a variety of rules, unused 529 plan money may be rolled into a Roth IRA for the beneficiary.

The CESA must be distributed by the time the beneficiary reaches age 30 or within 30 days after that date. The distribution may be in the form of a rollover to another family member. Amounts not rolled over and not used for qualified expenses are included in taxable income, and a 10% tax penalty applies. No such age limits apply to the 529 plan.

Start early

As valuable as the tax advantages of CESAs and 529 plans may be, the biggest advantage is starting early. The sooner one begins setting aside funds for a college education, the more time that capital has to grow into something significant.

© 2025 M.A. Co. All rights reserved.

Securities and Insurance products are NOT deposits of Heartland Bank, are NOT FDIC insured, are NOT guaranteed by or obligations of the bank, are NOT insured by any government agency, and are subject to potential fluctuation in return and possible loss of principal.

Legal, Investment and Tax Notice: This information is not intended to be and should not be treated as legal advice or tax advice. Readers should under no circumstances rely upon this information as a substitute for their own research or for obtaining specific legal or tax advice from their own counsel.

When people decide to relocate, how do they choose a destination? Key factors will include job opportunities, family situations, and lifestyle changes, such as retirement. According to a recent study from the Tax Foundation, income tax rates are also a factor, especially for upper income folks who have more resources to draw upon in making their decisions (“Americans Moved to Low-Tax States in 2024,” https://taxfoundation.org/data/all/state/americans-moving-to-states/). The data comes from the U.S. Census and from industry moving companies United Van Lines and U-Haul.

The census data shows that the five states losing the most population in 2024 were Hawaii, New York, California, Alaska and Illinois. Those that gained the most were South Carolina, Idaho, Delaware, North Carolina and Tennessee. The moving company data offered slightly different rankings but, in general, confirmed the census data.

Digging deeper into the tax differences among the states, the study observed:

• Of the 26 states that had per capita state and local tax burdens below the national average in 2022, 18 had population growth in 2024. Conversely, of the 25 with above average taxes, 17 lost population.
• The top one-third of states gaining population had an average top state income tax rate of 3.5%. The bottom one-third, the population losers, had an average top tax rate of 6.7%, nearly double.
• Six states in the top one-third have no income tax at all.
• Twelve states have a flat-rate income tax, rather than a progressive system with escalating tax rates as income goes up. Of those 12, eight experienced population growth in 2024.

The pandemic altered employment patterns, enabling remote and hybrid work environments. According to the study, three states with “highly uncompetitive tax codes” enacted reforms to compete better with their lower-tax neighbors for jobs and businesses. These were Iowa, Louisiana and Arkansas.

Whether other states join the tax-cutting movement remains to be seen. One of the advantages of federalism is that the states can serve as laboratories for new ideas in governance.

© 2025 M.A. Co. All rights reserved.

Legal, Investment and Tax Notice: This information is not intended to be and should not be treated as legal advice or tax advice. Readers should under no circumstances rely upon this information as a substitute for their own research or for obtaining specific legal or tax advice from their own counsel.

Sometimes a sound estate plan may need to be modified after it is put into effect. One such situation was recently outline in Private Letter Ruling 202504006 from the IRS.

A decedent’s estate plan called for the creation of two trusts, a marital trust for the surviving spouse and a decedent’s trust. Although the ruling doesn’t mention it, the decedent’s trust was likely funded so as to fully consume the decedent’s federal estate tax exemption while avoiding being included in the taxable estate of the surviving spouse. With the unlimited marital deduction, there was probably no federal estate tax due at the decedent’s death.

The marital trust was a Qualified Terminable Interest Property (QTIP) trust, which meant that the surviving spouse could not change the final disposition of the trust assets. The trust beneficiaries arranged under state law to divide the QTIP trust into two nearly identical trusts, leaving all income and remainder interests intact. The difference was that Trust 1 would be funded to take full advantage of the surviving spouse’s federal estate tax exemption, and Trust 2 would hold the balance of the assets.

The next step was for the surviving spouse to disclaim her entire interest in the newly created Trust 1. This was a transfer subject to the federal gift tax. By doing so, the surviving spouse consumed her entire federal estate and gift tax exemption—she “locked in” the exemption and will not lose should Congress decide to lower the exempt amount in the future.

The questions presented to the IRS were whether these actions required the recognition of gain or loss for income taxes, whether Trust 2 continued as a valid QTIP trust, whether the spouse would be treated as having made a transfer to Trust 2, and what the tax effects will be when the spouse dies. Happily, for this estate, there were no adverse tax determinations.

No numbers were presented in the ruling, but it seems likely that this estate saved millions of dollars in estate tax obligations with this modification.

© 2025 M.A. Co. All rights reserved.

Securities and Insurance products are NOT deposits of Heartland Bank, are NOT FDIC insured, are NOT guaranteed by or obligations of the bank, are NOT insured by any government agency, and are subject to potential fluctuation in return and possible loss of principal.

Legal, Investment and Tax Notice: This information is not intended to be and should not be treated as legal advice or tax advice. Readers should under no circumstances rely upon this information as a substitute for their own research or for obtaining specific legal or tax advice from their own counsel.