Aging is a fact of life. It brings with it many great things such as a growing family, more financial freedom and enjoying the golden years of retirement. With it also comes the risk of diminishing capacity and the potential inability to manage one’s own financial affairs. When we age, we may lose the capability to manage our own finances, and in doing so may make ourselves more vulnerable to investment fraud or other types of financial abuse.
Not everyone will experience memory loss or other forms of diminished capacity, but taking these 3 simple, proactive steps today will aid in protecting yourself from the risk of fraud and abuse and can reduce a lot of stress down the road for you and your loved ones.
Organize your financial life:
Having an inventory of your entire financial picture will not only simplify your life today, it will also make it easier in the future for you or other trusted individuals to keep your financial affairs in order. You will want to have a complete inventory of all retirement, brokerage and banking assets, any debts outstanding and regular, recurring bills, insurance documents and estate documents such as your will in a safe place. Giving copies to a trusted individual or letting them know how to access this information is also important to prepare for a situation when they are needed, and you are not in the right mind to supply them.
Work with a trusted financial professional:
Having a trusted advisor to work with can be invaluable throughout your financial life and as you age can serve as the individual who will make sure your financials stay protected and if needed, to work with your loved ones to help them sort through your financial affairs. When working with an advisor, provide them with contact information of whom they should contact should they suspect something is wrong or someone who you would like for them to discuss your financial affairs in the event of your incapacity.
Prepare Advanced Healthcare Directive and durable financial power of attorney:
Having an advanced healthcare directive and durable financial of attorney in place are great ways to protect yourself against the ‘what-if’.
Advanced healthcare directive:
This document allows you to select a preferred individual to make medical decisions on your behalf in the event you cannot make those decisions for yourself. The document provides guidance as to whether to provide life sustaining treatment should you have a terminal condition or an event leads to a permanent coma or otherwise vegetative state.
Durable financial of attorney:
If you become incapacitated in any way, your financial power of attorney will have the legal authority to make financial decisions on your behalf. Make sure the individual you decide to assign as your financial power of attorney is someone you trust wholly, as they will have complete financial decision-making authority on your behalf. You may make updates to your power of attorney over time should a relationship become severed or if there is a more trusted individual.
Sadly, the Senate Special Committee on Aging, estimates that as many as 5 million older Americans fall victim to some form of elderly mistreatment each year. By having safeguards and trusted individuals in place, you can have the peace of mind knowing that should you experience some form of incapacity you and your financial affairs will be taken care by the person whom you would really want making decisions for you and your loved ones know that they are doing things as you would have wished.