The worst-case scenario just happened to your client — either an accident or he or she just found out about a serious illness — and he or she will be incapacitated for two months. Who would pay their bills? Make medical decisions? Who would take care of their children and pets?
When planning for their future, it makes sense to ask your clients, what would happen if they had a catastrophe? Ask them to imagine a scenario and then walk them through the many facets of their lives that are private and the personal information that only they know how to access.
Help your clients change the conversation with their loved ones to include having a contingency plan in place if they are faced with a debilitating injury or illness.
A few years ago, two of our clients — a married couple — were seriously injured on a remote vacation and eventually transported home by private aircraft. We marshaled funds needed to cover unexpected expenses from a combination of accounts and interpreted insurance coverage, but we spent significant time figuring out whom to call for the more personal issues.
When determining who is best able to handle the heavy lifting in an emergency, it is important for clients to think of their life as a play — not only because things can get dramatic, but because every star has and needs an understudy — or two. This isn't an honorary position or based on how much a client likes or loves someone. It has to be someone they can trust with everything they own.
Let's be real. As advisers, we know that choosing an understudy can be a stressful decision for our clients because it requires raw honesty about the positives and the shortcomings of their family and friends. A client may have a loving daughter who may be financially irresponsible or a brother who may be a doctor who's great at making medical decisions but is not very kid- or pet-friendly. And there could be a father who is a whiz with insurance companies but falls apart when one of his children is hurt.
When choosing an effective understudy, clients will have to assess the hundreds of mundane tasks performed daily, weekly, monthly and yearly, such as the very serious tasks of moving money around and paying rent or the mortgage. This is not fun to consider, but the reality is, if something happens to your clients, someone is going to have to step in to help.
Ask your clients to create a navigation document that lists all of their accounts and contact information for financial advisers, banking institutions and medical care. For each item, have your clients write down the best person to carry out these tasks. If after the exercise they choose more than one understudy, they will need to make sure all involved will work in concert.
Depending on the circumstances, you may wish to advise clients to separate financial powers from medical powers. If your clients' financial affairs are consolidated with one firm, they can work with private bankers to pay bills on the clients' behalf. If their assets are at numerous institutions or if automatic bill-pay is used, having solid instructions on what gets paid and when, and how to access funds in case a paycheck stops for a while, can be invaluable. Another key piece is to have clients record all of their login names and passwords in a secure location. Your client may want to speak frankly with those they are considering and let their reactions be a guide for the final decisions.
It is extremely important to advise your clients to consult an attorney in their state. A durable power of attorney, which only covers financial activities, may be needed. If your clients find themselves unable to make medical decisions for themselves, their rights may be delegated to another person by a health care proxy or medical care directive. The understudy for this portion of their affairs may need to make decisions up to and including end-of-life care. With regard to children and pets, clients may be better served having a will that specifically outlines their wishes before they are incapacitated.
In times of disaster, pain and fear can impair judgment and allow important details to fall through the cracks. When a disaster hits, it is important for your clients to know you've thought about their future and have spent time ensuring they are prepared.
Andrea Grosso Kaempf is managing director of personal trust for The Private Client Reserve of U.S. Bank in Seattle, Wash.