Handing over financial responsibility to someone else, even if that someone is your own child, is a very sensitive issue. You may think that letting go is the equivalent of resigning from a game of chess when you are in a winning position. Yet handing over responsibility for your monetary affairs at the right time, to the right person, is what will help you win your financial endgame.
This issue raises the following questions:
- Under which circumstances should you relinquish control?
- How much control should you give to others?
- Can you trust your children enough to give them so much responsibility over your personal situation, or should you choose someone else?
- When should this be done?
Time to let go
As senior citizens age and face more mental cognition issues, it becomes more difficult to keep on top of finances. Aging tends to make people forgetful. Even senior citizens who are healthy and do not suffer from dementia or Alzheimer’s may forget to pay a bill or sign a check. At this point in your life, it is much easier to hand over the pressure of financial responsibility to someone you trust.
Who should take the reins?
For some people, that’s an easy question to answer. Their children are trustworthy, and they can simply pass financial responsibility over to them. But what about people who have no children, or who don’t have a healthy relationship with their offspring? Then it’s time to involve professionals, such as a financial planner, lawyer, or accountant. You should never feel that you are alone or that there’s no one you can trust. By reaching out to experienced professionals, you can remove the pressures of running your finances even if you don’t want to give control to your children.
The importance of planning ahead
Don’t wait until you are infirm and incapable before you hand over control. By then it’s too late! By planning ahead when you are still in cognitive control, you can make sure that your affairs are handled according to your wishes. This applies not only to your finances during your lifetime, but also to estate planning in general. By drawing up a will or creating a trust, you can ensure that your assets will go to the heirs of your choice.
For 5 tactics to organize your estate click here.
Douglas Goldstein, co-author of Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing, is an avid chess fan, international investment advisor and Certified Financial Planner (CFP®).