At some point, it becomes necessary for aging people to hand over control of their finances. One aspect of estate planning is naming an agent or fiduciary who can take control of finances if you become incapacitated or experience significant cognitive decline, explains the article “Don’t Forget to Build This Into Your Retirement and Estate Plans” from yahoo! finance.
A financial agent makes financial decisions with you or on your behalf. The exact nature depends upon your preference. However, most agents act as co-signatories or solely control your financial accounts. A co-signatory means you and the agent must jointly authorize a financial transaction. In contrast, a sole controller means only the agent can authorize financial transactions to and from your accounts.
This is a type of Power of Attorney in which you authorize another person to act on your behalf in a legal capacity. The purpose is to protect your finances against cognitive decline often accompanying aging. When it’s unnoticed, the individual can continue making financial decisions, and they may not always be correct. Cognitive decline is why seniors are so vulnerable to financial exploitation and fraud.
A study from the University of Southern California found that cognitive decline significantly reduces wealth among households whose financial decision-makers experience these declines.
Putting a Power of Attorney in place before it is needed can prevent many issues. Children or another trusted family member are usually selected to serve as agents. The issue of timing is another concern—the agent should be appointed before irreversible mistakes are made. If control of finances is handed over too early, the elderly parent can be forced to live as a competent adult who needs permission to make routine decisions. However, waiting too long exposes them to financial mistakes.
How should you manage the timing? First, have regular medical checkups with a doctor who can track your mental status over time. Select your agent before issues begin as part of your estate planning. Consider a Springing Power of Attorney, allowing your agent to take charge if a doctor or court declares you unfit. Medical incompetence is a high bar, and financial mistakes can be made long before you meet a doctor’s standard for incapacity.
Another option is speaking with your agent regularly. Ask for their advice and follow it. If you trust them, you can have your estate planning attorney prepare a Power of Attorney form to suit your individual needs. Do you want your agent to manage every aspect of your financial life or focus on day-to-day bill paying? Does your situation require one person to pay bills and another to manage investments?
Cognitive decline impacts many older adults and can expose them to serious financial risk. You can protect yourself from this risk by appointing a trusted agent in a timely manner to manage your legal and financial lives.
If you need help setting up your estate plan, or if you are dealing with a probate case, we are here to answer your questions. Contact The Werner Law Firm probate lawyers for a free consultation!
If you have any questions, schedule a free appointment with us through our online appointment page.
You can also read reviews from some of the hundreds of clients we have helped over the years.
Reference: yahoo! finance (July 28, 2023) “Don’t Forget to Build This Into Your Retirement and Estate Plans”
Founded in 1975 by L. Rob Werner and serving California for over 48 years, our dedicated attorneys are available for clients, friends, and family members to receive the legal help they need and deserve. You can trust in our experience and reputation to help navigate you through your unique legal matters.
Whether you need help creating a living trust or navigating probate, our living trust law firm's compassionate team of estate planning lawyers and probate lawyers are here to help you and ready to answer your questions.
Our goal is to make your case as easy as possible for you. Hiring a lawyer can be a daunting task, but it doesn’t have to be. From the moment you contact our firm, through the final resolution of your case, our goal is to make the process easy and understandable. We cannot change the fact that probate is a long and complicated process, but through our Werner Law Firm Difference, we strive to go out of our way to keep you informed of your case through every step of the way. We are constantly refining our processes and procedures for a more streamlined and calm client experience. Our goal is to have you feel like a burden was lifted from your shoulders, and that we made the whole process an easy one
If you're dealing with a legal matter, we urge you to schedule a free initial appointment today and join the many satisfied clients who have contacted Werner Law Firm.
23 Corporate Plaza Dr., Suite 150
Newport Beach, California 92660