Who will handle your finances when you can't?

[socca]

If I die young, no problem: a sibling is executor of my estate / successor trustee of my revocable trust. If I die very old, I have a big problem that I have not yet satisfactorily solved. If my assets are stolen by whoever I enlist to manage my end-of-life finances and/or to settle my estate, the beneficiaries who are screwed are major charities. How would these charities ever know that they've been screwed unless they have visibility into my end-of-life finances and estate settlement? I have not yet contacted any of my favorite charities to see if they have a solution to this problem.

 

[Nords]

Anyone have experience or advice on ways to handle both short- and long-term finances in very old age? I'm talking about everything from handling the checkbook to handling the investment portfolio. If my wife goes first, I'll be confronting this challenge.

Various options might include: Family member? Daily money manager? Public fiduciary? Trust company? Are there others I haven't heard of?

I'm sure some of the smart folks on this board have given this some thought, and I would appreciate your sharing your approaches.

Thank you.

We've given quite a bit of thought to that in our family. I was my father's conservator for over six years of his Alzheimer's, and I settled his estate when he passed away three years ago.

My spouse and I have split our planning into death and disability. Death planning is slightly less painful than disability planning, but now I completely understand why so many people avoid doing either of them.

My spouse is much more likely to outlive me. (She seems eerily confident of that?) I've handled the household bills for over 30 years, and we've agreed that now it's her turn. She starts her Navy Reserve pension in a few months, so we've already moved most of the monthly bills over to her checking account. (They're all in autopay so there's very little monthly labor.) Transferring them over to her was her first glimpse of the bureaucratic hassle that can come from setting up auto-payments. It took our local water/sewer utility over four months to figure it out, but they got it right on the third try. Everything's running smoothly now.

I'm keeping the mortgage payment (which is covered by my pension). I still have my credit-card payments deducted from my checking account, too, since they're an unsecured debt which she (or rather my estate) will pay only if legally required. She has her own credit cards.

We're still landlords of a single-family home. Three years ago I'd had enough of landlording while she was still interested in keeping the property. As a compromise while we figured out our exit strategy, she took over all of the management. (I'm still handyman labor and tax prep.) The last three years (and an awesomely destructive pair of tenants) have convinced her that she's also had enough of landlording. We expect to finish off that phase of our life in a few more years when our current (much better) tenant moves on. Until then, if I die or become disabled then she only has to hire my replacements.

We've also made all of our financial accounts Payable On Death and Transfer On Death. Since my spouse and I each have our own pensions and assets, our Roth IRAs go straight to our daughter. Our "joint with right of survivorship" taxable account will pass to each other and then to our daughter.

Hawaii real estate can also pass with a Transfer On Death Deed, but our disability planning meant that we needed a different way to handle our real estate.

My father did zero disability planning-- not even a power of attorney. When he ended up in a hospital emergency room with an Alzheimer's injury then I stepped into financial chaos. Our (adult) daughter watched as we dealt with all of the issues, and we're all rightfully concerned that it'd be too easy to do the same caregiver disaster to her. Our disability plan makes it as easy as possible for her to take over our finances when the time comes.

Our disability plan has an interesting side effect for her. Not only is she tremendously relieved to know that she won't go through the stress I had to handle, but now she can see all of our financial transactions. She understands what's happening in real time and could take over without any turnover.

On the disability side, we've given our daughter our durable power of attorney over our investments (the Roth IRAs and a joint taxable account). Setting that up was a bureaucratic pain but now she can see our Fidelity accounts in her own Fidelity account. She doesn't even need to know our logins or passwords-- she has Fidelity's full authority to handle the assets whenever she wants. That's kinda the point of a DPOA, because a regular POA becomes invalid if the grantor is no longer mentally competent.

We could have opted for a springing DPOA, but that would have required her to deal with a "cognition committee" of doctors, lawyers, or a trust company to trigger the authority. We wanted to avoid gatekeepers and have her able to step in whenever it was necessary-- and with minimal caregiver stress.

