“Be Prepared” Should Be Your Estate Planning Motto: A Real Story.

Independence, self-reliance, self-sufficiency, are all laudable goals for us as individuals. Independence is the hallmark of a well crafted and administered estate plan. But independence requires that you be prepared.

A friend, recently called me. Let’s call her Joan. Joan, unfortunately, recently had a stroke and is struggling with her new realities and limitations. Joan is one of those rare people that followed the recommendations made to her over the years by her advisers (most advisers seem to lament how few clients heed their recommendations). She also used common sense to fill in gaps in her planning and assure practical steps were taken. Her diligence put her in better stead than most people making these types of calls. There are some valuable lessons in some of what she did, and perhaps speculating as to why she was able to make preparations that most don’t. We also tried to brainstorm together some of the further steps she might consider to better her situation going forward.

Steps Joan Took That Made her Situation Much Safer and Easier

Joan has been proactive for many years in planning for the inevitable issues of aging. Those steps are a model for what others might take to prepare for what for many of us will be inevitable declines in health and other challenges of aging.

Identify Reliable People Who Will Assist: Joan knew that she could rely on her children, and has her grandchildren grew into responsible adults, them as well. Not everyone has children or grandchildren, or children that they can rely on. If you don’t have that good fortune, you have to identify who you may be able to rely on. Perhaps it is other relatives. One client has no spouse or descendants, but nieces and a nephew she can rely on. Another client who also never had children or a spouse, thought she could rely on close friends who were also neighbors. But when she was diagnosed with Alzheimer’s disease and arranged for a meeting to finalize plans with them, their backed out of their previous commitments! So, practically and realistically identify those that you think you can rely on, and then confirm it with them. If you don’t have family or friends that you know will be reliable to help you may have to make arrangements with professional trustees and caregivers to provide that support.

Annual emergency contact listing of information: Years ago, Joan assembled a detailed letter of instruction to those she would rely on in an emergency. Over the years, little by little, she added more details to that instruction letter, and she thoughtfully updated it each year. That was a brilliant move. When Joan had her stroke she had already compiled all the relevant information about those who would help her might need to assist. Joan had key information on who her children should contact for help, where her financial resources were located, account and other details. By starting well in advance, and slowly improving the instruction “manual” each year a bit at a time, this project was never particularly burdensome for Joan, and she was able to think of new information to add over time. Joan also was able to review the letter of instructions with her children in advance of her stroke and clarify points they requested.

Consolidation of assets and accounts: Joan consolidated her financial and investment accounts to a very few institutions and accounts. That makes it easier for her children to help out. Also, with some of the difficulties she is confronting post-stroke, having her finances simplified and organized makes it easier for her to remain in control of her finances. That’s important to Joan as she has always been very self-sufficient and independent. Some people, even those who are as fiercely independent-minded as Joan, fail to take these steps as they somehow feel consolidating and simplifying assets, or creating the emergency roadmap of instructions that Joan did, are signs of weakness they don’t want to confront. But to the contrary, taking logical steps well in advance can, as it is doing with Joan, help keep them in as much control as possible over their affairs. For some that seems counterintuitive.

Autopay: Joan slowly over many years put as many of her recurring bills as possible on autopay. Her income, to the extent feasible, is also on automatic deposit. That avoided the need for more urgent action by her children following her stroke. That enables her children to continue focused on their own busy lives and to devote as much of the time as they can helping their mom to helping her and not handling routine financial matters that could have been automated. They were already automated.

Moving to an apartment with services near a loved one: Joan, although she had been very independent, living her own life, working, traveling and more, She had continued to work and lecture until her stroke and only deferred some of these undertakings to see how her recovery progresses. But Joan was and remains an insightful, objective and self-aware individual to make those tough decisions many avoid. Joan was astute enough to have realized years ago, when there was no health issue even on the horizon, that one day as she continued to age she might face challenges. So, Joan moved cross-country to be physically closer to where one of her children lived so that it would be more practical for them to help if that was ever needed. And years later, just recently, that help was needed. Joan also, practically assessing the realities of aging opted to move into an apartment that had a full array of services. There are onsite restaurants, social activities, a gym and more. The building she moved to also can provide in-home cleaning, health aides and other services. At the time of her move years ago, none of those were needed, although Joan enjoyed the convenience of a gym in her building. But with the recent stroke, these services and opportunities made it practical and feasible for Joan to continue to be as active physically and socially as possible. Hopefully, as her recovery continues, she will revert to more independent activities. But whatever the future holds, Joan’s decisions were wise and prescient.

