There’s a tipping point where people who have managed their finances and investments over a lifetime question their ability to carry on as they age. I know this from the flow of e-mails from readers in this situation. The question they all ask: What options are there for getting help? For answers, let’s check in with Marc Seguin, author of Advocacy in Aging: Building your team for the seamless transition of personal care and estate management. Here’s a Q&A we did recently by e-mail:
Q: Marc, can you tell us how you came to write Advocacy in Aging?
A: One particular close-to-home event was a catalyst: My father-in-law, who was passionate about estate planning, had not contemplated a scenario in which he became ill or lost mental capacity. In the early stages of dementia, he started undoing his well-thought-out plans, including selling assets at a significant discount, in an effort to retain control by simplifying his affairs. Luckily, the family was able to intervene in time and reestablished his affairs as originally intended.
Q: I’m hearing from a growing number of readers that they are concerned about their ability to manage their finances and investments as they age. What would you say to these people to help them start thinking about how and where to get help?
A: They are right to be concerned. I, for one, acknowledge that I am not as sharp as I was 10 years ago, while my kids are at their prime and likely more capable in some respects.
If you have a power of attorney for property in place, the person identified in that document (the “attorney”/delegate) will become your helper. They should be fully apprised of their role, and you should have early conversations so they can learn your financial affairs.
People without a POA for property in place should get help from a lawyer or notary to create one. It is important to select a trustworthy attorney/delegate, someone with the necessary skills, interest, good health and availability.
Q: Let’s say you want to delegate management of your finances to the individual who you have given power of attorney for property. What’s the best way to make this transition?
A: The transition should be gradual, following the four steps below:
1. Have your attorney/delegate learn about your financial affairs.
2. Allow your attorney to shadow your financial activity and possibly fine-tune your processes.
3. Gradually transition management to your attorney.
4. Fully hand off your financial management.
Q: When is a good time to start this transition? It’s easy to say sooner rather than later, but many people are very involved in their day-to-day finances and will be reluctant to give up control.
A: ‘Sooner rather than later’ is the answer, however simplistic it may seem. I believe the transition should start the day the POA is signed. You don’t have to give up control, but you need to start the conversations and the transfer of knowledge that will lead to a gradual delegation of certain responsibilities over the years. The ultimate goal is not to give up control, but rather delegate the active management of your affairs under your guidance and with the benefit of your wisdom.
Q: For the children of seniors, what are some signs you need to step in because your parent is no longer on top of their finances?
A: Pay particular attention to:
• Loss of memory
• Loss of information-processing capabilities
• Loss of reasoning skills
• Decline of speech abilities
In general, people acknowledge and accept signs of degradation far too late. Detrimental financial situations can be avoided by children getting involved early and with frank conversations between parents and children – though that’s easier said than done.
Q: What if you’re a solo senior with no family members you can give power of attorney for property or health-related matters? Who can take on this duty for you, and what’s the cost?
A: A reader reached out with questions about that very situation. She has no family and, although she contemplated asking friends, she realized the importance of having someone younger. Although she was uncomfortable with the idea of using a trust service, with some encouragement she shopped around and found a service and adviser that suited her. The cost of such services comprises initial fees of about 0.25–2.5 per cent of your asset value, plus annual fees in the range of 0.1–0.5 per cent.
Unfortunately, there do not appear to be similar third-party options for decision-making for personal care. As an alternative and an initial step, I encourage people to put in place an Advance Care Plan and to communicate it to friends, health-care providers and other members of one’s close community. These actions will help build a team of advocates, and eventually, may lead to…
Read More: Thoughts for people who love managing their money, but worry about advancing age