July 24, 2024
Thoughts for people who love managing their money, but worry about advancing age

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 identification of a substitute decision-maker for the POA for personal care.

Q: What are your thoughts on lifelong do-it-yourself investors finding a financial adviser to look after their investment accounts? Is it almost too late if you wait until very late in life to make this transition, and how do you find someone trustworthy?

A: It’s never too late to select an adviser, as long as you have the mental capability and/or are surrounded by people to help you. Do-it-yourself investors should either plan to eventually involve a suitable financial adviser/planner, or identify someone capable and interested to eventually take over the management of the financial plan and investment portfolio as their attorney/delegate for property.

Subscribe to Carrick on Money

Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.

Rob’s personal finance reading list

The down side of over-saving

A retiree on her regrets about emphasizing saving over life experiences. She’s got money to spend now, but feels she missed out on opportunities to travel and enjoy time with friends.

Debt is being rebranded

Expect to see more retailers and credit cards offering instalment payments, a.k.a. buy now, pay later. Example: You put a flight on a credit card and are offered the opportunity to pay for it in 12 instalments, interest-free. Instalment payments make debt sound acceptable and easily manageable, but that’s a mirage. The entire point is to get people to spend more money than they otherwise might. The latest on instalment payments in Canada: Holders of RBC and Scotiabank Visa cards now have the option to select instalments as their method of payment for Amazon purchases.

Don’t count the U.S. out

A veteran investing blogger and money manager on why he remains bullish on the United States. Welcome perspective if you need a break from doomscrolling about U.S. politics.

Planning a trip? Consult your kids

A suggestion is made here to bring your children into the process of planning and budgeting for your next family vacation. The idea is to teach kids the idea of making the most of whatever amount of money you have to spend.

Podcast fans

Subscribe to Stress Test on Apple podcasts or Spotify.

Ask Rob

Reader comment: “I was the executor of my mother’s estate. She had the forethought to name me as the beneficiary on a small insurance account. That way, I didn’t have to charge any fees but still got compensated for the work.”

Do you have a question or comment for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.

Tools and guides

For anyone feeling crushed by their debts, a non-profit credit counselling agency’s primer on consumer proposals and bankruptcy. Also, a guide to tax debt forgiveness.

In the social sphere

Social media: A Reddit discussion on whether it’s poor etiquette to consult more than one mortgage broker.

Watch: CBC reports on why so many big-city condos are sitting empty. The market has been flooded by investors getting out of properties that don’t make financial sense at today’s mortgage rates.

Money-Free Zone

If I compiled a list of songs that have been covered to exhaustion, Pink Floyd’s Wish You Were Here would be on it for sure. That said, the version by the blues duo Larkin Poe more than pulls its weight. BTW, I saw L-P at a music festival in Ottawa a few years back and they rocked the house down.

More PF from The Globe
  • There’s rot in the economy and it’s costing you better pay and investment returns
  • Multi-generational living is getting more common. Here’s how to share costs – and a mortgage
  • Arranged mortgages: How Canadian parents influence their children’s housing choices
  • Financial resilience is the newest training ground for Canadian military members

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *