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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.
But, as with many reminders of our own mortality, all too often we put the experience behind us and hope we never suffer 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.
A quick look at the stats
Dementia (including Alzheimer’s disease) is Australia’s second leading cause of death, only behind heart disease.
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 money
Staying on top of your spending, saving, investments and bills can be tricky at the best of times.
But dementia and ageing can complicate matters further. Not only may you forget your banking details, but it could become harder for your to absorb information and comprehend advice.
So while you may have worked hard to enjoy a comfortable retirement, your failing memory could leave you feeling scared and confused, unable to meet your financial commitments or make sound financial decisions.
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, reducing your credit cards, and saying goodbye to the trusty old cheque book.
Also, create a list of your regular bills and stick it to your fridge. Once each bill has been paid, immediately cross it off the list. You can also set up a direct debit system, which will take away the hassle almost entirely.
2. Appoint an enduring power of attorney
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.
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 or memory capacity.
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.
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 – no wonder people put it off!
So if you need any information from us to help you put your list together, don’t hesitate to get it 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.
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