Account access if we become disabled

[donheff]

The CCRC discussion prompted me to update my document for DW and the kids to follow if I die or become incapacitated and it raises some questions it might be worth kicking around here.

Here is the scenario. Either DW dies leaving me the beneficiary for her accounts or vice versus. DW worries about family Alzheimer's hitting her. I have Parkinson's Disease. So far mild and no cognitive or emotional issues but I worry about them developing when I get very old and I worry about not recognizing the onset. My fear is the possibility that I could eventually go south mentally and wreak havoc on our finances. This is always a slight possibility but with Alzheimer's or advanced Parkinson's it becomes more concerning. DW and the kids have instruction on how to seize control of the accounts if I suddenly start acting nuts but it is clear that I will probably not go quickly and will want to transition control but the methodology is the question. I

can envision handing over the reins to my son while I am still competent. It would not be a good idea to just hand him my passwords since that is legally questionable and would result in a distorted record of actions. Better would be to delegate appropriate authorities which would let him take actions under his name. At Vanguard I found a limited access form that would probably do the trick - allowing him to rebalance, buy and sell but not change designations of beneficiaries. I think a similar change can be made a Schwab using a power of attorney. The objective would be to let him manage the investments, make RMDs, transfer funds to my bank for spending.

There is also an incapacitated person access. That requires a durable POA (which we have) and a doctor's certification. When those are properly filed the designee could take over. That may be the best solution,

Have any of you thought about these sorts of delegations? Any ideas on simple best practices?

 

[gauss]

Nothing too sophisticated over here -- especially since we do not have children/nieces/nephews etc to rely on.

One approach would be to consolidate assets under some type of balanced fund and. then setup an automatic amount to be transferred to checking account -- probably monthly.

This would appear similar to a traditional pension which have served elders well for much of the 1900s for those who were fortunate enough to have them. Similarly Social Security hopefully will be available also for most folks.

The problem would be that if I had the desire to tinker with things other than this.
Maybe setup 10% of the assets somewhere else where tinkering could be allowed?

A similar problem might exist for a married couple, where one individual had much more interest in personal finance than the other. How would this be handled when the 'active' individual passes first?

Just thinking out loud here.

-gauss

 

[W2R]

I don't know the answers to most of your questions.

As for RMD's, IIRC you are a retired federal employee. If you don't take sufficient RMD's on your TSP balance, here's what the TSP will do:

IF the separated participant does not make any withdrawals or if the amount of the withdrawals fall short of the required amount, the TSP will automatically send the separated TSP participant the amount that is required sometime in early December.

So, I am not personally concerned at all with forgetting to withdraw RMD's. I think that's a nice thing for the TSP to do for us.

 

[donheff]

We have all the bases covered for managing things if I die or I simply become addled and am not able to DIY it. What I am concerned about long term is how best to voluntarily hand over control when (and if) I reach a point where I think I could become paranoid and destructive. We have emergency instructions but I would rather avoid the emergency.

 

[Dash man]

We use LastPass, which allows us to share each other’s passwords and usernames. It also has an emergency feature where a designated individual can request emergency access to your account and after a defined period of time if you haven’t denied it, they can access your account.

 

[OldShooter]

... Have any of you thought about these sorts of delegations? Any ideas on simple best practices?

This is why our estate attorney, who is deliberately much younger than we are, is the executor of our estate. DS has instructions to contact her in the event, as does a younger family friend who is listed as Trust Protector.

In general I believe that there are far too many "what ifs" for us to deal with them all ahead of time. If you really want to go that route I'd strongly suggest that you have an attorney review your plans, including all the free forms that you may be using. The likelihood of conflicts and I-forgots in a pile of randomly-selected documents seems quite high to me.

 

[MichaelB]

We have all the bases covered for managing things if I die or I simply become addled and am not able to DIY it. What I am concerned about long term is how best to voluntarily hand over control when (and if) I reach a point where I think I could become paranoid and destructive. We have emergency instructions but I would rather avoid the emergency.

If you do suffer from paranoia and cognitive decline you will not willingly turn over your financial management to another family member. The more this is needed the less likely it will take place. Likewise, a ruling of incompetence is not easy. This a challenge with no easy or straightforward options.

Dash Man’s approach is similar to ours. Access to my password manager together with instructions on what to do if I’m incapacitated.

Cognitive decline does not usually occur overnight. In most cases it grows slowly, and early on is often mistaken for forgetfulness, mild senility, or other natural aging related behavioral conditions. I think the two most important things I can do are 1) have a plan in place it if does happen, and 2) monitor my congestive functioning, brain and mental health, hoping to identify problems while I still have enough self control to act in my own best interest.

 

[38Chevy454]

As part of the revocable living trust for DW and me, it has durable power of attorney each for medical and financial, on each of us. Primary POA is the spouse, and backup is the same as the executor for the estate.

 

[REWahoo]

...2) monitor my congestive functioning, brain and mental health, hoping to identify problems while I still have enough self control to act in my own best interest.

Yep, always a good idea to keep tabs on brain congestion. After all, you can blow your nose but not your brain. OK, maybe once...

 

[donheff]

If you do suffer from paranoia and cognitive decline you will not willingly turn over your financial management to another family member. The more this is needed the less likely it will take place. Likewise, a ruling of incompetence is not easy. This a challenge with no easy or straightforward options.

