03 Feb Dealing with memory loss and finance
Today we’re talking about memory loss and finance. It’s an unfortunate fact of life: as you grow older, your memory is likely to fade. While you’ll probably be forgiven for forgetting the odd anniversary, the stakes are much higher when it comes to keeping track of your finances.
Most of us have watched on as a loved one’s memory has faltered and faded. It’s painful to see and can be difficult to cope with – from all sides.
As with many of the stark and harsh reminders of our own mortality, all too often we put the experience behind us and hope we escape a similar fate.
But if you start to experience early warning signs of memory loss in yourself, or a loved one, there are some simple steps you can take to safeguard your financial future and property assets.
A quick look at the stats
According to the Australian Bureau of Statistics, Dementia (including Alzheimer’s disease) is Australia’s second leading cause of death, behind heart disease.
In fact, 35 Australians die as a result of dementia every day. And most of these are women.
However, due to Australia’s ageing population, ABS statisticians believe dementia will overtake heart disease as Australia’s leading cause of death as soon as 2021.
Memory and your finances
Staying on top of your spending, saving, investments and bills can be tricky at the best of times.
Unfortunately dementia and ageing can complicate matters further. You may forget to make mortgage repayments or pay the phone bill. It could be simple things like leaving your purse at home or forgetting where you put the cash you just withdrew.
It could also become harder for you to absorb information and comprehend advice.
To protect yourself and your loved ones from the financial consequences of memory loss, ASIC recommends you take the following steps.
1. Keep it simple
Simplify your finances by having just the one transaction account with a small yet functional balance. You may be able to ask your bank to set up an automatic top-up when the balance drops below a certain amount.
Reducing the number of credit cards you have and lowering their limits will avoid large, unplanned for purchases that may not be recalled later on.
Say farewell to the trusty old cheque book, it’s time has passed.
Also, create a list of your regular bills, such as mortgage repayments, insurance due dates and phone and electricity bills. Stick it to your fridge so it’s front of mind. Once each bill has been paid, immediately cross it off the list.
An easier system is to set up direct debits, which will take away the hassle of remembering almost entirely.
2. Appoint a Power of Attorney
While you can, choose a person to manage your affairs if you lose the ability to make decisions for yourself.
People often choose someone they trust implicitly such as a spouse, child, another relative or friend. But it could also be someone independent, such as a solicitor.
Another safeguard is to choose two enduring powers of attorney. Just make sure they’re two people who know how to agree with one another and will always act in your best interests.
Importantly, make the appointment early. If you leave it too late then a court or tribunal may make the decision for you. Your local Public Trustee branch can assist you in preparing a Power of Attorney. They can also help you to understand the different types of Attorney available to you (General, Medical, Enduring.)
3. Update your will and Super beneficiaries
If you haven’t created a will, or it’s been a long time since you updated it, then it’s time to create one – no matter your age. It needs to be completed while you are still able to understand the decisions you have made about your assets. It is a good idea to complete this with your Solicitor, in conjunction with someone you trust. Particularly if you have recently been diagnosed with Dementia.
Now, unlike your other assets, your Super account does not automatically form part of your estate.
You generally have two options to ensure your Super fund goes to the right people in the event of your death.
The first is to make a binding death benefit nomination (aka a binding beneficiary nomination) through your Super fund. The second option is to nominate your estate as the beneficiary of your Super fund. This will ensure your Super will be distributed according to the terms of your will. Have a chat with your Super provider and Financial Planner/Accountant/Solicitor to make the best decision for your circumstances.
4. Sort out important documents
Last but not least, you need to compile an easily accessible file of all your personal and financial information. After all, you want to make this whole process as easy as possible for your Power of Attorney.
The list will be quite long, and should include your birth and marriage certificates, your will, tax file number, a list of your assets, house deeds and insurance policy details.
Financial documents may include bank accounts, ongoing direct debits, mortgage details, Superannuation papers, information on any loans or debts you have, investment documents, and any pre-paid funeral plans.
Finally, don’t forget all your important health documents, such as Medicare card number, pensioner concession card, and private health insurance policy.
And that’s that!
As you can see, it’s quite the list to get in order – it’s no wonder people put it off! Getting it sorted takes a bit of time but it pays off in the long run.
So if you need any information from us to help you put your list together, please don’t hesitate to get in touch.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.