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You may not be able to choose your family
but you can choose your Power of Attorney

Major financial decisions

Throughout our lives we are faced with major financial decisions; buying a house, saving for retirement and the complex issue of retirement itself. As many reading this article today will realise, it does not stop once you have reached retirement.
For most of us selecting the right retirement vehicle is a major obstacle. If you select the wrong method for taking your retirement income you can find that you can’t adjust the income levels as your costs increase or you could be faced with running out of money. Increased longevity means that as we approach retirement our parents are often reaching the end of theirs. Not only are we faced with choosing the right retirement choice, but also dealing with parents going into care or having to deal with their estate.

When you and your family are faced with having to deal with your parents’ personal and financial well-being it would probably be a good time to start considering your own needs for long term care and estate planning. I say this because most of us leave this far too long before making adequate provision for long term care.

Estate planning problems

There are many IFAs selling Estate Planning, it is fairly easy and there are lots of products that will help. A simple well written Will by a private client solicitor can work wonders. If you are reading this and are thinking my circumstances are so complex, think again. The worse thing is to do nothing. Most of the problems that you think you have, have been seen before by an experienced solicitor. I have listened to many estate planning problems that seemed larger than houses, resolved within minutes by speaking to the right person.

A far tougher decision is choosing who will be in charge of your financial well-being and selecting your care package and nursing home. Not all financial advisers are Long Term care qualified and there are even fewer products available in the market place. Every parent hopes that their children will play nicely like they used to when they were little. Hopefully my parents will forget the open jam sandwich that I shoved in my brother’s face at breakfast aged seven! In reality children have grown up with busy lives, living in other parts of the country with partners that influence them leading to differences in opinion when it comes to caring for you.
So, if you are dealing with your parents’ issues, it is probably a good time to consider which of your children, if any, to appoint as your Power of Attorney [POA] for Health & Welfare and Property & Financial Affairs. When dealing with these matters, I would recommend that you keep the whole of the family in the loop.

 

They don’t all need to know the full details of your arrangements, but distrust between siblings forms quickly if some are kept totally in the dark. Arguments can form around who did what and who has not helped. Too often families stop talking when parents become ill or die which can easily be avoided by carefully selecting the right person as POA.

One of the problems is knowledge. Everyone is an armchair critic when it comes to how to care for their parents. A little knowledge is often dangerous. I have seen POAs make gifts that they should not have, trying to avoid paying tax and in the worse cases put themselves before the person that they are responsible for. To avoid this it may be prudent to consider appointing at least one professional POA who understands the law to support a family member who will be faced with the day-to-day challenges of looking after you, their normal lives, and possible disagreements with their siblings whilst dealing with the emotions associated with losing a parent. This also deals with choosing the person you might consider the most financially astute member of the family in preference to someone who might take better care of you.

Seek advice

One of the things POAs need to do is seek expert advice when they don’t know or understand something. Many POAs sell houses to pay for care fees and are then faced with a pile of cash. The first reaction tends to be to split it into chunks of £85,000.00 and place the funds in different banks accounts in case they go bust Although at present interest rates are low, when used in combination with a range of income paying investments, you could make the funds last longer and/or leave more to family members.

It would be far better to start planning your finances at retirement with one eye on how to provide for long term care. Introducing your POA to your financial planner, accountant and/or solicitor can help smooth the process. 
If you are a solicitor or accountant and would like to know more about how we can work with you and your clients feel  free to  contact our Branch Principal Pieter Burger on 01395 207350 or email Pieter.Burger@RaymondJames.com

We offer free consultations if you have concerns about how to prepare for long term care. We also have female advisers should you prefer to speak with a woman.

 

 
If you are concerned about any of the matters discussed in this article you should seek advice from an Independent Financial adviser [IFA] or a suitably qualified professional.
 
 
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