Prior Planning for Catasrophes

None of us know what kind of unexpected surprises will occur in our lives. We’d like to believe they will all be happy events, like winning the big Power Ball jackpot. However, unpleasant things like illness or a flood or fire often occur. We never think it will happen to us, says The Dalles Chronicle’s article “Prepare now for emergencies.” Unfortunately, these things do happen, and when they do, being prepared can make all the difference between a stressful situation and a really awful situation that could have been made, well, less awful.

For starters, have you met with an estate planning attorney to create a comprehensive estate plan that includes a will or trust, a financial power of attorney and a health care power of attorney? The will/trust concerns distribution of your possessions and property, the power of attorney gives a trusted person the ability to take financial and legal actions on your behalf in the event that you become incapacitated, and the medical power of attorney allows someone to make health care decisions for you if you become incapacitated. There are also many other tools that an estate planning attorney can help you with, such as a Special Needs Trust, if your family includes a family member with special needs, or other trusts if they are needed.

Next, your emergency preparations should include having important documents assembled in a notebook, on a memory stick and/or a safe location. Imagine there was an emergency evacuation and you had to leave your home immediately. What documents would you need? Here’s a helpful checklist to look at:

  • Contact information for family members, doctors, attorneys, dentist, insurance broker, financial advisor.
  • Cash, so if ATMs are not working, you will have cash on hand.
  • Identification documents, including originals of your birth certificate, marriage license, divorce papers, passport, Social Security card, health insurance cards (or Medicare or Medicaid cards).
  • A video of your home and all of your possessions on your mobile phone. Consider emailing it to a family member or friend who lives in a different location.
  • Insurance policies for home, auto, disability, long-term care, etc. Include contact information for either 800-numbers or your local agent, if you need to file a claim.
  • A copy of recent financial statements for credit cards, banks, brokerage firms, retirement accounts, car loans, mortgage and similar types of accounts.
  • Copies of the last three years of tax returns. If you work with a CPA, they should have them on a secure portal, but a hard copy will be useful to have.
  • Legal documents for your estate plan, including the will, power of attorney and health care power of attorney, as described above.
  • Other legal documents, including car registration, car title and property deed to your home.

These documents should all be organized in a folder that is placed in your home where you and your spouse know where it is and can grab it on your way out the door.

One more item that should be noted in this digital age: if you use a laptop or tablet that contains websites that you use frequently for personal finance, investments, etc., be mindful of its location in the house, so you can grab it (along with a charger cable) quickly. If you have passwords for accounts—and most of us do—you should print them out and include them in your file folder for easy access. You can almost always re-set a password, but how much easier will rebuilding your life be if you have them on hand?

If you do ever face a catastrophic emergency, having these materials will save you hours of time and stress.

Reference: The Dalles Chronicle (July 16, 2019) “Prepare now for emergencies”

Figuring Out A Parent’s Financial Life, When They Cannot

Imagine that your perfectly fine, aging-well parent has had a minor stroke and is no longer able to manage their financial or legal affairs. Your parent has been living independently, waiving off offers of help or even having someone come in to clean for years. It seemed as if it would go on that way forever. What happens, asks the Daily Times, when you are confronted with this scenario in the aptly-titled article “Senior Life: What a nightmare! Untangling a loved one’s finances”?

After the health crisis is over, it’s time to get busy. Open the door to the home and start looking. Where’s the will, where are the bank statements and where’s the information about Social Security benefits? When you start making calls or going online, you run into a bigger problem than figuring out where the papers are kept, no one will talk with you. You are not legally authorized, even though you are a direct descendant.

This happens all the time.

Statistically speaking, it is extremely likely that your parent will end up, at some point, in a nursing home or a rehabilitation center for an extended period of time. Most people have no idea what their parent’s financial situation is, where and how they keep their financial and legal records and what they would need to do in an emergency.

It’s not that difficult to fix, but you and your hopefully healthy parent or parents need to start by planning for the future. That means sitting down with an estate planning attorney and making sure to have some key documents, most importantly, a Power of Attorney.

A Power of Attorney (POA) is a legal document that gives you permission to act on another person’s behalf as their agent, if they are unable to do so. It must be properly prepared for your state’s laws.  It allows you to pay bills and make decisions on behalf of a loved one, while they are alive. Without it, you’ll need to go to court to be appointed as legal conservator of the estate. That takes time and is MUCH more expensive, than having a POA created and properly executed.

If you have downloaded a Power of Attorney and are hoping it works, be warned: chances are good it won’t. Many financial institutions insist that the only POA they will accept, are the ones that they issue.

Once you have a POA in place, assuming that your parent is able to sign it, then it’s time to get organized. You’ll need to go through all the important papers, setting up a system so you can see what bills need to be paid, how many bank accounts or investment accounts exist and review her financial status.

