When you’re in charge of a loved one’s money
Caring for others can be challenging—physically, emotionally and intellectually. When you add money to the mix, things get even tougher. Caregivers face a quagmire of deeply personal information, technical maneuvering of accounts and a new vocabulary of legal terms. Caring for the financial well-being of a loved one requires a combination of practical measures and personal conversations. Here are some things you may consider—whether you are planning for the care of another or organizing your own affairs.
DURABLE POWERS OF ATTORNEY: These legal instruments allow an appointed agent to effect transactions on behalf of a loved one. This is especially important if/when the individual is unable to act on her own behalf. From routine monthly bills to major medical expenses, giving someone else the proverbial “checkbook” can ease transitions during a caregiving event. There are a few different ways to implement a DPOA (i.e., immediate authority vs. authority upon incapacity), so talk with an attorney or financial planner to determine the right approach.
SUMMARY OF ACCOUNTS & AUTHORIZED INDIVIDUALS: An appraisal of assets is a core component of financial planning. Many clients express surprise at the complicated web of accounts and policies they hold, once committed to paper. A proactive summary of accounts, along with the individuals authorized to transact these accounts, can provide a solid foundation for caregivers.
SUMMARY OF LIABILITIES & EXPENSES: In addition to assets, an outline of debts and ongoing expenses is essential. Such a guide will best allow authorized individuals (such as those holding DPOAs) to continue to service debt and utility payments in the event of incapacity. A caregiver could easily pick up where their loved one left off—potentially avoiding late fees and service discontinuations that sometimes occur without proper planning.
KEY CONTACTS: A directory of professional contacts can also do wonders to ease caregiving transitions. This directory should not only include names, phone numbers and email addresses, but also a description of the services provided and a list of associated accounts/policies. Caregivers can more easily manage affairs when easily able to track down their loved ones’ attorneys, financial planners, investment advisers and insurance agents.
Beyond the practical measures outlined above, I’ve seen an increase in clients who proactively engage their future caregivers in the investment and financial planning process. Many do so in order that their children or heirs establish a relationship with their “protective circle” of financial and legal professionals. This can ensure seamless communication in the context of a caregiving event; pre-existing relationships will serve to speed and facilitate transitions.
It can also be helpful to establish a dialogue regarding attitudes about investments, capital markets, risk and philanthropy. In doing so, many clients hope to shape and explain the disposition of assets during their lifetime while providing a roadmap for would-be caregivers and beneficiaries. While legal documents can specify who does what and when, such conversations establish context for the all-important why that binds a financial plan together. From either side of a caregiving relationship, this conversation serves an important role in setting and meeting expectations.
Through a combination of practical efforts and meaningful conversation, much can be accomplished to ease the burden of financial caregiving. As always, it is important to review your specific needs, concerns and circumstances with your attorney and financial planner. Finally, don’t delay. While these efforts can be emotional and difficult, they can save hours of effort and heartache when they matter most.
Scott Mazuzan is a certified financial planner for F.L. Putnam Investment Management Company, an independent firm that provides investment management and financial planning services. www.flpfinancialplanning.com/planning-blog