UNPLEASANT BUT IMPORTANT

Would it be possible for someone to take over your finances this afternoon? Could they locate the required documents? Could your spouse guide them in the right direction? I ask these questions because I am often called on to do just that and find it amazing that it is such a difficult task. Sometimes its an unexpected death; however, in others it is in a situation where dementia has gradually lessened someone's ability to decide what's important and worth keeping. In those cases, there is often so much unorganized, trivial information that it is impossible to sort through it all to locate what's really needed.

If you expect insurance companies to be a big help in this area, you can be sadly mistaken. Mortgage cancellation policies are particularly difficult. I have spent hours on the phone talking to mortgage companies before locating someone who has a clue as to the benefits available under these policies. In one instance, the surviving spouse was told that the policy was an accidental death and dismemberment policy with no benefits available for natural death. Since the premium appeared to be way to high for an AD&D policy I was determined to get more information. After speaking with five or six representatives over the phone, I finally found someone who could give me an insurance company and policy number. The spouse got a $40,000 benefit but it was stress she didn't need at the time.

Living trusts are another example. These are supposed to be devices to avoid probate and simplify distribution of an estate but they are worthless if you don't put any assets in them. Sometimes successor trustees have been appointed and never given a copy of the trust documents. In some cases, they weren't even told that they would have this responsibility. The same is true for durable and medical powers of attorney.

Perhaps the worst instances are those in which one spouse has handled all the finances and the surviving spouse has no idea what to do when left alone. Even if a detailed record of all the assets is available, the surviving spouse may not be able to determine how to derive income from those assets. I have seen cases in which the surviving spouse had to cope with considerable anxiety along with grief until we were able to determine that she would be able to support herself without the deceased pension and private annuity income. The moral of that story is that income planning can be the central issue in estate planning as well as retirement planning.

I could devote several posts to this unpleasant topic but I hope this one gives you the motivation to contemplate what those who depend on you would do without your presence in in handling your affairs. It certainly has me. Stay tuned for my next post on the topic of canroys. If you don't know what those are you are probably in the majority. I've had to do a bit of research myself to become more familiar with this topic.