There are many financial preparations and considerations to make as we age – do you have enough saved up for retirement? Is your mortgage fully paid off? Have you budgeted appropriately for bills and living expenses on a fixed income?

As you strategize for life after retirement, Tony Patrick, a Vice President and Wealth Advisor with First Merchants Private Wealth Advisors, also stressed the importance of preparing, now, for a time when you will need to depend on others for care.

“As we age, we often come to depend heavily on others,” Tony said. “Whether that’s having someone to look after our health or help us with day-to-day tasks or having a loved one manage our finances. It’s important to create a strategy and make as many of those decisions as you can ahead of time so that when the time comes the transition is an easy one.”

Start with a Conversation

The first step, he said, is to sit down and talk with your loved ones – whether you will be the caretaker or the one needing care.

“It’s really important to have the conversation,” he explained. “A detailed conversation. If you’re going to be a caretaker, the goal is to get an understanding of what your loved one wants to see happen and where they are going to need assistance.”

Providing care for an older loved one should be a collaborative effort, he explained, with as much buy-in from the loved one as possible. You should work together to come up with a comprehensive strategy that includes financial preferences.

It’s also important to approach this conversation from a place of love and concern, with the intent to listen and understand – it can be a difficult one for both caretakers and aging loved ones.

“It is a sensitive topic,” Tony said. “It is a hit to the ego a little bit that you’re not going to be able to handle things on your own anymore. And a person’s financial standing is a very personal situation – it can be especially difficult to bring another person into that and make them aware of all the ins and outs.”

And future caretakers should also ensure they plan ahead – carefully selecting a time and place for the conversation to occur so that it can proceed uninterrupted and is not occurring during a highly stressful or emotional moment.

“It’s very, very important to have these conversations well before they are necessary, and to have them in a time and place where your loved one has your full and undivided attention,” Tony said.

Make Your Intentions Known

If you are approaching a period where you need to plan for end-of-life, or where you think you might be under the care of a loved one, Tony recommends being clear and straightforward about your plans regarding assets and finances.

“You really need to make others aware of your intentions, so that if and when something happens that would trigger the distribution of assets your beneficiaries are aware of what will happen,” Tony explained. “That way none of it is a surprise, and your loved ones can focus on caring for each other instead of distributing assets or handling the estate.”

“As a Financial Advisor, I work with clients every day on this type of planning,” he added. “It really does help foster family harmony in these situations.”

Cover Your Bases

During this conversation, you should be prepared to cover a list of all your assets, retirement accounts, and bank accounts.

“You want to be able to give your family members a full understanding of what the situation is and where those accounts are held, so nothing is a surprise later on down the road,” Tony explained.

An easy way to do this is to put together a personal financial statement – a document that lists all your assets and funds in one easy place

This is also a good time to go over a basic budget, so that family members have a good understanding of what your financial needs will be in the future.

“Go over your utilities and necessities, and, if possible, work with your family members to set up automated bill pay for those consistent, recurring expenses – like rent, mortgage, and insurance – so you’re not leaving you or your family members open to default or to late fees and penalties,” Tony said.

Grant Access Ahead of Time

Once you have a firm strategy for how to proceed and have decided which family member will help you manage finances in the future, it’s time to make sure they have access to your accounts. Simply naming a loved one your Power of Attorney isn’t enough.

“With banks, simply being named Power of Attorney isn’t enough to grant access,” Tony explained. “You really need to get this trusted person authorization on the account well ahead of time, so that when the time comes, they can make those decisions.”

Call or visit your local banking center and speak to an attentive banker to add an individual to your account. Not only will this save you a headache in the future, but it can also save you and your family member heartache.

“That trusted person can then be a second set of eyes on your account, keeping an eye out for any potential fraud,” Tony shared.

Managing Your Loved One’s Finances

If you’re new to being a caretaker and managing a loved one’s finances, Tony says one of the most important steps you can take is to be as detailed and vigilant as possible.

“Monitor the accounts to make sure bills are being paid and keep an eye out for any unusual activity,” he shared. “And I personally recommend keeping detailed records of all your transactions made on behalf of your loved ones – deposits, withdrawals, purchases, etc. You do not want to leave yourself open to any scrutiny or questioning about where funds went.”

Those records can be especially important if you have family that is non-local – “Through those transaction records they can understand what is going on and therefore stay involved and up to date on their loved one’s care.

Most importantly, Tony said, don’t be afraid to seek out advice.

“You don’t know what you don’t know,” he said. “If you’ve been asked to be a caregiver, that doesn’t automatically turn you into a financial expert, so I would seek advice from professionals like a financial advisor, an accountant, or a lawyer. Because, unfortunately, if you’re not an expert you could make a mistake – so bring in some other experts to surround yourself with.”

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