When Relatives Need Help
No one wants to give up control of their lives. That’s as true at 20 as it is at 80. But if you sense an older relative is slowing down, or if a serious illness threatens the finances of any loved one, it’s time to start planning. A good first stop is a Certified Financial Planner ® practitioner who can help you make the critical decisions. Ideally, you’ll have an opportunity to prepare before there’s a crisis, but that’s not always possible. Here are some suggestions.
Start by understanding their condition and finding a balance. The first step in helping someone in a crisis is not to talk about the money but to understand the problem. First, do everything possible to understand how they’re feeling and most important, how they want to handle family, work and money issues at each stage of an illness. Your relative will likely want to keep control until they absolutely can’t manage anymore. So discuss their feelings to allow you to start helping. Then find out how they would like to proceed and formulate a transition plan.
Talk about legal documents. Does your relative (or friend) have a will and necessary health directives in place? Health directives name someone to manage key health decisions when a patient cannot. A will or power of attorney, depending on their assets and lifestyle situation, may contain instructions for managing their finances and other needs. If your relative is seriously ill (or declining) and has not made these arrangements, they need to be made immediately with the help of tax and legal experts. An individual who is ill needs to designate people whom they trust to handle health and personal finance decisions. Planning for business owners is very complex, and critically important.
Talk about long-term care provisions. According to the American Association of Retired Persons, the average nursing home stay is 2.5 years. Whether an individual chooses long-term care in the home or in a facility, it’s important to understand that while some direct medical expenses will be covered by private insurance, Medicare or Medicaid, most of the cost, including daily living expenses, will not.
Get a handle on bills and other key financial events. It’s not an easy conversation, but if more people planned their affairs with an eye towards death or incapacity, life would be much easier for survivors in their absence. Having simple wills and powers of attorney are just the beginning. Consider the following as well:
- Electronic bill payment: Generally, older people tend to trust traditional means of paying bills, but automatic electronic bill payment makes managing someone else’s finances much easier. It significantly reduces the risk of missing a critical payment. Most importantly – once those automatic transactions are set up, all the security codes and passwords must be kept in a safe place for both to access.
- Set up a home maintenance schedule: If your relative is hoping to return to the home or if it must eventually be sold to settle the estate, it must be maintained. This will assure its condition or preserve its value.
- Set up a correspondence system: The sheer stress of helping someone who’s ill or incapacitated is hard enough. The paperwork associated with a serious illness is mindboggling. Again, a professional with special skills working with elderly clients can help you set up a system for collecting and sorting both medical and non-medical correspondence.
- If their home is unoccupied, it’s also important to keep mail secure to avoid identity theft. Shred all mailed materials that don’t need to be filed and stop newspaper delivery to avoid tipping off thieves.
- Pull credit reports. If you can, try to get permission from your relative to pull the three annual credit reports they are entitled to during the year so you can confirm all accounts are current and they haven’t been targeted by identity thieves.
This column is prepared by Rick Brooks, CFA, CFP®, with the assistance of the Financial Planning Association, the membership organization for the financial planning community. Rick is Vice President for Investment Management with Blankinship & Foster, LLC, a wealth advisory firm specializing in comprehensive financial planning and investment management. Rick can be reached at (858) 755-5166, or by email at brooks@bfadvisers.com. Rick and his family live in Mission Hills.
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