Question

My wife and I are in our 80s and still in relatively good health. I currently manage all our financial affairs, but I’m becoming increasingly concerned about what would happen should I fall ill or pass away.

What steps should we take now to ensure that our daily financial arrangements can continue smoothly in my absence?

nswer

I regularly come across this in my practice. In many marriages, one of the spouses is not interested in financial matters and leaves the management of the finances to the one who is. Should something happen to the spouse who manages the money, it can lead to financial stress.

A bit of planning can help you avoid a lot of these problems.  There are a couple of steps that I generally follow when dealing with these issues.

Draw up a financial plan

This is a simple document that lists

• all your assets and their current values.
• all your sources of income and who to contact should there be a problem with that income.
• all the payments that need to be made each month and whether these done by debit order or EFT.

Discuss this document with your spouse and, if you feel comfortable, include your children in this discussion. It can be helpful if the entire family is on the same page.

Complete a life file

This is a document that I’ve shared with readers before and am happy to do so again. It lists the locations of all the key documents that an executor would need in order to wrap up your estate. These would include items like  marriage certificates, divorce orders and car registration papers. 

Knowing the location of these key documents can remove a lot of stress when dealing with a severe illness or death.

Find a trusted advisor

This person would support your spouse in making important financial decisions.   The person should therefore be trustworthy and have a good grasp of financial matters. 

This could be a family member, friend or financial planner.  If you are using a financial planner, ensure that there is a succession plan in place at that financial planning practice.  Should your planner pass  away before your spouse, there must  be someone to look after the  finances.

Power of attorney

A power of attorney will ensure that someone can look after your financial matters if you are in a situation where you cannot do so. Please remember that once you’ve had a power of attorney granted, you should go and speak to your bank as many banks require some additional documentation before granting access to your funds.

An important factor to bear in mind is that a power of attorney falls away should you be declared mentally incompetent.  So, should you get dementia or Alzheimer’s, the power of attorney falls away and then you need to look at other solutions like appointing an administrator or curator bonis.

Administrator or curator bonus

This is a person who would be appointed to look after your finances if you are deemed to be incapable of doing so.

It is important that you give some thought as to who this person should be and check that they are prepared to fulfill that role. I have come across several situations where there have been family fights around who should be looking after a parent’s affairs when they get dementia.

These issues are not always nice to deal with, but it is important that we do confront them. By putting the right structures in place ahead of time, you can ensure that your family’s income will be correctly managed.