Neglected Topics
One of the most uncomfortable topics for families to discuss revolves around assigning responsibility for Power of Attorney, last wishes, and acting as an executor for ones Will. But discuss these topics you must. This is not a situation where you want to make assumptions or outright guesses. These often neglected topics are the final piece to a solid financial plan.
So, why is it critical to have these important conversations with your loved ones? Unfortunately we all age, and a potential crisis looms on the horizon. As our parents age and eventually lose their independence, full time care is often needed. In the best case scenario this process takes years, and begins with in-home care and eventually leads to moving out of the house and into a long term care facility.
If Disaster Strikes
Sometimes, however, the process is immediate. For example, say your parent suffers a stroke and goes from being completely independent to requiring full time care. These unfortunate life situations can put an entire family into crisis. Decisions that would normally be made over years now have to be made quickly.
Naturally the magnitude of the crisis is directly related to the amount of preparedness. Do your parents have a financial safety net to ensure they can afford the care they need when this critical time occurs? Have they taken the time to assign Power of Attorney for healthcare and property to trusted individuals? Do they have life insurance and a Will? Consider yourself blessed if the answer is yes.
The Power of Attorney
Caring for another person requires a Power of Attorney; you can’t make healthcare or financial decisions without these important documents. The word “power” really describes this process. When a person can no longer make decisions on their own behalf (commonly due to mental illnesses such as dementia or Alzheimer’s) you will have the power to make those decisions. Obviously you want to choose a person who will not abuse the power you are assigning them.
Wills and Trustees
Having a Will and assigning an estate Trustee are equally important. How many people really know their loved one’s final wishes (cremation, burial, location, ceremony etc)? A Will answers these uncomfortable questions. An estate trustee must be chosen with care. This person will ensure your Will is followed and no abuse occurs. You need someone trustworthy, preferably with knowledge of taxes and finances.
Impending Burden
When one refuses to create Powers of Attorney, a Will, or buy adequate life insurance they are creating a potential huge burden for loved ones. Consider it the greatest gift possible when others don’t have to guess about your final wishes or face a financial setback that could have been avoided with some simple planning.
In my E-books (“Water Barrel” and “The Balance”) I discuss simple methods to live sensibly for today, take charge of your financial affairs, and invest safely for the long term. For more information please visit David Penna Amazon.
Disclaimer for ManageYourMoney.ca
The information provided on ManageYourMoney.ca is intended for educational and informational purposes only. It should not be taken as financial advice. The opinions shared are those of the authors and are meant to encourage sensible financial habits and decision-making. We recommend that you do your own research or consult a certified financial advisor before making any financial or investment decisions. All investments come with risks, and there is no guarantee of success. Past performance is not a reliable indicator of future results. Always consider your personal financial situation and risk tolerance before pursuing any investment opportunities.
As always, we are not a qualified financial advisors. We just relate financial management to our own experience which may not resemble yours at all. Advice is frequently worth exactly what you paid for it. Most of ours came from expensive experiences.
