Safeguarding Your Finances As You Age

Written by: Deborah Cartisser

We will all experience some form of diminished capacity as we age.  Cognitive decline begins in our 20s and intensifies after age 60.  We have all heard stories of the person who simply stopped opening their mail, the parent who started giving large sums of money to a charity no one had heard of, or the savvy relative who fell victim to a financial scam.  Managing your financial life has become more complex than ever, so what can be done to help safeguard your finances as you age?  Our advice: don’t wait.  The strategies listed below can be implemented now, regardless of your age.

Assess your Family Situation Objectively

Take a look at your family through the eyes of an outsider.  Are there relationship issues, problems with trust, siblings who are constantly at war, or children who can’t seem to make it financially and always have a hand out?  These present risks to you as you age. Is there anyone you need to protect?  Is there someone you need to be protected from?  Is there substance abuse? If you can identify the issues, safeguards can be put in place to prevent the personal dynamics from interfering with your plan.  These issues are not at all unusual and your professional advisors have dealt with them.  By communicating your concerns to your financial advisor, estate planning attorney, or CPA, they can devise ways to deter the risk and be on the lookout for unusual activity.

Create a Team

Your financial advisor, CPA, and estate planning attorney should form a team that shares information and communicates back and forth.  If they aren’t functioning as a team now, call a meeting and outline your expectations. Meet annually to share information and provide updates. If needed, the team can be expanded to include care managers, billpayers, etc.  Select one to be the team leader.

Identify and Name Your Trusted Contact

Who is the person who shares your values, cares about your well-being, and will carry out your wishes?  Ask them if they are willing to serve in a formal role in your financial world. Financial institutions now have forms where you can assign a trusted contact to your relationship.  This person is entitled to receive information about your account but can’t initiate transactions on your behalf.

Create & Update Estate Planning Documents

The person identified as your trusted contact can be named in your estate documents in formal roles.  While you are alive, a Durable Power of Attorney oversees all things financial if you are unable to make your own decisions.  A Health Care Proxy oversees all of your healthcare decisions, can receive information, and make decisions on your behalf.  A Personal Representative is the person who will settle your estate and ensure your wishes are carried out after your death.  Be sure to keep your documents updated.  Ask your attorney for a summary outline so you can review the names of all of your appointees every year.  Schedule a visit to your estate planning attorney every 5-7 years to ensure there have been no legislation changes that necessitate a change to your documents.

Create a Revocable Trust

A revocable trust, also called a living trust, can be revoked or changed by you while you are alive.  Having your assets in a revocable trust can make for a seamless transition if you get to the point where you can’t manage your finances.  You appoint a co-trustee who can function with you or for you as you age.  Be sure your co-trustee is completely trustworthy.  Once you have signed the trust document, be sure to fund the trust.  You fund it by having your financial institution re-title your accounts from individual names into the new trust title.  This does not apply to retirement accounts.

Appoint a Professional Trustee

It’s not unusual to lack a family member or trusted friend to appoint as your co-trustee.  If this is the case, enlist a professional trustee.  The professional trustee has a fiduciary duty to use trust resources to care for your best interests and to carry out your wishes after your death.  Their objectivity can be a lifesaver to families (look at trust one-pager for language)

Freeze Your Credit

Unless you are expecting to finance a purchase or take out a new loan, freezing your credit can prevent thieves from opening lines of credit in your name.  You call the major credit bureaus (Equifax, Experian, and Transunion) and request to have your credit frozen.  It can be reopened at any time by you.

Automate Bill Payments

Bill paying has taken on new levels of complexity which can be simplified by automating payments.  Maintain a list of accounts and passwords and make this information available to your trusted contact or co-trustee.  Professional bill payers are also available to perform the bill pay function.  Checks and balances can be created here so that a trusted person can review all the payments every month.

Safeguard Your Valuables 

Whether in your home or in an assisted living facility, you need to safeguard your valuables.  Don’t be the family that is surprised that all the sterling silver or family jewelry is missing after a prolonged illness.  Move items into a safe or safe deposit box.

Memo of Tangible Personal Property

If you have personal items that you want distributed to particular individuals or charities after your death, write it down, sign and date it, and give a copy to your personal representative and your attorney.  This applies to the tangible items you own, that are not held in an account at a financial institution. This gives instructions to give your gold watch to your nephew and your mineral collection to the Natural History Museum.

The point of all this preparation is to enlist people you trust and install safeguards that will help you carry out your own wishes as you age.  Don’t wait.  Help your family members to activate a plan like this and then do it for yourself.  Revise the plan as you age, and you will be much more likely to create a successful financial life.

Contact our team of experts today on how to safeguard your finances as you age.



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