• Mark Reckman - When to give up financial control

  • Jun 24 2024
  • Length: 9 mins
  • Podcast

Mark Reckman - When to give up financial control

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  • Summary

  • A study published by American Economic Review in 2021 found that
    most seniors in the U.S. have a person or agent in mind to take over their
    finances in the event of cognitive decline. 81% have a family member in mind
    and 19% have an institution or a professional in mind.
    Here are the major challenges they found:

    1) Not aware of one’s own decline;
    2) Not wanting to give up control;
    3) Agent is not aware of decline; and
    4) Agent is not “available”.

    Let’s talk about possible solutions:

    1) Pick the right Agent. Agent must be:
    a. trustworthy;
    b. reliable;
    c. “available” – which means they have both the time and the
    “right” temperament; and
    d. young and relatively healthy.
    2) The Agent does NOT need to be:
    a. close by (although that helps);
    b. a relative; or
    c. a medical or financial expert.
    3) Sign a financial POA and medical POA:
    a. does not have to be the same person;
    b. name a backup Agent;
    c. “refresh” the financial POA every 3-5 years; and
    d. avoid the “springing” POA.
    4) When it is time to turn things over:
    a. file POA in local county;
    b. file a copy of the POA with every company you do business
    with – starting with the bank, broker and other financial
    institutions. The medical POA gets filed with each healthcare
    provider, doctor, hospital, and health insurance company.

    When does the Agent “step in”? Depends on the individual. My parents
    had a division of labor that was typical of the WW II generation. Dad
    managed the money, and mom managed the house and the family. When
    dad got bad, my mother did not want to manage the finances. She was plenty
    smart – she was the valedictorian of her high school and nursing school. But
    she had NO interest in finances. So, she gave it up immediately.
    Other cases are very different. The Agent must look for clues like
    bounced checks, late tax returns, unopened mail, double payments, etc.,
    then offer to help – gently. It will take more than one offer.
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