MarketWatch: how to protect finances in advance in case of incapacity
In a MarketWatch column, a 65-year-old man whose wife retired this year spoke about concerns over the couple’s financial security in the event of cognitive decline. They help care for elderly parents and, having observed the decline in their cognitive abilities and the risk of fraud, decided to plan ahead to protect their own assets.
The couple has individual retirement accounts (IRAs), a health savings account (HSA), and a joint brokerage account with money market investments. The man said he wants to manage investments himself, not transfer all responsibility to a relative, and prevent all assets from being moved into the stock market.
Trust and power of attorney
The author of the MarketWatch column advised establishing a trust in advance and arranging a power of attorney that remains effective after incapacity. Assets and accounts can be transferred to the trust: in the event of the couple’s death or incapacity, the successor trustee will be able to manage these assets without court oversight. The trust can also provide for the distribution of property and payments to heirs.
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For assets outside the trust, the columnist advised arranging such a power of attorney. The agent can sign tax returns, contact government agencies, and handle legal or financial matters that do not fall within the trustee’s authority. The author stressed that an agent’s access to a bank account does not mean ownership of the funds and also noted the possibility of appointing two or more agents.
Paying for financial advice
The couple was advised to consult a certified financial planner who can assess their financial situation comprehensively rather than focus on selling investment products. According to the column, advisers who manage client assets typically charge about 1% of the portfolio’s value per year. For portfolios of approximately $1 million to $5 million, the rate may fall to 0.50% or less. Clients are also advised to find out whether an adviser works on commission, a fee, or a combination of both payment models.
