My job as an estate and elder law attorney brings me into contact with people on a daily basis who have decided to begin their end-of-life planning. As a part of the initial conversation I have with clients, I usually ask what made them decide to do this planning now. After all, many of them have lived 70+ years and haven’t done any planning. I am often fascinated by their answers. Frequently, watching a close friend or family member experience a crisis with an undesirable outcome drives people to make plans for themselves. Fear of repeating that crisis for themselves is a big motivating factor in seeking advice. So, I have made a list of the fears that drive seniors to do planning. This is my second blog in the series. If you are experiencing the same fear, please seek legal counsel. I believe you’ll find many of your concerns can be addressed in simple ways that will bring you some peace of mind.
One of the first signs of cognitive decline that affects older folks is the inability to manage personal finances. A personal observation of mine is that most people don’t manage personal finances well even when in perfect health. But when a person with a history of managing well, suddenly struggles at managing, there is reason to be concerned.
Such problems are usually discovered by a family member. It’s very rare that an aging person admits that they’ve having trouble managing their finances.. But, by the time something is discovered, it is usually too late for the incapacitated person to make well-reasoned judgments about who should be managing for them if they no longer can.
So, what are the options one should consider? Many choose to have a family member, such as a trusted child, a sibling, or possibly a close friend serve as a trustee or power of attorney. You may be fortunate enough to have more than one good option, or you may not have any of these options. Assuming you do have good choices, do you really want to burden these people with your responsibilities? They probably won’t mind or at least never voice any complaint, but wouldn’t you rather continue your relationship as family or friend without the added complexity of having them managing your budget and paying your bills? The dynamic of your relationship will likely change at the first sign of disagreement. Remember, you are not going to be in total charge of your cognitive faculties, so who knows what you might say or do?
Years of experience have taught me that a professional trustee or professional power of attorney most often serves you better. Bank trust departments or brokerage house trust departments are generally skilled at managing these situations. They understand the importance of proper budgeting, tax filings, and general administrative issues that family and friends are just not likely to know anything about.
Another reason I like the professionals is they are required to be licensed, insured, and bonded in most cases. This means they are regulated and if they do something foolish with your money you stand a good chance to recover. If your child or friend does something foolish with your money, all bets are off as to recovery. I want to be able to recover if my funds are mis-managed, I don’t ever want to be in a position to need to sue a friend or my family.
Professional trustees charge around 1% per year of the funds they manage. If they are investing well, they should average 4% over a multi-year period. You pay no fee for having them in line to manage. They only charge you once they actually take control of the funds.
Make a decision about these questions now while you have good judgment, not later when your judgment may be challenged or impaired. In other words, have a plan. Get the basic legal documents in place first. Then seek legal counsel on more in-depth planning best suited to your needs. Learn about your options from a skilled advisor.
I will write about other common fears in upcoming blogs. If you are seeking experienced senior legal services, please give us a chance to help you. We have the experience and knowledge to take the fear and anxiety out of end-of-life planning. Getting started on these things before you need them is a sure-fire way to prevent anger amongst family members, and can give you the peace of mind you need to enjoy your twilight years. Give us a call today, and we’ll be more than happy to guide you through the process.