https://www.cwbwealth.com/en/news-and-stories/insights/when-it-comes-to-health-and-your-finances-be-prepared
If you or a family member was suddenly diagnosed with a severe health issue would someone be able to step in easily and take over your finances for you? Although we’re now living longer lives, they’re not necessarily healthier. For example, according to the Alzheimer Society of Canada approximately 912,000 Canadians will be living with dementia by 2030.
To ensure that your financial life continues to run smoothly no matter what health challenges confront you, here are a few suggestions on how to set things up with the help of your financial advisor.
- Ensure your estate plan has been taken care of so things will run smoothly if you become incapacitated. In addition to helping you with your estate plan, your financial planner can refer you to a lawyer who specializes in estate planning and can prepare Wills and Powers of Attorney (POA) for property and personal care.* Your bank may require that you complete their own Power of Attorney for Property, so check with them if this is necessary.
When completing your estate planning documents, ensure that anyone you wish to become your executors and trustees have agreed to those roles. It should come as no surprise when you notify people that you’ve appointed them as your executor (or liquidator in Quebec) and attorneys. Tell each person that you’ve appointed what your wishes are in the event of incapacity, and what you will expect of them. You may want to also include a Personal Directive (also known as a Living Will) with your POA for personal care in order to have a written record of your wishes.
- List all of your financial advisors and their contact information and the locations of all of your important documents. Give this list to your executor, the people who will have Power of Attorney and/or family members.
- Prepare a list of accounts and items that need passwords such as your bank card, credit card and banking websites. Print and store the list in a secure location such as a safety deposit box. In addition, keep a copy in your home that can be easily accessed by the person who has taken over.
- Make sure that your spouse, your executor/liquidator, and the person who has Power of Attorney for Property has access to your safety deposit box. If you have a spouse, keep one joint bank account for easy access to funds but keep separate credit card accounts.
- Consider designating a Trusted Contact Person. Unlike a POA, a Trusted Contact Person helps safeguard your well-being when your advisor suspects you may be a victim of cybercrime, or has reason to believe an aging-related health issue may be impacting your decision-making ability.
It’s important for your advisor to know who to contact if you start to make unusual requests for funds, start asking to invest your funds in a significantly different way, or something similar. Your Trusted Contact Person can confirm information about you, but won’t have access to the details of your account or be able to make changes to it.
- Make sure your tax preparer has access to your tax information on the CRA website. If you haven’t already done so, complete CRA form T1013 (Quebec form MR-69) so the preparer and your spouse both have access. Keep a detailed document for your tax preparer which includes any critical information such as the cost base of real estate.
- Summarize your cash flow to include a list of family income received during the year and the frequency of deposits. Include information such as salary, pension, disability insurance, survivor pension, CPP, OAS and rental income.
To make it easier for someone to pay your bills for you, prepare a list of all bills paid during the year. Indicate frequency and dates. Note how the bills are paid - credit card, automatic withdrawal from bank account or cheque.
- Compile a summary of insurance policies for your home and car insurance, private disability insurance, critical illness insurance and long-term care insurance. Your summary should include any life insurance policies as well. These can have investment components and annual premium payments that need to be made manually, so its important that your POA knows where to find those statements and policies.
Also, document the details of your pension and group benefits, the company contacts and their phone numbers.
- Describe your medical claims process. You may have medical costs that aren’t covered by government programs. Prepare a document with the details of your medical insurance claim process. Document how claims are made. Do you pay first and then get reimbursed by your insurance? Or does your pharmacy submit your expense directly to your insurance company? Can you make online claims or do you have to mail in claims? Is there an access ID or password for the insurance company’s website?
- Think through the kind of help you might need or want in the future. Your advisor should understand what to budget for this. You may need to pay for in-home help such as a Personal Support Worker or nurse if your health has been compromised. As long-term care insurance is not an option anymore, you and your advisor should include the cost of a nursing home or in-home care in your long-range calculations.
Consider the fact that, if you have a spouse, you may need to pay for a nursing home while they’re still living at home, which would mean that you may not be able to sell your house to pay for the nursing home.
- Consider purchasing critical illness insurance which can pay you a lump sum if you’re diagnosed with certain illnesses. The payment is tax free and can be used to pay any type of expense. Your advisor can refer you to an insurance broker who can arrange this type of insurance for you.
Find out more about critical illness and disability insurance in part two of this blog next month when Robert Bradburn, General Manager, CWB Insurance Solutions will delve into this topic.
Managing a bad health diagnosis is always difficult for those who are involved. Working with your financial advisor as a guide now, when you’re healthy and able to focus on it, will lessen the load and financial worry immeasurably should your health decline.
*In Alberta, Personal Directive is the equivalent of the Power of Attorney for Healthcare, and Enduring Power of Attorney is the equivalent of Power of Attorney for Property.
Sources: Alzheimer Society of Canada, Canada Revenue Agency, CWB Wealth Management