Next, it’s time to consolidate. If your parent was a child of the Depression, chances are they have money in many different places. This gave them a sense of security and gives you a headache. Consolidate four different checking accounts into one. The same should be done for any CDs, investment accounts and credit cards. Have her Social Security and any pension checks deposited into one account. But be careful before moving any investments as there could be significant tax consequences if they are moved improperly.

If you need help, and you might, don’t hesitate to ask for it. The stress of organizing decades of a loved one’s home, plus caring for them and managing the winding down of a home can be overwhelming. Your estate planning attorney will be able to connect you with a number of resources in your area.

Reference: Daily Times (April 9, 2019) “Senior Life: What a nightmare! Untangling a loved one’s finances”

How to Decide Who Your Healthcare Proxy Should Be

It’s especially important to name a healthcare proxy, because the chances of having a crisis escalates dramatically as we age. That’s why so many people put off naming a healthcare proxy, says Forbes in the article “How to Select A Healthcare Proxy,” often only addressing this, when they are completing other documents for their overall estate plan.

What usually happens is that people get so stressed out about naming a healthcare proxy that they put it off or make a bad selection. Making it even worse, is neglecting to tell the person they have chosen for this important responsibility.

It’s not guaranteed that the person you chose as your healthcare proxy will ever be called on to serve. However, if they are, you’ll want to make sure they meet certain guidelines. For one thing, they’ll need to be at least 18 years old. They cannot be your direct health care provider or any of the direct health care provider’s employees, unless that person is also your spouse. They have to be willing to speak up and adhere to your own wishes, even if those wishes are not the same as their own. You’ll want to have a very candid conversation with the person you think you want to name as your healthcare proxy.

You might want to go through this exercise to make sure they are really willing to carry out your wishes. Create a worksheet that describes in detail some of the situations they may face. There are a few sources for this kind of worksheet, including one from a group called Compassion and Choices, a nonprofit centered on helping people get what they want at the end of their lives.

If you are close with your family, it may seem obvious to select your spouse, first-born child, or a sibling for this task. However, be realistic: when push comes to shove, will they be able to stand up for your wishes? Will they be able to deal with the fallout from family members, who may not agree with what you want at the end of your life? They’ll need to be up to the challenge.

Age is a real factor here. You want your proxy to be available in both the immediate and distant future. If you have a sibling who is only two years younger than you, she’ll be 84 when you are 86. That may not be the time for her to make hard decisions, or she may not be available—or alive. Select a few backups, and make sure the primary, secondary and even tertiary are listed on your advance directive.

Geography also matters. The person may be called upon in a crisis—if you are on the West Coast and they are in the Midwest, will they be able to get to your bedside in time? Many hospitals and skilled nursing facilities require a live human being to be physically present, if critical care decisions need to be made. Someone who lives within a 50-mile radius of you, might be a better choice.

Once you’ve made the decision, you’re almost done. Have a conversation with the person, whether they are the primary or a backup. You should also have a conversation with your estate planning attorney, to make sure that your healthcare directive and any related documents are all set for your future.

Reference: Forbes (April 10, 2019) “How to Select A Healthcare Proxy”

How to Be Smart about an Inheritance

While there’s no one way that is right for everyone, there are some basic considerations about receiving a large inheritance that apply to almost anyone. According to the article “What should you do with an inheritance?” from The Rogersville Review, the size of the inheritance could make it possible for you to move up your retirement date. Just be mindful that it is very easy to spend large amounts of money very quickly, especially if this is a new experience, so it is important to be smart about an inheritance.

Here are some ways to consider using an inheritance:

Get rid of your debt load. Car loans, credit cards, and most school loans are at higher rates than you can get from any investments. Therefore, it makes sense to use at least some of your inheritance to get rid of this expensive debt. Some people believe that it’s best to not have a mortgage, since now there are limits to deductions. You may not want to pay off a mortgage, since you’ll have less flexibility if you need cash. It is very important to check your student loan forgiveness options before paying off any student loan debt.

Contribute more to retirement accounts. If the inheritance gives you a little breathing room in your regular budget, it’s a good idea to increase your contributions to an employer-sponsored 401(k) or another plan, as well as to your personal IRA. Remember that this money grows tax-free and it is possible you’ll need it.

Start college funding. If your financial plan includes helping children or even grandchildren attend college, you could use an inheritance to open a 529 account. This gives you tax benefits and considerable flexibility in distributing the money. Every state has a 529 account program and it’s easy to open an account.

Create or reinforce an emergency fund. A recent survey found that most Americans don’t have emergency funds. Therefore, a bill for more than $400 would be difficult for them to pay. Use your inheritance to create an emergency fund, which should have six to 12 months’ worth of living expenses. Put the money into a liquid, low-risk account, so that you can access it easily if necessary. This way you don’t tap into long-term funds.

