Managing Your Money

We recently lived through this with my father. My dad, a highly educated and intelligent man, who was organized, on top of everything, and never missed a birthday or bill payment, was being slowly taken away by Alzheimer’s. He had always been the one who managed the finances, paid the bills, and handled their investments, with me as their financial advisor. It slowly became clear that my mom would have to take over all this responsibility. Though she too is highly educated and quite capable, the task was intimidating, and she didn’t know how she would handle one more thing. The emotional reality of what was happening, and what was ahead, was already overwhelming.

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The reality is that we can never fully prepare for the impact that a mental or physical incapacity or death, will have on those left behind. We can however plan ahead for the legal and financial transition.

When my mom realized that my dad was starting to fail, she began watching over his shoulder as he would write cheques and pay bills. Over the months, she started keeping track of the day-to-day finances, and eventually started taking over the management of the household finances herself. I reassured her that a late, or missed payment was not something to be hard on herself for, or get upset about.

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I helped her organize all the tax stuff, and reviewed their financial plan with her so that she was on top of their household income and expense situation. We tried “on paper”, various “what if” scenarios to determine what their options were in regards to hiring a caregiver, moving into a care facility, etc., should it come to that. This helped my mom significantly, knowing what the options were, and understanding what financial limitations they had. When I reviewed my parents’ investment situation with my mom, we ended up making some changes to their investments. Because she has a lower tolerance to risk than my dad, and their situation had changed, I felt it was important that she be comfortable with the amount of investment risk and volatility in the portfolios.

Planning Ahead

It is always best to have your finances in order. But when a spouse or loved one begins to fail, either mentally or physically, it becomes even more crucial. There are some key planning items that you will want to get-on as soon as possible.

The Will, Power of Attorney & Mandate in Anticipation of Incapacity: make sure these documents are current. Many people ask me what the difference is between the power of attorney and mandate. Both are very important documents to have. The power of attorney gives another person designated powers and becomes valid as soon as it is signed. Whereas the mandate in anticipation of incapacity only becomes valid once a person is deemed to be incapacitated. Both these documents, as well as the will, need to be prepared and signed by a person of sound mind, and if this “window” is missed, then the courts will step in.  I strongly recommend that these documents be prepared by a notary, in the province of Quebec.

Financial Inventory: I know of a surprising number of people who have “lost” or “misplaced” accounts in the best of times.  Imagine how much more likely it becomes when a spouse or loved one starts failing or passes away. Keep a financial inventory of accounts, insurance policies, loans, etc., and update it on a yearly basis.  With so many people receiving “online statements” instead of paper statements these days, the risks of misplacing accounts seems to be even greater. Consider consolidating accounts to fewer institutions, and it helps to have one financial planner who is overseeing or at least on top of the whole financial situation.

Trusted financial planner: It’s common in a couple that one spouse has a closer relationship with their financial advisor, which is fine. But I strongly suggest that the less involved spouse get to know the financial planner, and ensure they feel a comfort and trust with him or her. If comfort and trust is not there, it may be easier to meet with, and search for a new advisor as a couple. Bottom line, it’s important that you work with an advisor with whom you are comfortable asking questions, and that you trust. Otherwise, when the waters get rough, you may not feel like you have a solid professional to turn to. I also recommend to clients to involve their adult children at some point, because it helps significantly when they know, and can turn to the financial advisor should the need arise.

Important Note:

The Richardson GMP Fall Seminar Series is in full swing!  We are pleased to invite you to a series of educational lunch events hosted by our tax and legal experts. These workshops will be held at both our Pointe-Claire branch, and our downtown Montreal branch. Please visit my website, under events, for the full workshop series, dates, and locations at or call us at 514-981-5796.

Lynn MacNeil, F.PL. Vice President, Investment Advisor, is a Financial Planner with Richardson GMP Limited in Montreal, with over 20 years of experience working with retirees and pre-retirees. For a private financial consultation, or more information on this topic or on any other investment or financial matter, please contact Lynn MacNeil at 514.981.5795 or [email protected].

The opinions expressed in this article are the opinions of Lynn MacNeil and readers should not assume they reflect the opinions or recommendations of Richardson GMP Ltd. or its affiliates. The comments contained herein are general in nature and are not intended to be, nor should be construed to be, legal or tax advice to any particular individual. Accordingly, individuals should consult their own legal or tax advisors for advice with respect to the tax consequences to them, having regard to their own particular circumstances. Richardson GMP Limited, Member Canadian Investor Protection Fund.

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