Legal - Managing Your Finances
DO YOU NEED HELP MANAGING YOUR FINANCES?
BE SMART!
CONSIDER ALL OPTIONS AND THEIR PROS AND CONS
Disability due to illness or injury can happen to anyone, at any age. It can be gradual or sudden. As we get older, in the normal course of living, it is more likely we will need help managing money, paying bills, and making prudent financial decisions. The death of a spouse can leave us with bills to pay and significantly less income from which to pay them. Illness or injury may impair our physical or mental abilities so we cannot manage on our own. Without proper planning, the options available may also be greatly limited.
While advance planning to cope with these possibilities is always a good idea, it almost always involves some risk. That is why it is necessary to consider all of the options available to you, their pros and cons, and after careful thought (and reliable professional guidance, should you wish it) take the steps that work best for your particular situation.
Here are some common legal options to consider, with some pros and cons. Other options may be available to you as well. Remember, not every option is right for every person.
If you have trouble remembering to pay your bills, or getting to the bank, or are afraid to carry cash or a checkbook, consider direct deposit, automatic payment, and ATM-check cards.
New technology can help you transfer money without having to carry cash, open your wallet or purse to write a check, or even be present in person. Government checks, pension checks and many employment checks can be directly deposited into your bank account. Many bills can be paid automatically on the due date, directly from your bank account. Many ATM cards cannot only be used to deposit or withdraw from your account, but as a “debit card” to pay for many purchases.
Pros: Checks are not misplaced, lost in the mail, or stolen from your person or mailbox. Bills won’t be forgotten, leading to costly late charges and compounded interest. Banking and bill paying, and ATM card purchasing can be done easily from your home, especially if you are hooked up to the Internet, and there is always a written record from your bank. You don’t need to get to the bank in person, at certain hours, or carry cash.
Cons: Mistakes happen, so it is still your obligation to inspect all records carefully. Make sure you read any purchasing or payment plan agreement carefully to avoid hidden costs or problems. Never give your ATM card’s PIN number or your account access information to anyone unless you have reason to completely trust them – they can wipe out all your savings in a heartbeat.
If you become disabled, mentally or physically, your assets can still be accessed on your behalf through joint ownership of bank accounts or property.
Adding someone’s name to your bank account, or title to property, usually gives that person equal rights to access that asset, and assures the asset will pass to that person upon your death, automatically.
Pros: It is a convenience to have the joint owner able to do your banking and pay bills, sell your house or car, if necessary. There is no need to go to court and obtain a conservatorship to do this if you should you become disabled or otherwise incapacitated.
Cons: The joint owner has rights equal to yours. They can wipe out your bank account, maximize credit cards or endanger any property that you own jointly. If they are sued, your assets can be considered their assets, subject to attachment. And it may not be easy to change your mind, should you wish to leave the asset to someone else upon your death.
Power of attorney is a legal document that allows a person to transact certain business as if they were you, and becomes invalid upon your death.
There are different types of powers of attorney. While a general form may be available at most stationary stores, it is best to consult an attorney before signing one.
Pros: It is more flexible than joint ownership, and can be tailored to suit your particular needs. You can choose to have the powers go into effect immediately, or only if you become incapacitated. It must be notarized as a protection against fraud.
Cons: It is still possible that a dishonest person can talk you into giving them power of attorney, which they can use to their advantage and your disadvantage. Even if they are successfully prosecuted for Elder Abuse, your property is gone.
If you are disabled or have troubles limiting or keeping track of your spending, so that your Social Security check or other government pension isn’t covering all your bills, a Representative Payee can be designated to help manage your money.
Pros: You can choose your Rep. Payee, or someone can apply to be Rep Payee for you if they get a doctor’s letter saying you are incapable of managing your finances. This type of supervision is less drastic than a conservatorship and does not require a court proceeding.
Cons: A dishonest Rep. Payee can steal from you and once a doctor has declared you incompetent, it may be difficult for you to do anything about it.
If you don’t have a plan that gives trusted persons the legal authority to manage your finances should you become unable to do so, a conservatorship may be the only option.
It is a court process by which one person is given full responsibility to manage your affairs if you are declared legally incompetent. It can be initiated and ordered contrary to your desires. You have the right to legal representation and an opportunity to be heard.
Pros: The court investigates your situation prior to ordering a conservatorship and requires periodic accountings afterward. Legal safeguards offer protection against abuse.
Cons: You lose most of your legal rights and even strict court safeguards cannot always protect against abuse, neglect, and theft by conservators.
This information is made available to you by Kings/Tulare Area Agency on Aging. If you are 60 years of age or older and want more information, call 1-800-321-2462.