Bridge of Life Planning (Part 2) – Financial Plan Review

How to help a parent get what they want during a decline

What Does Momma Want?

The second pillar of Bridge of Life Planning is Financial Review. Our experience shows Financial Plan Review to be all too often overlooked. If you haven’t already please read and review our previous Bridge of Life Planning (part 1) blog. This article contains details of the first Pillar in BOL Planning to make sure your Loved One gets what they want. You have probably worked very hard your entire life to accumulate what you’ve got. You may have made many shrewd business and financial decisions over the years, but now it’s time for a review. Here are a few of the many items to consider:

Asset Structuring

It’s time to take a step back and determine whether your assets are structured properly. Your advisor should be able to help you determine whether your investments are aligned with your life goals at this stage of your life. For example, if you are retired, you may not want to take the same risks that you have taken before.

Choice of Person to Carry out Your Wishes

It is very important to delegate the person who should use your money for your care should you become incapacitated. If you don’t exercise your right to choose, then “whatever” happens. “Whatever” happening is rarely as good as an informed decision made by you.

Can Your Assets Be Used for Your Benefit?

An important objective of a review meeting is determining whether your assets can be used by the person(s) you designate. The aforementioned objective is often overlooked. If you should become suddenly incapacitated, who has access to your money? Anyone? If so, does this person know what is expected of them? Have you discussed this with them? Do they know how you would like your assets to be used for your benefit? Can they even access your accounts?

Can They Get to the Money?

Some accounts are very restrictive. Oftentimes, accounts are set up where only you (the account holder) can make decisions or move money from the account. If you are the only owner of the account and you become suddenly incapacitated, anyone else (even your spouse or kids) may have problems when they need to withdraw money. It doesn’t matter the reason – even if one of the kids wants to withdraw money from your account to pay for your medical expenses, they may not be able to do so. If they are not listed as an authorized signer on the account OR if you don’t have a properly prepared Power of Attorney, then it may take a Guardianship Order (which is an Order of the Court) to access the money.

Possible Penalties or Taxes

Some accounts may have high penalties or substantial taxes (ex. IRA) to pay if money had to be withdrawn early or in a lump sum. We have seen many families forced into a huge tax or penalty “hit” because they were forced (by life) to withdraw money quickly to use for their Loved One’s benefit. However, some pre-planning may have served to minimize the severity of this tax or withdrawal fee.

Stay Informed

These are just a few of the care options available and a few of the decisions that need to be made when the decline starts. When a Senior declines to the point that they are no longer able to care for themselves, some quick research has to be done AND the family has some big decisions to quickly make. To assist your family with this process, download our Alternatives in Care Tip Sheet. This resource lists the Top 7 Care Options and highlights a few of the main points to consider for each. You will find it to be a helpful resource when quick decisions need to be made.

The Financial Plan portion of the Bridge of Life Plan is a very important, but often overlooked area. It is very beneficial if your Financial Advisor and your Elder Law Attorney can work together to craft a plan to take potential future caregiving needs into account.

Stay tuned until next time for more keys to your Bridge of Life Financial Plan.