Dash Man’s approach is similar to ours. Access to my password manager together with instructions on what to do if I’m incapacitated.

Cognitive decline does not usually occur overnight. In most cases it grows slowly, and early on is often mistaken for forgetfulness, mild senility, or other natural aging related behavioral conditions. I think the two most important things I can do are 1) have a plan in place it if does happen, and 2) monitor my congestive functioning, brain and mental health, hoping to identify problems while I still have enough self control to act in my own best interest.

These are the considerations that caused me to raise the issue. I have Dash Man's approach in place. DW and the kids know to access the password safe and seize the accounts with a shock and awe approach if I get weird. But DW and the kids processing transactions in my name after seizing control would be a brief (and technically, probably illegal approach) while they rushed to get a doc to sign off on the POA.

On this thread I'm exploring your number 2. How best to structure access if I am together enough to voluntarily hand things over. I'm probably overthinking this. It seems like most people muddle through these messes.

 

[MichaelB]

On this thread I'm exploring your number 2. How best to structure access if I am together enough to voluntarily hand things over. I'm probably overthinking this. It seems like most people muddle through these messes.

I don’t think you’re overthinking. There are plenty of threads here about parents or family members that are not acting in their own best interest.

When my DM was diagnosed with AD she turned over her day to day finances to me. I was already doing her taxes. I found out quickly her financial management skills had already deteriorated.

Over the next 2 years she gave me a durable POA and had a trust made in which we both were trustees. After that, her condition worsened and she resigned as trustee, making it irrevocable.

The advantage of the early POA was it allowed me to get on her bank and investment accounts while she was still capable of making decisions. We did have issues with one bank which she was able to address.

Financial institutions don’t like it when a user account is accessed by someone else. I’ve discussed this at length with USAA and Vanguard. When they have the POA they grant access to the account through my account, so there’s a a record showing I accessed the account and carried out a transaction.

 

[Walt34]

When dealing with FIL's issues we realized that we had not done a lot of things that we should do in preparation for old age and/or incompetence. We each now have complete POA for the other, including medical. We've filled out the appropriate forms at Vanguard (my IRA) and TSP (for DW) for each to take over for the other if needed. As a backup to that, a (very!) trusted nephew is the backup for each of us if the other is unable to serve. It's not that I don't trust my sister, but she's only 18 months younger than me so is subject to the same issues that I may encounter.

 

[Bamaman]

My wife & I are executors on each other's wills. All goes to the remaining spouse, and we're both on all accounts jointly.

The daughter, the accountant, is a secondary executor, and she is a check signer on all checking/savings accounts. In with the wills are account numbers, passwords, etc. on all the IRA accounts--of which she's a partial beneficiary. A power of attorney is also in the packet--in case it's needed.

It'll work just fine in our state.

 

[donheff]

When dealing with FIL's issues we realized that we had not done a lot of things that we should do in preparation for old age and/or incompetence. We each now have complete POA for the other, including medical. We've filled out the appropriate forms at Vanguard (my IRA) and TSP (for DW) for each to take over for the other if needed. As a backup to that, a (very!) trusted nephew is the backup for each of us if the other is unable to serve. It's not that I don't trust my sister, but she's only 18 months younger than me so is subject to the same issues that I may encounter.

I will look into filing the POAs for DW to access and vice versus. Might as well get that in effect. Then (as long as the other was alive) the initial "seizure" would be authorized.

 

[PatrickA5]

DW and I each have POA's for each other with a daughter as secondary. We also have Full Agent Authorization on all of our Fidelity accounts which allows me to do just about anything with her IRAs'a and vice versa. We're joint owners on everything else.

Obviously, none of that helps if I decide to do something stupid because I no longer know better.

Fidelity offers something called a "Trusted Contact" where Fidelity is supposed to contact that person in the event they find something unusual going on. I have no idea what that might be.

 

[ERD50]

... I can envision handing over the reins to my son while I am still competent. It would not be a good idea to just hand him my passwords since that is legally questionable and would result in a distorted record of actions. Better would be to delegate appropriate authorities which would let him take actions under his name. At Vanguard I found a limited access form that would probably do the trick - allowing him to rebalance, buy and sell but not change designations of beneficiaries. I think a similar change can be made a Schwab using a power of attorney. The objective would be to let him manage the investments, make RMDs, transfer funds to my bank for spending. ...

I think you are on the right track here. You are correct that sharing passwords really isn't an approved thing to do, and could cause all sorts of problems (IIRC, Midpack got 'caught' doing this a few years back, and was run through some hoops over it).

I think every brokerage has a simple form to give someone else various levels of authority over your account. That makes it clean and simple. I'd consider doing that now while you know you are in good shape, so you can calmly review everything with your son.

Yes, POA handles this, but that might include the extra step of having to have you declared incompetent? The authorization form just seems so much simpler, with no downside that I can see (you have to trust your son either way), and would be perfectly adequate for what you might need at some point.

-ERD50

 

[Magus]

We use LastPass, which allows us to share each other’s passwords and usernames. It also has an emergency feature where a designated individual can request emergency access to your account and after a defined period of time if you haven’t denied it, they can access your account.

A lot of financial websites require a second level of approval besides the passcodes to access them now - majority in fact - usually a text message to phone on file or email to email address on file with a 5-7 digit one time code, until the device is registered.