At any age, it is difficult to think about the time when we will be unable to care about our finances much less ourselves. Most of us want and like being independent and in control of our lives. We certainly don’t want anyone to know about our financial business. However, what would you do if you became suddenly ill or incapacitated either mentally or physically? Who would take over managing your money, paying bills, and making sure that you had the appropriate healthcare? Are you and your family prepared to handle the time you can no longer manage your finances?
At the point that you can still think clearly and are in reasonably good health, start pulling together your finances and other important documents. Identify the people in your life who will become the designated caregivers of your finances and health in the future. Be it a family member or friend, engage them in the initial conversations and process before it becomes an emergency. In all cases, make sure they are responsible people you can trust.
Essential Questions and Answers for Your Designated Caregivers
If you were suddenly hit by a bus and became both mentally and physically incapacitated, what would your designated caregivers need to know to care for you and your financial affairs?
- Do you have a durable power of attorney?
A durable power of attorney designates who will take care of your affairs if you are unable to decide for yourself in the case of mental or physical incapacitation. You can designate one person to handle health decisions (the health care proxy) and another for financial decisions (the financial proxy) or the same person for both roles. Without a durable power of attorney, your key caregivers will have to obtain guardianship to access accounts on your behalf. This will take time and can be a legal nightmare.
- What are your monthly expenses?
To avoid penalties or worse for defaulting on your monthly bills, make sure that your designated caregivers have a list of monthly expenditures, including your mortgage, car payment, credit card debt, electric and water bills, and other expenses.
- What are your bank account numbers and names of your financial institutions?
Where do you keep your money? What are the specifics on all account numbers, including the name of the bank? Who is your mortgage company? Do you have an investment firm? As a standard of practice, consider consolidating your accounts into one or two primary financial institutions to keep it simple.
- Where do you keep your financial records?
Where do you keep your financial records? Do you keep them in a bank, a safe, or in a special place at home? What is the location of keys or codes to lock boxes or safes? What are key passwords to major online resources? If possible, maintain a secure and central location for all key documents and information.
- How do you pay your bills currently?
Do you have automatic payments being taken out of your checking account? Do you use online Bill Pay or only paper checks?
- How much is your annual income and where does it come from?
Do you receive a monthly pension check or Social Security? Do you have dividends or annuities coming in from investments? Do you get money from a disability, alimony, or other such assistance?
- What kind of medical health insurance do you have?
Do you have health insurance provided by an employer? If you are retired, are health benefits included as part of a pension? Do receive Medicare or Medicaid with supplements?
- Do you have long-term care insurance?
A “regular” health insurance plan does not cover the cost of assisted living or a nursing home. Do you have a long-term care insurance policy to cover the cost of those residences? If not, and you can no longer live on your own, what can you afford in terms of housing?
- Do you have an accountant or financial planner?
Who is it and how do you contact them? Have they done any estate planning? Do you have a Will and/or Living Trust?
Plan now to avoid major problems later. Make sure that your legal and financial documents are organized in a safe and secure location, communicate their content and location to your designated caregivers, and keep all communication clear and direct. The more you are prepared, the easier it will be for others to concentrate on your well-being without having to go through the emotional and legal nightmare that will await them if you don’t. One of the greatest gifts you can give yourself and your loved ones is being ready for the inevitable.
Source: Smart Strategies for Successful Living Staff