Advance planning information

Laurie MacNaughton 2021

As with most things in life, dealing with planning falls into two categories: steps to take before there’s a crisis, and measures to take once a crisis has already occurred. Everyone agrees the first option is preferable, because though nearly any issue can be remedied, the bigger the problem, the pricier the fix.

In general, needs can be placed into three buckets: financial, legal, and medical. Earlier in life these matters typically are very distinct. However, in the blink of an eye the three can become inseparably intertwined.

Following are important steps to take before a crisis arises.

The first is to record all administrative information on one master list. Include on this list:

  • The name of all banks and other financial institutions;
  • The name of any pension plan, life insurance plan, investment account, and health savings account, along with account numbers;
  • All income sources, including Social Security, annuities, pensions, veteran’s benefits, and the like;
  • All financial obligations, including credit cards, mortgages, car payments, and utilities, along with the names of the utility providers;
  • Usernames and passwords for all online accounts;
  • Copies of driver’s licenses, social security cards, healthcare cards, birth certificates, divorce decrees, or death certificates, as applicable;
  • The names of primary care physicians over the past 10 years. The current physician may well be different than the one used a decade ago. (I will say more about this, below.)

The second step is to meet with an attorney regarding the following documents:

  •  Power of Attorney (More about this, below)
  •  Will
  •  Advance medical directive
  • HIPAA release

If these documents already exist, review them and have an attorney make necessary updates.

There’s something important to know about a Power of Attorney: many times, in order to use a Power of Attorney a physician’s letter is required stating the Principal has become incapacitated. This letter serves as a safeguard against a bad actor who might try to exercise a Power of Attorney behind your back. In the letter the doctor must state that at the time you signed the Power of Attorney, you were mentally competent to do so. This seems insulting to the attorney who drew up the Power of Attorney, but there is no fighting this requirement. It also means your doctor must have access to medical records going back to the time you signed the Power of Attorney.

If no one knows who your physician was at the time the Power of Attorney was signed, or if the physician has died or is otherwise not to be found, the adult child – or other party – may well need to become your guardian, conservator, or both. Over the years I have had dozens of adult children go this route, and it has some advantages. However, it can be slower, and is certainly more expensive, than getting a letter from a doctor.

Another item of note is the following: in order to use a Power of Attorney when applying for a mortgage, the original Power of Attorney document must be available. A copy is not acceptable, regardless of state law. If the original document truly is not to be found, there are remedies; however, the fix requires the services of an attorney and will carry a price tag.

As I’ve said, almost any issue can be fixed. But if someone must run interference on your behalf, both time and money are likely to be at a premium.

In a utopian world there would be no aging, sickness, financial hardship, or death. But in this world we inhabit, a little planning and forethought can avert a lot of pain, a lot of hassle, and a lot of unnecessary expense.

If you would like more information on this topic, or if you would like to look into how an FHA-insured reverse mortgage might help with financial needs in retirement, give me a call. I always love hearing from you.

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