Updating all her estate planning documents: When Joan moved cross-country she took yet another prudent step that too few people bothered with. Estate planning rules differ significantly from state to state. So, Joan contacted a new attorney in her new home state and had new estate planning documents created that were both current and conformed to the laws of her new home state. That was wise. By doing so, her children had current and proper legal documents to step in as needed to make health, financial or legal decisions. Many people, when they move to a new state, simply rely on their old estate planning documents to avoid the hassle, cost or both of getting new documents. Joan’s conduct yet again sets a model to follow.

Some Other Steps Joan Might Consider

While Joan earned an A+ in planning and preparation, there are some other steps she and others might consider.

Have a practice or dry run: Get together with your agents, perhaps depending on your circumstances one of your advisers, and have a practice run. What happens if an emergency occurs? Do family and others you will rely on know what to do? While the thought of this is certainly unpleasant, it may cost nothing, take a modest amount of time, and identify critical gaps in your plan to address. This might all be done on a web meeting.

Resist adding people to your accounts unless necessary: Joan had inquired as to whether, to enable one of her grandchildren to better help with her finances, she should add her to her bank account, something her financial adviser recommended. Maybe, but that could be a big mistake. It may be better to rely on the grandchild (or whoever your agent is) relying on and using a durable power of attorney that authorizes them to act on your behalf. If you instead add that person to an account they may inherit that account to the exclusion of others. Is that really your intent?

Use technology: Use technology to your advantage. And like Joan, prepare well in advance of when you might need to have steps in place. Use a password manager. Not only is that safer to reduce the risk of someone accessing your confidential records, but in the event of an emergency you agent who will help with your finances may only need one password and one authentication mechanism to access all of your accounts. Scan all old paper records. Many people have crates upon crates of old tax returns, bank statements and other records. Those are a real danger to identity theft. A home repair person might easily pilfer a few documents with confidential information that could be used to steal from you. Scanners are efficient and inexpensive. But if you can’t realistically get your old paper scanned and shredded there are vendors you can hire who will scan everything, shred it securely and give you a hard drive with all of your data. Have that data securely backed up to the cloud and your laptop or other device encrypted and/or password protected. If you have to move due to a health issue you will avoid having to address those voluminous documents at that time. It may also serve to keep your data safer. If you have a family member or other person stepping in to assist in an emergency, all that data may be quickly searched for relevant information. That is in sharp contrast to the near impossibility of combing through decades of paper records. If you haven’t automated your finances on a personal financial software do it. If you don’t have the ability you might be able to hire an accounting firm or part-time bookkeeper to assist you. That will make it easier and faster for professionals or family to help you in an emergency.

Communicate health information: If you have any health issues, and wishes, discuss those with the person you have designated to help you make medical decisions if you can’t do so (called a health care agent or proxy). That could be important to assuring they understand your wishes and the challenges you might face.

Hire professionals: If you’ve been making all your own investment decisions, consider whether it is time to turn that over to a professional. That way, if and when you face challenges you don’t have to worry about making mistakes or leaving it up to your agent to have to figure out what to do. There are a wide range of options that come with bare bones to deluxe services and a wide range of price options as well. Pick what makes sense for you but generally, as you reach more advanced ages, or your health deteriorates, it might be safer to have this all handled professionally. If you have been preparing your own income (and perhaps other) tax returns consider whether it might make sense to hire a CPA. A CPA is a licensed professional and as your age or health concerns advance, having a trusted adviser who is subject to industry oversight to handle important tax and other matters could be a valuable safeguard.