It turns out that Hawaii title companies hate DPOAs for real estate, because of the possibility of the grantor recovering from their disability. If the attorney-in-fact had sold the real estate during the grantor's disability, then the (recovered) grantor could dispute the transaction and throw the title into doubt. The solution is a revocable living trust.

Our home and our rental property are in a RLT with me, my spouse, and our daughter as co-trustees. We elected to have no gatekeepers or other obstacles. Each of us has full power to act on our own, and technically even without the notification or concurrence of the others. We're all still required by law to act as fiduciaries for the grantors (me and my spouse) but our daughter can step right up whenever necessary-- and with minimal caregiver stress.

As a final part of our disability plan, my spouse and I hold our savings & checking accounts with our daughter as joint owner. This seems easier than setting up a checking account for the RLT, although our checking accounts could be impacted if our daughter's ever involved in litigation.

Of course these plans can all go horribly wrong if our daughter joins a cult, or develops an addiction, or is coerced by an abusive relationship. If that happens then my spouse and I still have our pensions (and eventually Social Security) and could recover our finances.

Title companies (title insurance) and lenders are still two annoying features of putting real estate in a trust.

The first hassle was titling our home and our rental property into the trust. (That took several months, including fixing a typo on the property-tax database.) Then we had to change our homeowner's insurance to the trust instead of me and my spouse. We still had to keep the mortgage company on our home's insurance policy.

A year after putting the real estate into the RLT, we're still dealing with two different title companies to have the title insurance policies transferred to the name of the trust (instead of me and my spouse).
It seems to take weeks to find the one person in the firm who knows how to do that, assuming that they even know how to do it correctly.

Separately from the insurers, some lenders are reluctant to refinance real estate that's in a trust. The "solution" is to transfer the real estate out of the trust, refinance the mortgage, and then transfer the property back into the trust. In some states this can trigger the mortgage to be due on demand while in other states the lenders don't seem to care. The result is that we've sat on the sidelines of the latest refinancing rush, and I don't know whether we'll ever do a refi again.

We go into more details in this post:
https://the-military-guide.com/family-estate-planning-for-your-disability/

Our family lawyer retired 5 years ago. Have not found a young guy willing to take us on because the will is done and unlikely to change.

When my father passed away I called his lawyer (who had the original of the will) to ask him to file it with the probate court.

I learned that Dad's lawyer had passed away earlier that month of a heart attack... still on the job, and at his desk. The law office had many awkward conversations with clients & families.

 

[Lewis Clark]

I attended an estate planning workshop a couple of months ago. One big takeaway for me was the benefit of NOT having ALL financial accounts set up as payable on death or transfer on death.

Many estates will incur expenses such as funeral costs, disposing of tangible property, legal fees and taxes. If all accounts are set for POD or TOD, those funds will go directly to the beneficiaries and the estate may not have enough cash to cover these expenses. Having some funds go through the estate and probate will ensure the executor has money available to cover those costs.

Something worth considering when setting up our financial plans.

 

[donheff]

We've given quite a bit of thought to that in our family. I was my father's conservator for over six years of his Alzheimer's, and I settled his estate when he passed away three years ago.

Thanks Nords, that was a thought provoking post. DW and I have approached this in a similar manner but haven't gone all the way to current DPOA's. We have the house and a large joint taxable Vanguard account in an RLT (no mortgage). We are grantors and co-trustees until the last standing becomes incompetent at which point our two kids become co-trustees with a designated tie breaker if they can't work out a dispute. 2/3 of our estate is currently in 401Ks and IRAs and those go to each other and then the kids. At some point we may modify that, like you did, to send some of them to the kids when the first of us dies.

We haven't done DPOAs and probably won't until one of us is left or both are showing mental decline. I am worried about the later since DW has Alzheimer's in the family and I was recently diagnosed with Parkinson's. I am only mildly affected and have no cognitive symptoms but that could potentially go south with little or no notice. I do the financial stuff so we met with the kids and went over how everything works. All accounts have alerts to each other on all transactions. I will probably add my son to those alerts at some point - maybe soon after reading your piece. I also went over how DW and DS can access my password safe, change account passwords, and seize control of all accounts if I suddenly start acting bizarre. DW (a lawyer) was satisfied that capability gives them time to contact doctors and activate our POA's, notwithstanding the questionable legitimacy of those interim actions. But, I can see that it has some vulnerabilities that a DPOA would solve. But DPOAs have some vulnerabilities that our half assed self help approach avoids. Soooo, food for thought.

