Eldercare Financial Planning
This article is the first installment of a brief series on the topic of assisting people who may be at risk financially due to illness or complications of aging. Elderly people are more likely to rely on their life savings for security and comfort than younger people who are still working, so protecting their nest egg is crucial. Financial planners will tell you that many of their clients are baby boomers who have aging parents they are concerned about. These factors have led my firm to pay special attention to the challenges of aging. This series will illustrate some of the ways things can go wrong and offer some guidance to avoid or resolve problems.
A Common Problem
My first encounter with financial vulnerability of the elderly occurred before I made the career switch to financial services. In fact, it was influential in my decision. Looking back, you could say I went from being a clinical social worker to a financial social worker. The situation involved my mother in law who was becoming demented. I was recruited by the family to help manage her finances because she trusted me. As I began to sort through the confused notes, statements and correspondence scattered throughout her home it quickly became apparent that a steady stream of her money was flowing to a variety of unwise destinations.
She had duplicate subscriptions to magazines and was a sucker for memorial plates and other impulse purchases. Other concerns weren’t fraudulent but exploitative. She had purchased several unnecessary “no exam needed” final expenses life insurance policies. Then there were the marginal “charities” that had obviously identified her as an easy target which they could regularly and successfully solicit for contributions.
It was upsetting to think of my well-intentioned, gullible and diminished mother-in-law’s vulnerability. It was frightening to see how her financial security that had been built up over half a century could have been quickly eroded had I not been able to step in to help. Since then, I have learned that as our population ages, financial vulnerabilities that are prevalent among the elderly present a growing challenge that isn’t easily addressed.
Not Limited To Dementia
Harmful financial actions aren’t limited to people suffering from dementia. Loneliness, depression, physical illness and changes in brain functioning unrelated to dementia are among the factors that can lead an otherwise competent person to make emotionally driven choices that lead them astray. This is a problem for family members and professionals trying to help someone who may not want to be interfered with and is well within the legal range of mental competency.
What Can You Do?
In my family’s case, while my mother-in-law was still legally competent we were able to help her establish a trust with a bank and me as co-trustees. She also agreed to a durable power of attorney and named me as her agent. We were able to consolidate her investments and savings into the trust for more efficient management. Thanks to the power of attorney, I was able to cancel unneeded subscriptions and services, stopped automatic drafts to questionable charities and mysterious billers and even retrieved some money from the unnecessary insurance policies.
As her condition worsened, we soon would not have been able to help her so easily. First of all, she wouldn’t have been legally competent so a very unpleasant court procedure would have been required to grant conservatorship against her will. That is the second point. As her thinking processes deteriorated, she became fearful and distrustful and would clearly not have cooperated. It pays to have arrangements in place before they are needed.
All families should “have the talk” about what to do when we are not able to manage on our own. This isn’t only for those of us with elderly parents or relatives. We all are vulnerable to accidents or illness at any age. Having legal arrangements such as a durable power of attorney, healthcare directives and healthcare power of attorney can save a lot of heartache during an already stressful time.
Many families are reluctant to have these conversations. It isn’t fun to confront our own or our loved ones’ mortality. And there can be stresses in family relations that create anxiety or tension. But neither mortality nor relationship stresses are going to just go away. Family “issues” are likely to be worse in a time of great stress like when someone has had a stroke or dies than when everyone is as OK as they usually are. If you need help going forward, seek assistance from a family therapist, counselor or coach who is trained to help with a constructive conversation about difficult topics.
Tom Chancellor is a Certified Financial Planner Professional helping clients enhance their financial peace of mind. Tom spent 20 years as a marriage and family therapist and now incorporates resources from psychology, communications, and relationship studies in financial planning for people who experience life-changing events. Tom helps his clients and other financial professionals respond to life transitions such as divorce, death of a spouse, retirement, receipt of an inheritance and legal settlements. Contact Tom with questions at firstname.lastname@example.org.
Securities offered through Comprehensive Asset Management and Servicing, Inc. (“CAMAS”), 2001 Hwy 46, Ste. 506, Parsippany, NJ 07054, 1-800-637-3211. Member FINRA/SIPC. Teak Tree Capital Management, LLC, is independent of CAMAS.