OCEAN CITY – Many Americans are living longer, more fulfilled lives than ever before. In 2009, people ages 65 and older represented almost 13% of the U.S. population, compared with just 5.4% in 1930, and those ranks are poised to swell dramatically as the first wave of the baby-boom generation turns 65 in 2011. But financial concerns can also come as we age.
Even mild memory loss can lead to mishandling of financial affairs, and this is not a minor issue, nor is it something that anyone likes to talk about, in part because such problems seem decades away — all the more reason for families to begin getting ready for them in advance.
"Do it now," urges Sally Hurme, a lawyer and senior project manager at AARP (formerly the American Association of Retired Persons). "It’s never too early to make your wishes known and to get a plan in place for handling age-related problems. When you wait too long, decisions about everything from your health care to your finances fall out of your hands."
There are a few key legal documents you should discuss with counsel:
A power of attorney for finances enables you to appoint someone you trust to pay bills and make financial decisions on your behalf when you are unable to do so. "This is just as important as preparing a will," says Hurme. "Selecting a trustworthy representative and giving clear direction to that person about how you want your life managed can lay the groundwork for all the care you receive through the end of your life."
Those concerned about retaining control for as long as they are mentally capable can opt for a springing power of attorney, which specifies a date or a scenario that would trigger the power of attorney.
Those with more complex finances, such as multiple real estate holdings or a small business, may want to create a living trust. Assets are placed in the trust, and a trustee is appointed to manage resources and disburse proceeds according to the terms of the trust. A trust also has the advantage that, like a will, it can direct how the trust property is distributed after death.
"You want to make sure your strategy still reflects your current wishes and meets current legal requirements," notes Hurme. "Getting these documents in place, which is not all that complex, is like giving yourself and your family a gift.
(A Merrill Lynch Wealth Management Advisor. She can be reached at 410-213-8520.)