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HANDELSNUUS PROMOTIONAL ARTICLE
Financial planning for the elderly
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LUCAS COETSEE LIBERTY LEGAL SPECIALIST
If we consider that only 6 % of retirees are financially comfortable , 94 % of retirees are either financially dependent on the state or on family members . A vast number of South Africans emigrate , leaving their parents behind - we are then faced with the stark realisation that financial planning should be done for the elderly and with the elderly in mind .
FINANCIAL PLANNING FOR THE ELDERLY :
• Make sure that your parents have a valid will and if a parent is pre-deceased and they had a joint will , make sure that the surviving parent draws up a new will ( it may be difficult / impossible to trace the original will at the Master ’ s Office .)
• Make sure that your parents have a life file , containing a list of all investments , bank accounts , insurance policies , doctors details , list of chronic medication , medical details etc . This file will be so important in the event of ill health ( especially requiring hospitalisation ) and death .
• Make sure that your parents are being serviced by a credible financial planner . If at all possible , ensure that at least one of the adult children is involved in all the financial decisions taken and that the siblings are all kept in the loop . The balance of power between siblings
AUG / SEP 2017 • SENWES Scenario
is incredibly important – you don ’ t want any of them to feel that you are manipulating your parents to serve your own ends .
• Try to encourage your parents to use internet banking . This can be quite challenging as , depending on their age , the concept may be completely alien and can make them feel incredibly vulnerable . Assist them with this and be sure to educate them about the importance of keeping passwords safe and remind them on an ongoing basis of the scams that are out there . The advantage of internet banking is that you can easily assist your parents in the payment and management of accounts and to a large extent can automate the administrative side of their lives which can become so stressful in later years .
• Your parents may want to give you general power of attorney to deal with their affairs . Critical here is to understand that a power of attorney enables someone to transact on another person ’ s behalf when that person cannot be physically present . However , as soon as the person granting the power of attorney lacks mental capacity , then the power of attorney is null and void - should one continue to act on it , it would amount to fraud .
HOW EFFECTIVE IS A POWER OF ATTORNEY ? A power of attorney is only valid when a person has mental competence – basically the person granting the power of attorney must still take all the decisions , the person holding the power of attorney is merely an instrument to give effect to those decisions ( to stand in the queue and sign the documents , when the principal is too frail to do so , for example ). As soon as the person granting the power of attorney no longer has mental competence – for example has dementia or Alzheimer ’ s , then the power of attorney is no longer valid and may not be used !
To continue to use it constitutes fraud on your part . Time and again we see the abuse of powers of attorney and children manipulating their parents to benefit themselves ( often at the expense of siblings ), and at times even blatantly stealing from their parents .
It must be accepted that those who lack mental capacity are extremely vulnerable and thus strict measures are in place to protect them . In countries like the UK they have the concept of an “ enduring power of attorney ” – this power of attorney continues to be valid if the grantor becomes mentally incapacitated ( it must be granted prior to the mental incapacity ). Unfortunately this concept is not applicable to South African law , as it could solve many practical problems , at a small cost .