Wouldn’t it be Nice to Have a Personal Financial Assistant?

Are you a senior and still handling your own bills, investments and finances? If so, studies have shown that you likely believe that you can handle your financial matters as well as you could when you were in your 40’s or 50’s.

But can you, really? As you age, your physiological systems slow down. You probably notice the physical indications of this every day. You do not go up and down the stairs as easily as you used to. It is more difficult to bend over to pick up things you dropped on the floor.

Although you likely recognize these physical manifestations of aging, it’s not likely the same with your mental manifestations of aging. Studies have shown that after age 60 your financial abilities decrease about 1% per year, but your confidence in those financial abilities stays the same or slightly increases with age. So starting at about age 60, there is a growing gap between what you can do with regard to your financial matters and what you think you can do.

When it comes to financial matters and growing older, there are two basic truths of life we all have to face:

FINANCIAL TRUTH OF LIFE NUMBER 1: After age 60, there is a decline in our ability to handle our money and our financial affairs.

FINANCIAL TRUTH OF LIFE NUMBER 2: There is a stubborn denial of Financial Truth of Life Number 1.

I heard of a recent case in which a senior in her 80’s believed she could handle her own finances, and convinced her family she could too. She had some movers in the house to haul furniture from her main floor downstairs to an upstairs bedroom, and they also helped themselves to her fine jewelry and her credit card information. She never discovered her jewelry missing and did not notice the new charges on her credit card bill for which she then continued to pay. The missing jewelry and improper credit card charges were only discovered after she died many months later. The family had a nightmare trying to recover the jewelry and straighten out her credit card bills.

If you are over age 60 and still handling your own finances, what can you do?

Admit your financial limitations.

Recognize Financial Truth of Life Number 1, that you cannot handle your finances as well as you could when you were younger. To do a checkup on your financial abilities, take the short 16 question multiple choice financial quiz on the AARP website at https://www.aarp.org/money/budgeting-saving/info-01-2014/test-your-money-smarts.html#quest1.

I took the test and scored 100%, but I am still in my late 50’s and I am in the business. Compare your score to the average scores for the age groups of a study:

  • Age 60-69 Average Score: 59%
  • Age 70-79 Average Score: 45%
  • Age 80 or above Average Score: 31%

Ask for Help.

Don’t be embarrassed. Don’t be stubborn. Wouldn’t it be nice to have a personal assistant? Donald Trump has one. If one of the kids wants to be your personal assistant to help out with bill paying and balancing the checkbook, so long as he or she is trustworthy and has money management skills, why not go for it? If you have a personal assistant, there is less likelihood you will be scammed. Discuss such a situation with your loved ones before you need help.

If you are a child and want to help out Mom or Dad, don’t just tell to Mom or Dad that you are going to take over their finances because they can’t do it anymore. This often just buttresses Financial Truth of Life Number 2, the denial, and can damage family relationships. A better way to approach is to offer to be a personal assistant to help out with those matters with which Mom or Dad appear to need assistance. Maybe start with organizing bills or preparing checks for Mom or Dad’s signature. Have meaningful conversations with Mom or Dad. That usually is more productive than a confrontation or intervention.

Update Your Estate Plan.

Review your estate plan on a regular basis, at least annually. Is your estate plan up to date for changes in your personal and financial situations, changes in the law, both tax and non-tax, and changes in your estate planning attorney’s experience? At a minimum, you should have a will, a financial power of attorney and a health care power of attorney. If you are missing any of these three basic documents in your estate plan, then your estate plan needs updating.

In addition to these three basic documents, many people would also benefit from a trust. If you have a trust, is your stuff in it, is your trust fully-funded? Trust funding is completely and correctly designating your trust and individuals as owners, beneficiaries and insured parties of your assets. The proper funding of your trust is critical in making your estate plan work and having the results you plan. Failure to properly fund your trusts may cause unintended results. These may include probate during your lifetime or after death; distributions not in accordance with your goals and objectives; additional taxes; and additional administrative, legal and other expenses.

Do you have disability provisions in your powers of attorney and/or trust to allow non-probate transfer of control of your affairs to trusted successors in the event of your mental disability? Have you discussed this transfer of control to those successors?

Simplify Your Financial Life.

Keeping track of bank accounts, mutual funds, retirement plans and other investments can be a real chore. Now may be the time to simplify and consolidate your financial life. Consolidating your stocks, bonds, mutual funds and investment accounts with one trusted adviser will not only be easier for you, it will be easier for your successors in the event of your mental disability or death. Managing your rentals and other investment properties is becoming a real pain. Maybe it’s time to start selling them or having them professionally managed.

By taking the time now to do a little bit of planning, you can stay in control while you are alive and well, provide for you and your loved ones in the event of your mental disability and when you are gone, give what you have, to whom you want when you want the way you want, all at the lowest overall cost to you and those you love.

By Matthew M. Wallace, CPA, JD

Published edited May 27, 2018 in The Times Herald newspaper Port Huron, Michigan as: Nothing wrong with asking for help

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