Planning ahead can help achieve a smoother financial handover

Question:

My wife and I are both in our eighties and still in relatively good health. I manage all our financial affairs, but I’m increasingly becoming concerned about what would happen should I fall ill or, worse, pass away.

What steps should we be taking now to ensure that our daily financial arrangements can continue smoothly in my absence?

Answer:

I regularly come across situations like these in my financial practice.

In many marriages, one of the spouses is not interested in financial matters and leaves the management of their finances to the one who is. Should something happen to the spouse who manages the money, it can lead to financial stress.

A bit of planning can help you to avoid a lot of these problems. There are several steps that I generally follow when dealing with these issues.

Read more: How to inflation-proof your inheritance and make it last with alternative investments

Draw up a financial plan

This is a simple document that lists:

All your assets and their current values; 

All your sources of income and who to contact should there be a problem with that income; and

All the payments that need to be made each month and whether these are done by debit order or EFT.

Discuss this document with your spouse and, if you feel comfortable, include your children in this discussion. It can be helpful if the entire family is on the same page.

Complete a life file

I’ve shared this document with readers before and am happy to do so again. It lists the locations of all the most important documents an executor would need to wrap up your estate. They would include items such as marriage certificates, divorce orders and vehicle registration papers. Knowing their location can remove a lot of stress when dealing with a severe illness or death.

Read more: How to provide your partner with fast access to funds while your estate is being finalised

Find a trusted adviser

This person would support your spouse in making important financial decisions. The person should therefore be trustworthy and have a good grasp of financial matters. 

This could be a family member, friend or financial planner. If you are using a financial planner, ensure that there is a succession plan in place at this person’s financial planning practice. Should your planner die before you, there must be someone to look after your finances on behalf of your spouse.

Power of attorney

A power of attorney will ensure that someone can look after your financial matters if you are in a situation where you cannot do so. Please remember that once you’ve had a power of attorney granted, you should go and speak to your bank, as many banks require some additional documentation before granting access to your funds.

Important to bear in mind is that a power of attorney falls away should you be declared mentally incompetent. So, should you get dementia or Alzheimer’s, the power of attorney falls away, and then you need to look at other solutions like appointing an administrator or curator bonis.

Administrator or curator bonis

This is a person who would be appointed to look after your finances if you are deemed incapable of doing so.

It is important that you give some thought to who this person should be and check that they are prepared to fulfil the role. I have come across several instances where there have been family fights about who should be looking after a parent’s affairs when they get dementia.

These issues are not always nice to deal with, but it is important that we do confront them. By putting the right structures in place ahead of time, you can ensure that your family’s income will be managed correctly. DM

Kenny Meiring is an independent financial adviser. Contact him on 082 856 0348 or at financialwellnesscoach.co.za. Send your questions to kenny.meiring@sfpadvice.co.za.