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In lieu of the fountain of youth
It's depressing to think of the possibility that one day your parents may not be able to care for themselves. But you can help prevent a bad situation from turning worse by making arrangements now for a family member or a close friend to take over their affairs if necessary. You may have already broached some of the more sensitive issues such as the Will, long-term healthcare, provisions for retirement or nursing homes, but it's also important to get a firm grasp of their personal finances and investments.
Start with the simplest details. Your parents should make a financial-records inventory, including names and telephone numbers of key advisors, and locations and account numbers of important documents, such as Wills and trusts, bank and brokerage accounts, pension plans and retirement accounts.
Next, they might want to consider automated deposits of recurring income and payment of standard bills. This simplifies financial affairs and ensures steady deposits and payments for them today, as well as an appointed relative who may be stepping in at a later date.
Your parents should also consider granting a power of attorney* to an adult relative or trusted friend. It's important to note that there are several forms that a power of attorney can take. Some relate to decisions regarding assets and include a Limited Power of Attorney and a General Power of Attorney. A different type is called Power of Attorney for Personal Care, which governs such matters as medical treatment, healthcare, shelter, clothing, hygiene and safety.
It is important for your parents to review their investment portfolio annually with their Investment Advisor and ask a few basic questions. For example:
- Does the portfolio's investment income adequately supplement other income?
- Should the asset allocation be adjusted to reflect current or expected needs?
- Are investment return levels in line with portfolio risk?
If your parents anticipate involving a family member or friend in managing these finances, that person should eventually be included in portfolio reviews and/or statements as an interested party.
Use our Find An AdvisorOpens a new window in your browser. tool to locate a CIBC Wood Gundy Investment Advisor near you and take the first step to achieving the financial future you want.