Your health and wealth plans: Are they in sync?

It is said that you cannot enjoy wealth if you’re not in good health. Yet we spend a significant amount of time preparing financially for our retirement without serious considerations of our healthcare.

The fact is retirement planning and healthcare are closely connected and the choices you make today will have an impact in your retirement years.

Why is it important to align healthcare and retirement planning?

According to a study conducted by Age Wave and Edward Jones, more than 97 per cent of retirees and 99 per cent of those age 75 and over report that health is more important than personal wealth.¹ Yet despite this near- universal appreciation for the importance of physical and mental well-being, many of us will face health care crises or challenges as we’re planning for, or living in, retirement.

Your Edward Jones financial advisor can take a comprehensive approach to serving you by helping you plan for unexpected life events that could derail you from your goals. Strategies may include investment and insurance solutions that help ensure a healthcare event doesn’t take you off track.

Thinking through the following considerations can help ensure your wishes are understood and followed – as well as helping to prevent surprises and more difficult conversations in the future.

Who has the authority to act on your behalf if you are unable to make financial decisions?

Planning for your well-being includes having documents in place to address what happens in the event you are not able to make financial decisions for yourself. You may be temporarily incapacitated or chronically debilitated, but in either case, having documents in place that grant someone else the authority to make financial decisions on your behalf is a key aspect of ensuring your healthcare and finances are in order.

Many people don’t realize that, generally speaking, no one has the automatic authority to act on your behalf — not a spouse, not a child, no one. We only have to think about a couple of examples to appreciate the implications of this. Recall a time when there was a mistake on your phone bill or an issue with your utility provider. You would have been asked a whole lot of questions to verify your identity and you wouldn’t have been able to do anything about the issue until the company was satisfied that you were the authorized person from whom they could take direction.

Not being able to immediately deal with an erroneous phone bill or an uncooperative utility provider may be inconvenient, but the impacts can be much more severe when you are facing a healthcare crisis but haven’t granted anyone the legal authority to act on your behalf when you can't. For instance, investment accounts or funds required to pay for your care could be inaccessible during a time when the stakes are high and time is of the essence. To help ensure the best possible outcomes for you and your family, you’ll want to make that you have the appropriate documents to enable your trusted representative prove that they have the legal authority to address your financial affairs.

Why and how to ensure your Powers of Attorney are up to date

Many believe that they have given a trusted individual sufficient authority to act on their behalf in case anything happens to them by signing a Power of Attorney (POA) contained on a financial institution's form. However, this type of POA generally only deals with specific assets held at the particular institution and does not grant broad authority to deal with your other assets.

Of course access to manage specific accounts is useful, but your trusted person may need access to much more in order to pay all bills, collect payments, give instructions to your trusted advisors, sell assets, communicate with government bodies and make many more financial decisions on your behalf.

Also worth considering when you last reviewed these forms. Since signing them, did you get divorced or married? Do you remember who they named to act on your behalf? Are they still in good health? Did you name an alternate in case the first named person cannot act? Has the person you named moved away, or are they a U.S. citizen or dual citizen?

A general Power of Attorney for Property², that is not specific to assets held at a given financial institution, is the gold standard to grant a trusted individual(s) sufficient authority to manage all of your assets on your behalf. This document will help ensure that the individual you want to have the authority to manage your Edward Jones accounts, as well as all of your other financial affairs, has the legally-recognized right to do so.

You can choose when this document becomes effective. For instance, a "Continuing" Power of Attorney can give one or more individuals the authority to continue making broad financial decisions on your behalf in the event of incapacity. You can also precisely state the scope of an attorney's powers over your assets. If you do not specify any limitations, they will have broad powers and be able to do your banking, pay bills, sign contracts, make investment decisions, sell real estate – essentially any financial decisions on your behalf. However, your attorney for property is generally legally restricted from changing an existing Will, making a new one and changing your beneficiary designations. The individual(s) you name must manage your affairs for your benefit and can be required to provide an accounting of their decisions. They also cannot grant a new POA on your behalf to someone that you have not personally designated. It is important to designate an alternate attorney to act in case your first choice cannot.

Keep in mind that if you do not have this documentation in place, no one is granted automatic authority to act on your behalf, including your wife or children. Someone will generally have to apply to court to obtain the powers to handle your financial affairs, which can be costly and stressful. The person who is granted authority may not be the person you would have wanted to act. That's why it is important to make sure you take the necessary steps to execute a Power of Attorney for Property naming the individual(s) of your choosing to act on your behalf.

Percentage of Canadians who have a POA and have updated it within the past 5 years

Power of Attorney for Foreign Property rules

Each jurisdiction has its own rules surrounding Powers of Attorney for Foreign Property and they don’t necessarily recognize the validity of documents prepared outside that jurisdiction. Imagine your spouse, children, parents or trusted friend trying to deal with your property in another country (such as an overseas bank account or your vacation home in the US) without the appropriate documentation. Would they be able to access the account? Put in place insurance or negotiate rental contracts?

Would they be able to hire a real estate agent or sell the property? Perhaps eventually, but you'll want to ensure things go as smoothly as possible during times of stress so your loved ones can focus on what’s most important.

It’s a good idea to consider having local powers of attorney for property in each jurisdiction where you own assets or spend significant time. But remember to consult with your lawyer to coordinate this planning as you may have inadvertently revoked an existing POA dealing with other assets because the language of the POA for Foreign Property didn't contemplate for it.

Percentage of Canadians that have a POA and when it was last updated

Trusted contact

In addition to a POA document, there’s another document that can significantly increase the value of a POA and help ensure your goals and values are known and protected. This is achieved by instituting a “trusted contact” at Edward Jones.

A trusted contact is someone to whom your financial advisor can reach out if they are unable to get in contact with you or if there are concerns about your capacity to fully comprehend financial issues or make informed decisions.

How can a trusted contact help?

By completing the Trusted Contact Form, you authorize Edward Jones to contact your designated person in the event that concerns arise regarding the inability to make contact with you; or if concerns arise about your capacity to fully comprehend financial issues and/ or make informed decisions concerning your Edward Jones accounts.

This authorization does not give the person the authority to make decisions about the account. Furthermore, no information about your account will be shared with them.

This authorization allows Edward Jones to provide information to the person you designate about activity we observe or transactions you request which would allow the designated person to determine what steps need to be taken to review the situation and identify actions that should be taken to protect you or your property.

A Trusted Contact Form is not a power of attorney or trading authority and does not authorize Edward Jones to accept any transaction related instructions. But it does provide an additional layer of protection in the event you are experiencing a healthcare (or other) crises.

What to do if you already have a Power of Attorney

• Confirm with your attorney (the person you’ve named in your POA) that they are willing and able to take on this important role if the need arises
• Make sure you and our attorney know where your POA and other important financial documents are located
• Regularly review the terms of your POA to make sure it still reflects your wishes
• If you make any changes to your Enduring POA or financial institution POA forms, you should advise your financial advisor and lawyer immediately
• Review your financial records on a regular basis and talk to your attorney about your preferred approach to handling money and property

We can help

At Edward Jones, we take a comprehensive approach to serving you by nurturing your financial wellness to help you maintain and enjoy wealth. Talk to an Edward Jones advisor and other professionals to help you create or update your comprehensive plan for the unexpected.