Recently, my client admitted that she is no longer capable of managing her everyday financial affairs. How can you and your planner prepare for this, should it happen to you?
Dr Sylvia Kree turned 91 recently and has many interests. She also still goes to gym regularly which helps her keep fit. “It is your responsibility to look after my financial affairs, and my responsibility to look after my health,” she regularly says to me.
Of late, Sylvia finds it difficult to manage daily financial matters, like banking, and she is daunted by the fast pace of changing technology. She also does not have any children and her nearest relative lives in the Cape. ‘Who will look after me when I am not capable of doing so myself?’ she asked.
Sylvia and I discussed appointing an administrator over her affairs. Sylvia agreed. “It’s comforting to know that my affairs are in capable hands. I feel reassured and confident that you are there for me, even now,” she says. “I do not understand all the financial terms, and also cannot retain that kind of information. So having someone taking over that responsibility is a huge relief.”
Start thinking about your wishes should this ever happen to you. Prepare for when you can no longer care for yourself. Take time to look at retirement villages and facilities before you need to – where would you like to stay? Do you want to move only once? Then choose a village with assisted living and frail care facilities – most of these cover that cost by a life rights arrangement. Talk this through with your spouse and your planner so that you are prepared before you are compelled to move because of injury or illness. Many of these establishments have waiting lists in excess of two to five years, so choose where you might like to live and put your name on the list – there is no obligation, so you can change our mind.
By thinking this through whilst you are still capable of contributing to the conversation will make the process so much simpler and in line with what you want.
When do you institute a power of attorney?
If you leave it too long, and there are early signs of dementia, a power of attorney may not hold. Under current legislation, the power of attorney would not endure in situations where you are no longer able to understand the impact of such consent. Rather pre-empt the situation and be prepared for such an eventuality.
Consider whom you would entrust with a power of attorney.
Build additional costs in your financial plan for such a situation. The cost and strain on family members can be overwhelming. The carer or child has to go through an onerous process to be appointed administrator or appoint a third party as administrator and/or curator.
Planners can facilitate and advice around these matters, having established relationships with administrators and curators. Experienced planners have been through this process before, and are aware of aspects of planning that you may not be. You should have a trust relationship with your planner that ensures that he or she is planning in your own best interests … and a time when you are most vulnerable should be no different.
Article by Christina Forman, Certified Financial Planner and Retirement Specialist at Chartered Wealth Solutions. Click here to access the second article in the series: When a loved one can no longer manage their financial affairs. One of our clients also shares their personal experience of the Implications of being a parents’ tax consultant and having power of attorney.