November 2016 newsletter

Lest we forget – simplifying your estate

As many of you know, I was one of the co-founders of The Secrets of Radar Museum, located here in London, behind Parkwood Hospital. During WWII, over 6000 Canadians from all walks of life were drawn into the Radar training program, which was more secret than efforts to develop the atomic bomb. Our vets were trained here, and in the UK, and couldn’t talk about what they did until 1991. If you’ve never heard of the museum, I would encourage you to visit.

I have made many wonderful friends from my time at the museum, including my friend Haydn Lewellyn Davis, who was an art student recruited into radar. He and I became great friends, having a shared business and arts background – so much so, that a year after he passed away, Bridget and I named our youngest son in his honor. Haydn served in the UK for most of the war, and amongst other things, drew a poster for the war bond effort (the original now hangs in the Victoria & Albert Museum in London England). You can read about his and other vet’s stories at the museum.

More info can be found at www.secretsofradar.com.

As memory fades

When we started Secrets of Radar, many of our vets were in their late seventies, and the few who remain today are in their mid nineties. Like all of us, our vets found that as we age, our cognitive abilities begin to fade. For some, it’s a normal process, and for others, the process can be accelerated at a very young age due to health issues such as Alzheimer disease or dementia.

There are a number of things to think about in estate planning as we age, but one of the most overlooked is the impact of cognitive changes on long-term estate plans. I think there are a number of key questions we all need to ask ourselves, and I wish financial and estate planners would spend more time talking with people about some of these difficult topics on a more regular basis.

Here’s a list of key items from my experience:

  • How complex is your investment portfolio? Are you and your spouse equally comfortable staying on top of it?

I have worked with a number of clients over the years who self-managed some very impressive portfolios during their working and early retirement years. However, in most cases, the portfolio is being managed by one spouse. The other spouse may not be comfortable, or capable, of managing a portfolio of that complexity.

Put some thought into how and when it would be appropriate to simplify your investment structure, and how to ensure both spouses are involved (or, if you’re single, that your power of attorney would be capable and willing to manage something of that complexity).

Ask yourself this: Can you see yourself managing a portfolio as complex as the one you have today in 10 years? Could your spouse? If the answer is no, then start the process of simplifying things today. Once you begin to draw down on income, tiny mistakes can have major long-term consequences on your income and net worth.

  • You can’t change your will and/or power of attorney documents if you’re no longer legally capable.

This is one of the trickiest and most difficult things to handle. If you’re no longer legally capable, no one else can alter your will or powers of attorney documents. Your power of attorney has no legal authority to make changes to your estate. If there is one single argument that should encourage you to review and refresh these documents every few years, this is it. One of the most difficult discussions I’ve ever had with a family was explaining that dad’s estate was locked in stone, even though the situation had changed dramatically, and there was absolutely nothing we could do about it.

That said, capability is an “in the moment” test – I’ve seen situations where making a will or beneficiary change in the morning would have been fine, but by mid-afternoon the person in question could no longer show they understood the consequences of their actions. This can be distressing and challenging for a family who may not understand why a lawyer or advisor might not be willing to have a document signed at that point in time. Please remember that as professionals we have a responsibility to the client – we cannot allow changes to their accounts if we sense that the client is not cognitively capable of understanding the consequences of those changes.

  • Regardless of age, we can all be cognitively impaired by health and life events.

As most of you know, my mother went into hospice around Christmas of last year, and passed away in February. The day she went into hospice, I made a major blunder on what was, for me, a very simple piece of paperwork. Fortunately, a few days later we realized what I had done and we were able to correct the situation quickly, and without incident. It was, however, a major eye-opener for me, as this wasn’t something I would consider difficult.  I did not expect, at the age of 41, to be facing cognitive impairment in my own work, but there it was, staring me in the face.   Life happens, and it usually happens at the worst of times.

For the next two months, as my mom’s situation progressed, I asked a trusted colleague to double check all of my work – even if it seemed very simple. While I didn’t make any other errors in that time period, it was an exceptionally stressful time and my colleague’s assistance and oversight was an excellent way to ensure that I wasn’t going to miss something while I was not functioning at my best. It never hurts to have an extra set of eyes looking at your finances – whether you’re 91 or 41.