There are a lot of gotcha's in this process. There ought to be some simpler solutions.

 

[audreyh1]

I attended an estate planning workshop a couple of months ago. One big takeaway for me was the benefit of NOT having ALL financial accounts set up as payable on death or transfer on death.

Many estates will incur expenses such as funeral costs, disposing of tangible property, legal fees and taxes. If all accounts are set for POD or TOD, those funds will go directly to the beneficiaries and the estate may not have enough cash to cover these expenses. Having some funds go through the estate and probate will ensure the executor has money available to cover those costs.

Something worth considering when setting up our financial plans.

In DF’s case he had DB and me added to his checking account for dealing with future issues caring for him. A few years ago I had DF do the paperwork set up his brokerage to be TOD, and just made sure enough accumulated in checking from pension and SS to cover anticipated estate expenses. At first he gifted excess, but as his health declined and he needed more care I let it build.

So of course there had to be agreement between DB and myself that the checking account was for taking care of the estate until the estate was closed out. No problem there.

It has worked out well so far.

 

[FIYes]

I always read these threads when the appear. This is a topic that DH and I have yet to address. As long as one of us is competent it is not a problem. However, we have no children so there is no one we would be likely to turn to for help in this area. We each have one sister, but my sister is older and in poor health. His sister is a bit younger but lives out of state. DH has 2 nieces, but both live out of state and are lacking in financial acumen.

I recognize that eventually we will need to consider some sort of professional help in this area.

 

[Nords]

We haven't done DPOAs and probably won't until one of us is left or both are showing mental decline. I am worried about the later since DW has Alzheimer's in the family and I was recently diagnosed with Parkinson's. I am only mildly affected and have no cognitive symptoms but that could potentially go south with little or no notice. I do the financial stuff so we met with the kids and went over how everything works. All accounts have alerts to each other on all transactions. I will probably add my son to those alerts at some point - maybe soon after reading your piece. I also went over how DW and DS can access my password safe, change account passwords, and seize control of all accounts if I suddenly start acting bizarre. DW (a lawyer) was satisfied that capability gives them time to contact doctors and activate our POA's, notwithstanding the questionable legitimacy of those interim actions. But, I can see that it has some vulnerabilities that a DPOA would solve. But DPOAs have some vulnerabilities that our half assed self help approach avoids. Soooo, food for thought.

There are a lot of gotcha's in this process. There ought to be some simpler solutions.

I hear that.

My father could probably have satisfied the legal requirements of signing a DPOA while he was still in the “mild cognitive impairment” stage. However when it’s hard for a person with dementia to follow a conversation, the easiest answer to everything becomes “No.” That’s if we even understand that we have a cognitive issue instead of being blissfully confident in our competence.

My spouse and I have essentially removed a bunch of legal safeguards and enabled our daughter to legally do what most families do anyway: nobody knows who you are on the Internet when you have the logins and passwords. I felt that as long as I was fiduciary in my behavior then the authorities would ignore the situation, or at least agree that there were mitigating circumstances.

I made a rookie mistake with my father. When he was recovering in the hospital from emergency surgery (exacerbated by Alzheimer’s), he was worried about taking care of his finances. I offered to help him pay his bills, and I brought his mail and his checkbook to the hospital. He asked for help writing out the checks, and then he signed them.

Dad lived in a very small town, and the manager of his bank was immediately alerted to the different handwriting on his checks. I was locked out of his checking account for the nine-month legal process of obtaining a conservator’s appointment. (His pension and his Social Security payments were deposited to that account.) The bank continued its adversarial stance for our entire relationship (including “malicious compliance” with the court order), and for nearly a year after his death.

 

[JustCurious]

Having some funds go through the estate and probate will ensure the executor has money available to cover those costs.

