The One Document You Absolutely Can’t Do Without

When I was a young man, I would occasionally have something bad happen to me.

Maybe it was locking my keys in the car. I would circle around the car in frustration praying that maybe one of the doors wasn’t locked. After the first trip around the car, the facts weren’t going to change, but I would keep prancing around the car three more times like an idiot. Soon a desperate sinking feeling would settle in. It wasn’t good.

I only wished I could go back in time two minutes and make a better decision.

It was about then that I would cry out in anger, “Why do bad things always happen to me? This is going to cost me a lot of wasted time and money.” And it did. It ruined my day, maybe even my week.

As I matured in life, I started trying to predict which bad events could occur and then I would devise simple techniques to alleviate the situation.

Do you remember those magnetic key holders that you could stick to the underside of your vehicle? The next time I locked my keys in the car, all the bad feelings would begin flooding back – until I remembered the $2 precaution that I had taken. It was as simple as reaching under the car and going back two minutes in time to fix the mistake. Not only did I not get angry, I would have a rush of joy because my good planning had easily gotten me out of a jam.

Recently a client called me with a very unfortunate situation: his wife was experiencing signs of dementia.

Beyond the realities of a lifetime of caretaking and frustration on both of their parts, his question to me centered around how this situation would influence the management of her IRA and other financial accounts.

He thought they had set up a will but was sure they did not have a power of attorney.

Just so you know, all IRAs are individual assets. There are no jointly owned IRA accounts. A person has no legal ability to work with us on matters with his/her spouse’s IRA. We must communicate directly with the owner of the account.

It’s common knowledge that you should name a beneficiary for your accounts. However, a beneficiary designation only comes into play after death. If you are still living but become incapacitated, you need to have someone who is legally able to give direction on managing the account and making the required withdrawals.

Without a durable power of attorney (POA), the husband in this case would need to petition a court to appoint a conservatorship for his wife – which can be a very time-consuming and expensive process.

So, could we sign a POA form now? Immediately I checked with a qualified attorney and she told me that yes, a form could be signed… uh-oh… but the wife needed to be able to answer some basic questions such as: Who are her family members? What kinds of assets did she own and what were they worth? And this should be done without family members in the room.

Unfortunately, there was a high degree of uncertainty that the man’s wife was capable of doing this. That old sinking feeling started to come back to me again – and the husband himself ended up having quite a sleepless night.

However, then good news came. This attorney I checked with had drafted this couple’s will years ago. As a matter of routine practice, she had also prepared a durable power of attorney form. This simple two-page form brought immediate relief to my client. As a trusted and loving companion, he could now carry on and take care of his wife without any legal hassles.

Did you know that over 40% of retired individuals have never established the basic estate documents?

Do me a favor.

If you don’t have a will or trust, do it now – and make sure a durable power of attorney is also drafted. If you did this process many years ago, double check to make sure that it’s in place.

Don’t know who to call? Call me and I’ll refer you to an attorney we trust.

I never planned on slamming my car door shut and locking my keys in the car. But I did it many times. Bad things in life happen to everyone – when you least expect them. It’s how you prepare in advance that determines your ability to move forward.

Ron Dickinson, CPA, CFP®, MPA-Tax

 

[Financial Planning and Investment Management Services offered through Dickinson Investment Advisors, Registered Investment Advisor. Statistics and market information provided by Litman Gregory Advisor Intelligence.]

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