Protect your finances as you age

Get important legal plans in place

Keep important financial documents together that outline where you want your money to go and who will manage your wishes should you become unable to do so. Include these documents in your legal plans and communicate them with loved ones:

• Financial and health care powers of attorney (POAs) grant a person (also known as an agent) you trust the authority to act on your behalf. A financial POA manages decisions about your finances while a health care POA oversees medical care decisions. Springing POAs are effective when you become incapacitated whereas durable POAs are effective immediately.
• A living will or advance directive outlines your preferences for medical treatment in terminal situations. Unlike a health care POA—which applies to other areas of medical care—a living will details instructions concerning end-of-life care only.
• A will is different than a living will and doesn't capture health care wishes. Instead, it identifies the executor you've chosen to manage your estate and the beneficiaries who will receive your assets. Since a will is executed after your death, it doesn’t address who will manage your finances if you need help while you're living with a mental or physical illness.
• A revocable living trust offers more control than a will and can help make your estate plan more flexible. It allows you to assign a successor trustee to help manage your financial assets if your initial trustee is unable to step in. If you're concerned about placing this burden on a family member, our trust services can help guide you in the right direction. Vanguard can take on the role of sole trustee or partner as a co-trustee to help simplify the process and provide you with a dedicated advocate.   

Establish trusted partnerships

When choosing someone to make decisions on your behalf, consider someone you trust who: 

• Understands financial matters and will be available to make decisions on your behalf.
• Recognizes your wants and needs and will pursue your interests as their own.
• Is likely to remain healthy and capable to assist you throughout your lifetime.

If the agent you've designated to make financial decisions on your behalf doesn't live nearby, it's important to identify other trusted partners to help keep your assets secure.

Naming a trusted contact on your account is a great first step. You can also consider the benefits of a financial advisor. A Vanguard financial advisor can help you plan for the unexpected. They're committed to helping you keep your long-term goals on track and can also play a meaningful role in helping to prepare you and your loved ones by introducing the topic of cognitive decline far in advance of its potential onset. 

Develop guidelines for transfer of control

The ideal time to transfer control is a personal decision that involves up-front planning and communication with your loved ones.

To transfer control of your finances at the right time, it's important to develop guidelines that outline your wishes. Partner with your loved ones to fine-tune the details. Perhaps you designate someone to pay bills on your behalf if you begin missing payments regularly. Then create a more specific plan for when to hand over the responsibility based on warning signs of cognitive decline.

Organize financial accounts

Create a financial inventory of your assets and bills. Keep a secure, easily accessible record of your accounts, and include the contact details for the financial associates you consult (e.g., tax planners, advisors, estate planners, trustees). You'll also want to capture all your regular monthly bills. And, of course, make sure your loved ones know how to access this information.

Consider consolidating your assets. Holding more of your assets in one place instead of across multiple investment firms makes it easier for you and your loved ones to keep track of your accounts and get a more holistic view of your assets.

Revisit your intentions from time to time. Legal documents aren't something you can set and forget. Life events such as the relocation or death of an agent cause your plans to change. So, document any needed changes regularly.

Communicate your plans

Finally, up-front communication and transparency about your plans is key. Once you have a repository of your accounts, monthly bills, and legal documents in place, share your plans with your family.

Schedule time with your loved ones to:

• Educate them about cognitive decline and the importance of knowing the warning signs.
• Share important documents and clarify your financial and health care wishes.
• Inform your beneficiaries and financial and health care agents of your plans.
• Develop guidelines for when to transfer control.

While these conversations may feel emotional or taboo initially, resist the urge to delay them. Normalizing these discussions can give you and your loved ones a sense of ownership and control over your plans.