Or, do as many people do, add one of your beneficiaries as a joint account holder on a checking account or brokerage account and keep sufficient funds in the account to pay for immediate estate costs. Or, add whomever you choose to handle the estate expenses as a TOD or POD to the accounts. That way you avoid probate AND the person or persons who will be handling the estate expenses will have immediate access to the funds upon your passing.

I think estate planning attorneys have an inherent bias against using easy tools to avoid probate because it reduces their business and therefore there is often an inherent conflict of interest in their advice.

 

[socca]

Having some funds go through the estate and probate will ensure the executor has money available to cover those costs.

My revocable trust has an account at Vanguard containing funds specifically intended to pay misc estate settlement expenses. There's no need to go through probate just to have money available to cover those expenses.

 

[frances]

One interesting thing I’ve discovered, as I’ve started managing my mother’s affairs, is how much resistance certain institutions have to recognizing a fully executed P of A. Bank of America was particularly difficult. I certainly can understand being careful but this seemed really obstructive. Thankfully Connecticut, where my mother lives, has a law requiring that P of As be honored so a call from her lawyer helped. But if I had a do-over I’d convince her to simply make me a co-signer from the get go. If I could talk her into that!!

Mom and I were told flat out by her bank (Bank OZK) that they WILL NOT accept a PoA. It HAS to be a specific PoA for THAT BANK. We are in Georgia. While I'm the one that selected this bank for her (she insists on a brick and mortar bank and will not put everything in the credit union we use - "don't want my eggs all in one basket". she is 89.)
To solve this we are joint ownership on all of her accounts and properties save one.

 

[frances]

We have two grown sons, both of which are pretty good with their money. One is in town, the other not. The in-town son has a GF, out-of-town son is married but has huge debt (Dr wife has student loans and a giant mortgage to boot). We have not designated who at this point, but if I had to pick right now I'd pick in-town son as he is debt-adverse. To the point he's never bought a new car (he's 30) and 5 years in has yet to paint the outside of his house.

 

[rkser]

I am following this very informative & helpful discussion, thanks

 

[zippy2020]

Banks are notorious for demanding that customers fill out the BANK'S power of attorney form. Customer service can send you the .pdf by email or fax, usually just a one pager that doesn't need to be notarized. But follow the bank's instructions to the "T"!

 

[audreyh1]

I made a rookie mistake with my father. When he was recovering in the hospital from emergency surgery (exacerbated by Alzheimer’s), he was worried about taking care of his finances. I offered to help him pay his bills, and I brought his mail and his checkbook to the hospital. He asked for help writing out the checks, and then he signed them.

Dad lived in a very small town, and the manager of his bank was immediately alerted to the different handwriting on his checks. I was locked out of his checking account for the nine-month legal process of obtaining a conservator’s appointment. (His pension and his Social Security payments were deposited to that account.) The bank continued its adversarial stance for our entire relationship (including “malicious compliance” with the court order), and for nearly a year after his death.

Gosh, that sounds horrible! Especially the continued adversarial relationship.

Thank goodness DF put me on his account years before I needed to pay his bills! And the small town GA bank happily made a copy of the POA - drawn up by a well known local attorney, so maybe that helped. But I’d had a relationship with that bank on DF’s behalf for several years already.

 

[Rosedala]

This is a concern for me. I will be simplifying investments as much as possible, and have some things automated. But we will need a bill paying service and someone to do taxes. There aren’t younger family members who can take on these roles.

...and to me too - I don't even have a spouse for him to take over. What i did is hire a lawyer who did all the necessary final documents. However, even though I have super simple investments of just CDs, MMs, etc. into a Revocable Living Trust, I made her put a clause that immediately after my demise (after debts, her fees, etc. are paid) to close all accounts and withdraw the money and put into my estate. I don't want anyone to do any business on my Trust.

I'm aware the lawyer may have to hire various professionals such as executor, accountant, etc.?

Since I do everything without an advisor, I often wonder if I did the right thing, but...does anybody here think that what a person totally alone as I am, needs some revising? I'd be very grateful if anyone cares to opine...

