Seniors: When is it Time to "Let Go" of Control?

There comes a point for many aging seniors when they must defer control to a person they trust to make their decisions for them. While it may seem a long ways away, the ideal time to designate that person is while you’re still competent and able. What’s more, it is crucial to specify, via documentation, the person (or people) you choose to make decisions for you regarding legal matters, financial matters and more.

For health-related decisions, an advanced health care directive specifies the designated individual(s), legally known as an “agent,” “health care proxy” or “medical power of attorney,” who has the power to make decisions for you when you become unable to do so yourself. For making and executing decisions on financial, property and some legal matters on your behalf, you can designate one or more people as your agent or attorney-in-fact with a durable power of attorney. With a trust, the trustee(s) you designate steps into the decision-making, management and implementation role—but again, all of this depends on your choosing a designee, executing the legal documents, and trusting that the designee will act on your behalf at the appropriate time.

Timing is Everything

As a financial planner working with retirement and elder care issues, I routinely face the question: should a certain change be made, and if so, when? It all depends on the factors in any given circumstance, of course, and if it involves a legal or medical issue, it should be addressed by an attorney, psychologist or a physician. About the only thing that’s usually clear: the answer is a definite grey area.

Too frequently, the actual execution of the change or transition in question does not happen when it needs to, resulting in some disastrous financial implications and sometimes even permanent damage. Often there are clear signs that change is needed, but these signs are ignored, hidden, or strongly opposed by the elderly individual. If I may offer one piece of advice to the designated decision-makers, it is this: do not wait until a fatal error is made or some severe financial damage results. Act responsibly; act when you need to; you were chosen because you were trusted to do the right thing. Even if you mean to do the right thing, letting too much time elapse before making a decision could worsen a situation infinitely. Timing can be as important as the decision itself. Remember: be respectful. Sometimes usurping an elder’s sense of self and identity can feel like a major violation—which can result in other consequences.

Recognizing an Elder in Need

I ran into this issue again recently. It is so sad, as the elder was such an independent, capable person and she now has daily problems, with drastically reduced mental faculties and other basic physical functions. I spoke with my elderly client, telling her that it was in her best interests to relinquish more control and get more help. When I spoke with her designated power-of-attorney and health care proxy, a professional who has been in this role for years and who is very involved in my client’s daily issues, I encouraged her to move forward in taking control, in light of this obvious deterioration. My client had already done substantial harm by trusting the wrong people. The choices she’d made (or been talked into) were scary and costly! I asked about my client’s attorney, but unfortunately, she could not remember who it was. Although my client had prepared for this scenario, her preparations were simply not enough.

In my profession, I have seen many elderly people try to retain financial control, making errors that can result in significant costs and legal liabilities. When they are desperate to stay in control, they hide mistakes and problems, and make excuses for their potentially harmful behavior. I understand why they are scared; we all want to retain our independence and sense of self. Unfortunately, elders in this situation sometimes look to the wrong person for help, someone who might seem sincere and caring, but who, ultimately, does not act in their best interests.

How do you know when an elder is no longer capable of making sound decisions? Here are some common telltale signs:

• Does the senior lose checks, forget to make deposits and/or overdraw checking accounts?
• Have important bills not been paid?
• Are mail and paperwork piling up?
• Does the senior sometimes lose track of what has happened?
• Is the senior unable to produce the paperwork to file taxes?
• Has he or she purchased expensive, unnecessary financial products? Are the products scams that lead to complete losses?
• Has the senior given personal and financial resources away in exchange for guarantees of attention, love and care?
• Has there been loss or breakage of valuables?
• Has the person deferred trust to people who have take advantage of them with deceptive promises of security and benefits (including family, sales and services people, tenants, etc.)?

Talk Early, Talk Often & Plan Ahead

Start the discussion before it gets to this point. An elderly person who is perfectly capable of making his or her own decisions today may not recognize it when the time comes to “let go.” At that point, it’s up to the designee to act responsibly, moving forward and taking control at the appropriate time.

It’s common for this point to coincide with increasing costs for personal and health care, which can sometimes jump dramatically. Whoever you designate to make financial decisions on your behalf will need to be comfortable making significant financial decisions, and must be comfortable doing so quickly. If you have a living will, it will help your designee ensure that you will be cared for according to your wishes. The transitions during this phase of retirement can be difficult for everyone involved, but coming to terms with the changes and limitations can be the kindest and most beneficial thing a designee can do for the elder.

With financial issues, pre-planned action and legal documentation of the seniors’ wishes helps a lot. The best way to prepare involves direct, realistic discussion of what could occur. Look to the future when determining resources such as long-term care insurance, real estate and all other financial assets. While you are still competent and able to make sound decisions, choose who you would want to manage your assets when that is no longer the case. Make changes in your portfolio to facilitate any needs that may change. Create and execute the legal documentation now, and review it with your designee(s) periodically, with open discussion along the way.

Posted in Advanced Directives, Advanced Planning, Communicating with Loved Ones, Essential Documents, Financial Planning for Retirement, Living Wills, Talking About the Future with Your Parents