If you are in a long-term relationship, it’s likely that either you or your spouse or partner has assumed all or most of the responsibility for your household’s long-term financial planning and investing. But what if your family’s decision maker becomes physically or mentally incapacitated and loses the ability to make rational decisions about your savings and investments?
Incapacity can strike at any age for a variety of reasons, and may occur gradually or all at once. No matter how quickly it takes hold, incapacity can wreak havoc on a family's financial goals and investment portfolio.
During such a difficult time, the decision maker's spouse or partner might feel unprepared to tackle matters like investing, retirement plans, life insurance and other aspects of the family's financial future.
Fortunately, incapacity is a risk you and your spouse or partner can manage through planning. By spending an hour or so now in a strategy session, you can help prevent one of you from having to spend far more time later on trying desperately to keep your financial future on track.
Start sharing information and decision-making
Start making some financial planning and investing decisions jointly, if you’re not already doing so. At the very least, you should keep a written or electronic master document that lists the following items, along with any usernames, passwords, personal identification numbers (PINs) and contact information required to gain access to detailed information about the items:
The document should also provide the names and contact information of all professional financial or investment advisors who currently provide services to you and your spouse or partner. If you have multiple advisors, think about narrowing the list down – ideally just one reputable individual or organization that can coordinate your affairs based on your needs and goals.
Keep your master document wherever you store your estate planning materials and make sure to let someone you trust know the document's location. In addition to this document, you can use a password manager, either in the form of software or a web-based service, to store and organize passwords and PIN codes.
At least once a year, you and your spouse or partner should review the master document and any data stored in a password manager to keep all information current.
Important legal documents for planning
|Document||What it does|
|Financial power of attorney||Appoints a trusted person to make appropriate financial decisions in the event you become incapacitated.|
Spells out in advance whether to accept or refuse life-sustaining medical treatment in the event such treatment is proposed
Identifies all physical conditions that would trigger the document's provisions and lists the types of treatment you wish to avoid.
|Healthcare power of attorney||Appoints a "power holder" to make medical decisions on your behalf in the event of incapacity in circumstances where the living will does not specifically define your wishes.|
Approaching the topic of incapacity planning
If your spouse or partner is used to making all or most of the financial planning and investing decisions in your relationship, approaching the topic of incapacity planning can be tricky. Here are examples of questions you can pose to the decision maker to spark a productive conversation about incapacity planning:
What if your spouse or partner is gradually losing decision-making abilities?
Keep an eye out for warning signs that might indicate your spouse or partner is gradually losing the ability to make financial planning and investing decisions:
As the key decision maker's faculties begin to diminish, it may be difficult for both of you to admit there's a problem. But it's important for the two of you to maintain as much of an open dialog as possible.
You may wish to reach out to a professional financial or investment advisor for guidance on keeping your financial plan on track. Other people to seek out for support and encouragement might include any grown children you have, an attorney, a clergy member, or any other friend, relative or professional associate who understands your needs and your family's needs.
What if your spouse or partner has already suffered sudden incapacity?
If your spouse or partner recently and suddenly became incapacitated, your first priority should be to ensure that they receive proper medical care. At the same time, take care of your own well-being by seeking solace in the company of loved ones and perhaps enlisting professional support for your emotional health.
Once you've regained some order, try getting a better handle on your financial planning and investing. The degree of challenge you face will depend on how much incapacity planning you and your spouse or partner have done in the past.
A professional financial or investment advisor can work with you to coordinate all your financial planning and investing from here on. Before meeting with the advisor, try to gather as much information as you can about your household bank and investment accounts, assets, liabilities, business interests and insurance policies. Also round up the names and contact information for any financial or investment advisors who have served you and your spouse or partner up till now.
This information is presented with the understanding that TIAA-CREF and its affiliates do not provide legal or tax advice. Individuals should consult with their independent legal and tax advisors for such advice to determine their planning needs.
TIAA-CREF Individual & Institutional Services, LLC, member FINRA, distributes securities products.
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