 

[Rosedala]

If I die young, no problem: a sibling is executor of my estate / successor trustee of my revocable trust. If I die very old, I have a big problem that I have not yet satisfactorily solved. If my assets are stolen by whoever I enlist to manage my end-of-life finances and/or to settle my estate, the beneficiaries who are screwed are major charities. How would these charities ever know that they've been screwed unless they have visibility into my end-of-life finances and estate settlement? I have not yet contacted any of my favorite charities to see if they have a solution to this problem.

If you are absolutely sure of your legacy to your major charities, I would contact them with my fears. I'd tell them approximately how much you'll leave for them so they'll be alerted in case of fowl play..... which nowadays wouldn't be surprising at all.

 

[BarbWire]

Solo, no close family (biologically or geographically), no younger friends on whom I would want to place this burden. And I'm not a religious person, so no "church family" to lean on.

As have many above, I'm trying to simplify my holdings now (age 63) so that I can cope with them later (DM began showing Alzheimer's signs at about 77, and had a 10 year rocky decline; DF had all his marbles until 1 year before his death at 92.)

I have all the standard estate documents: will, DPOA, MedPOA, living will/advanced directive. A trust company holds the DPOA, and a dear friend, 5 years old than me, has the MedPOA. I have Long Term Care insurance.

But as I think about the future and about moving to a new town in a new state (TBD), I've been thinking about who'd I need on my "geriatric team" to help me financially and physically should I need it. The team members would need to know who other team members are. Possible team members would be:

* Physician and specialists as needed
* Estate lawyer
* professional DPOA (for when I can't manage my money, possibly to serve as executor when needed)
* CPA (to manage money, investments, taxes, to file my LTCare insurance claims, etc)
* personal fiduciary (manage day to day spends?)
* local MedPOA (not sure if my MedPOA would need to be a person in the same state), possibly to coordinate with a Geriatric Care Manager

....and if I worry about developing dementia, a "private social worker" to visit me once every three months or so to count my marbles.

The other challenge is to make sure no-one has access to my money without the sign-off from someone else (eg, personal fiduciary needs CPA's countersign to get money, etc).

I had a spinster great-aunt who was mad at everyone (really, mad at the world) and in the 1980s was scammed by a mid-50s woman to be her "friend." When my aunt finally moved herself back to the nursing home in her small Oklahoma small town, insisting no one knew who she was, the nursing home director phoned my mother -- in another state -- to let her know. And when the scam-artist showed up at the nursing home demanding Auntie's checkbook, the nursing home director called the town's sheriff and bank president (all high school buddies) ...

Finally, the stories about predatory court-approved for-profit elder guardianship in Nevada have me spooked.

 

[BarbWire]

Mom and I were told flat out by her bank (Bank OZK) that they WILL NOT accept a PoA. It HAS to be a specific PoA for THAT BANK. We are in Georgia. While I'm the one that selected this bank for her (she insists on a brick and mortar bank and will not put everything in the credit union we use - "don't want my eggs all in one basket". she is 89.)
To solve this we are joint ownership on all of her accounts and properties save one.

The SSA will not accept a PoA. I learned this when I contacted them about DM's SS benefit after DF died (she had Alzheimers, was in residential care, and I had DPoA). They also said, should the need arise, I could not deal with Medicare on her behalf.

I had to apply to SSA to be approved as her "authorized responsible party" (or something like that) and was required to prove to them how her benefit was being spent if requested. (Fortunately that never happened; she died a few months later.)

 

[RetMD21]

One interesting thing I’ve discovered, as I’ve started managing my mother’s affairs, is how much resistance certain institutions have to recognizing a fully executed P of A. Bank of America was particularly difficult. I certainly can understand being careful but this seemed really obstructive. Thankfully Connecticut, where my mother lives, has a law requiring that P of As be honored so a call from her lawyer helped. But if I had a do-over I’d convince her to simply make me a co-signer from the get go. If I could talk her into that!!

