Wealth ... Senior Living
Ken Ng
Author of Money and Seniors
Are You Better Planned for Dying Than for Living?
Searching for the answer to this question led me to develop my own consulting practice and to formulate the 3Cs of Financial Preparedness—Clarity, Choice, and Control. When I was a trust officer for Hawaiian Trust, I met and interviewed more than a thousand people, and reviewed hundreds of documents. The question I asked most often was: Are you more concerned with your living years or with those after you are dead? Everyone smiled and answered–The Living Ones. But in reality most wanted only to minimize estate taxes, avoid robate, and protect assets from creditors and divorce for their heirs.
These are issues that arise after you are gone. While important, they do not address how your assets will be used to provide care for you, when you no longer can care for yourself. Many of my clients thought this issue was covered in their living trusts. But most of the trust documents I reviewed at Hawaiian Trust and later merely had variations of the following (in lay terms):
If at any time you become legally disabled by reason of illness or by mental or physical disability, and in the opinion of your successor trustee, are unable to properly manage your affairs, the successor trustee (your spouse, son, daughter, friend, personal advisor, etc.) shall use the trust assets as he or she deems necessary or advisable, in such a manner as he or she deems best, for your support in reasonable
comfort and care.
What they think is best for you is a judgment call. It is not what you think is best for you. At the most vulnerable time of your life, your wellbeing may depend on what others think—not on what you think. Your successor trustee may be a loving, caring, and trustworthy person. But without specific instructions from you, they will do what is best for you from their point of view. Is this what you want? If your answer is no, let’s start identifying hat you want.
Clarity
Where do you want to live—at home, in a family member or friend’s home, or at a care facility? What does comfort and care mean to you, and what does it look like?
Choice
Affordability will determine the choices that are available to you. Based on your income and assets, will you hire at-home care or go to a care facility?
Control
Ask yourself, should all my assets be available for my care and maintenance? Most legal documents will say who gets what and how much when you are gone. How much do you get while you are here? How much control of your care do you want? There are four areas of control to onsider.
1. Financial control - What are your financial management instructions?
Which of your assets can be used or liquidated for your care and which do you want conserved and passed on? Who will follow your instructions? Are they knowledgeable and qualified in financial and tax matters? Do they need professional guidance?
2. Operational Control - This comes down to affordability. Can you afford to design and manage your care or will it be in the hands of your caregiver or care facility?
3. Administrative Control - Who will pay the bills, maintain the files, keep the records, file and pay the taxes? Is there real estate to be maintained? Rents to be collected?
4. Legal Control - Are your instructions, preferences, and amount of control reflected in your documents? Have you named back-ups or alternatives in the event your primary choice of agent and successor trustee declines, becomes incapacitated, or predeceases you.
Be safe
- Be in better control. Name several people as a contingency plan.
- TAKE ACTION to exercise Clarity, Choice, and Control.
- Be clear about what you want, and ask for it.
- Claim your money, and choose how it will work for you.
- Claim your money, and choose how it will work for you.
- Choose the people that will make your choices happen.