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Alzheimer’s. Stroke. Heart Attack. They are words we all dread to
hear, especially when they occur to a loved one. The emotional
strain is tremendous. But it can be compounded if the loved one
didn’t take steps in advance to authorize someone to manage his or
her assets. Regardless of your age, it’s imperative that you have
the proper documents in place. Read on to find out why.
My wife and I have a friend who is in a terrible predicament. Her
husband, who is much older than she, had a stroke almost 2 years
ago. He didn’t have any legal documents in place that would give her
the ability to ‘take over’ if he were incapacitated. Shame on him!
He was a medical doctor and should have known better.
I wish he could see the nightmare his wife is living with on a daily
basis. Initially, she didn’t know anything about their finances. She
had to go through his papers to try and determine where they had
accounts and how much was in them. But that was just the start
because her name wasn’t even on the daily checking account! She
didn’t have access to any money!
Fortunately, she was able to set up a trust account for his Social
Security check to go into, but that took months to accomplish. Think
of the emotional trauma she was enduring, all the while trying to
care for her husband while being a mother of 3 minor children. And
it all could, and should, have been avoided.
Husbands, you have an obligation to take steps to provide for your
wife in the event that something happens to you. Don’t keep them in
the dark about your finances. They need to know where you have
accounts. Keep a list and/or copies of statements in a location that
she knows about. Always maintain at least one checking account with
both of your names on it with enough funds to cover three to six
months worth of expenses.
There are additional steps you need to take. If both husband and
wife’s names aren’t on all the accounts, then be sure there are the
legal documents in place that allow the other to manage that account
if necessary.
If you are single, it’s even more important to take steps now. You
need to have the legal documents in place naming the person you
would like to handle your finances in the event you can’t. You need
to let that person know where you will keep the important papers,
account statements, etc.
There are two different documents that can be used to grant someone
the authority to manage your assets for you without granting them
ownership. One is a financial Power of Attorney. The other is a
Living Trust. Nowadays, both can be obtained easily and
inexpensively.
The Living Trust, in my opinion, is by far the best choice. Living
Trusts are like buckets you put your assets in so you can control
how they are managed during your lifetime and at your death. You
still have complete control and can buy and sell and invest just
like before. But should you suffer a stroke or pass away, you decide
how your assets will be handled. Depending on what’s stipulated in
the trust, your successor trustee may only need two letters signed
by your doctors and a copy of the trust to present to your bank or
other financial institutions. That’s it.
A financial Power of Attorney also allows you to grant someone the
authority to manage your assets. You determine whether they have
control immediately or only when you become incapacitated.
I’ve heard of situations where a bank wouldn’t honor a properly
drafted power of attorney because it was over 6 months old. The
person had been incapacitated for years so she couldn’t sign another
one! In these situations a lawyer would be needed. If you rely on a
Power of Attorney, you might want to keep it relatively up-to-date.
After two years, my friend is still fighting battles that have
resulted from her husband’s lack of action. Frankly, she’s going
through hell. Don’t let this happen to the ones you love. I know
it’s easy to put off. But unless you choose to make it a priority,
it won’t get done.
Nationally-syndicated financial columnist and Certified Financial
Planner® Jeffrey Voudrie provides personal, in-depth money
management services and advice to select private clients throughout
the USA. He’ll answer your financial question – FREE at
www.guardingyourwealth.com.
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