We partially solved this by having my mother sign the bank's homegrown POA. The other thing is that with online access they don't know/care who is authorizing the e-payments. Now looking at helping wife do web access for MIL for bill payments. One of our children is interested in personal finance and I am "training" her.

 

[retiredtillwepart]

What to do.

Anyone have experience or advice on ways to handle both short- and long-term finances in very old age? I'm talking about everything from handling the checkbook to handling the investment portfolio. If my wife goes first, I'll be confronting this challenge.



Various options might include: Family member? Daily money manager? Public fiduciary? Trust company? Are there others I haven't heard of?



I'm sure some of the smart folks on this board have given this some thought, and I would appreciate your sharing your approaches.



Thank you.

Six and a half years ago I decided to cease being a “self-investor” and get help. I felt that since DW and Daughter were lacking in financial acumen and DW and I were in our mid-seventies it was needed to be done. We moved to Vanguard and got a Personal Advisor and this has proven to be a very good idea. DW will have the Personal Advisor relationship to help if I pre-decease her. In 2019 had a new Will and Trust created with all of the needed DPOA’s and directives in place and Daughter executor when we are both gone or sooner if necessary.

This is only part of the answer to the perhaps the bigger issue how each of us can handle our daily needs and maintain our living situation. Of course this will involve Daughter with outside support as needed. A WIP to be sure! We are creating a dynamic list of all things available and to be done.

 

[Nords]

Gosh, that sounds horrible! Especially the continued adversarial relationship.

The branch bank's adversity continued after Dad passed away, because conservatorships expire when the ward dies. The bank insisted on formally establishing the estate's personal representative for a checking-account balance of... one dollar. Plus six cents of interest.

I finally called out the branch bank on the blog.
https://the-military-guide.com/lessons-learned-settling-my-fathers-estate/
To the credit of their HQ, a VP made it right... way too late for me but at least it helped avoid further pain for other conservators.

 

[Rosedala]

This is a concern.
Especially as I now see with FIL in his 90's, his trusted banks were very happy to SELL him various investments/annuities.
Imagine selling an 84 yr old an annuity that doesn't start to pay out for 10 yrs !! What a lack of Morals that bank seller had.

It is highly selfish of that banker! DEMAND TO CANCEL IT!!! I'd shout at him/her a the top of my lungs to cancel and return the entire amount invested! good luck!

 

[shafer9]

This is a concern.
Especially as I now see with FIL in his 90's, his trusted banks were very happy to SELL him various investments/annuities.
Imagine selling an 84 yr old an annuity that doesn't start to pay out for 10 yrs !! What a lack of Morals that bank seller had.

BIG commissions. Grrrr

 

[ncbill]

I hear that.

My father could probably have satisfied the legal requirements of signing a DPOA while he was still in the “mild cognitive impairment” stage. However when it’s hard for a person with dementia to follow a conversation, the easiest answer to everything becomes “No.” That’s if we even understand that we have a cognitive issue instead of being blissfully confident in our competence.

My spouse and I have essentially removed a bunch of legal safeguards and enabled our daughter to legally do what most families do anyway: nobody knows who you are on the Internet when you have the logins and passwords. I felt that as long as I was fiduciary in my behavior then the authorities would ignore the situation, or at least agree that there were mitigating circumstances.

I made a rookie mistake with my father. When he was recovering in the hospital from emergency surgery (exacerbated by Alzheimer’s), he was worried about taking care of his finances. I offered to help him pay his bills, and I brought his mail and his checkbook to the hospital. He asked for help writing out the checks, and then he signed them.

Dad lived in a very small town, and the manager of his bank was immediately alerted to the different handwriting on his checks. I was locked out of his checking account for the nine-month legal process of obtaining a conservator’s appointment. (His pension and his Social Security payments were deposited to that account.) The bank continued its adversarial stance for our entire relationship (including “malicious compliance” with the court order), and for nearly a year after his death.

The above is why I like revocable living trusts...if the grantor has already been diagnosed then make the kid or whomever will be handling the finances a co-trustee (not successor) with any trustee able to act alone...can't say no to a trustee...though they might insist you find another bank.