Review your estate plan. Anytime you have a large life event, like the death of a parent or an inheritance, it’s time to review your estate plan. Depending upon the size of the estate, there may be some tax liabilities you’ll need to deal with. You may also want to set some of the assets aside in trust for children or grandchildren. Your estate planning attorney will be able to provide you with experienced counsel on the use of the inheritance for you and future generations.

Reference: The Rogersville Review (March 21, 2019) “What should you do with an inheritance?”

How Can I Make a Trip to the ER Easier for an Alzheimer’s Patient?

How Can I Make a Trip to the ER Easier for an Alzheimer’s Patient?
Emergency room

Trying to make someone with Alzheimer’s comfortable in an ER is not an easy thing. However, there are some things you can do to make the stimulation-saturated environment a little less overwhelming, says The Advocate in the article “Alzheimer’s Q&A: What should I know before taking someone with Alzheimer’s to the emergency room.”

Start long before you must go to the ER, by creating a list of your medications and have a few copies with you.

Bring the medication list and any assistive devices, including hearing aids, dentures, an extra pair of glasses and any walking aids, like a walker or a cane.

Also, have a list of contact information for all healthcare providers and family members. If you have a power of attorney for healthcare (also referred to a California Advance Healthcare Directive), bring that as well. If the individual has a POLST or any other documents, like a do not resuscitate (DNR), bring those just in case. Make sure to have all health insurance information.

Expect a wait, so bring snacks. A portable music player with the person’s favorite soothing music and headphones may provide some comfort. Magazines or books that are used during quiet times at home may be useful. Don’t bring anything of value, like jewelry or a wallet. And don’t bring a crowd. Small children, unless there is no one who can care for them or other family members, are best left at home.

Unless the individual is having a life-threatening emergency, you will likely have to wait, and you may be waiting a while. Provide simple step-by-step explanations of what is taking place and be honest with them about why they are in the hospital and what is happening.

Focus on keeping them calm and comfortable. Offer a snack and if possible, find a quiet space in the waiting room.

Make sure that the hospital staff is aware you are there with a person who has Alzheimer’s or dementia. They may not have training in caring for dementia patients, so be prepared to advocate for your parent or loved one. Offer suggestions in communicating with the person and ask doctors and medical personnel to limit their questions, which may increase stress and anxiety. Speak with the doctor privately, if possible.

Request that the staff avoid using any physical restraints or medications to control the person’s behavior, unless absolutely necessary. Let the staff know about any fever, medication side effects or changes in mental status. Never leave the person alone in the ER or the evaluation room.

Reference: The Advocate (Jan. 20, 2019) “Alzheimer’s Q&A: What should I know before taking someone with Alzheimer’s to the emergency room”

Are You Ready for an Emergency or Natural Disaster?

Are You Ready for an Emergency or Natural Disaster?
Wild fire and natural disasters

Fires, floods, earthquakes: the natural disasters and emergencies that have turned people’s homes and lives upside down have made us aware of how vulnerable we are, and how little time there is when disaster strikes. A “go-bag” to protect your family that contains credit cards, cash, flashlights, flares, batteries, warm clothes, prescriptions, and other necessities is just one part of being prepared, says the article “The most important ‘go bag’ item for emergencies is only 2 inches long” from The Union.

That’s your “financial go bag.” It won’t feed you or keep you warm, but it will save you countless hours and headaches when life returns to normal. Here’s what you need to know:

  1. Gather all your important documents. That means your driver’s license, passport, birth certificate, social security card and Medicare card. If you own your home, you should include deeds to property and titles to cars, as well as insurance policy summaries for home, auto, medical, long term care, life, or umbrella policies. Include statements for checking, savings, investments, debt accounts with account numbers and federal and state tax returns from the last three years. Add estate planning documents. If you have a pet, include their license information, chip ID and vaccine records. If there is an 800 number for a service that can track your pet. Make sure to include that.
  2. Create a physical list of important phone numbers and addresses for family members, professionals, including your estate planning attorney, CPA, financial advisor, dentist, doctors, and emergency contacts. Print it out and put it in your go bag. If you don’t have any power, your list on the phone will not be accessible.
  3. Create a video inventory of your home, including the contents of dressers, drawers, cupboards, collections. Don’t forget the garage and outdoor landscaping.
  4. Scan all this information and store it on two thumb drives (also known as memory sticks). Protect the information, by using an encryption method to secure it, in case it gets lost.
  5. Put one of these thumb drives into your safe deposit box and another in your go bag. Even a fireproof safe won’t survive a massive wildfire, so don’t put it in a safe in or under your house. Put the go bag somewhere near an exit point, where it blends in and is secure.
  6. Tell your family and closest friends that you have a financial go bag and where it can be found.

This does take a little time, but if disaster strikes, and you can move quickly with your documents and your “regular” go bag, you and your family will be in a better position to rebuild your lives.

Reference: The Union (Dec. 23, 2018) “The most important ‘go bag’ item for emergencies is only 2 inches long”