He is a retired bureaucrat and has travelled the world on work assignments with his family. Always in charge of his work, life and finances, decision-making has come easily to him. However, at 82, he finds making big decisions somewhat daunting. There are three major personal finance questions to address for a super senior person like him. First, how to ensure that the wealth acquired and cared for over a lifetime is made available to heirs. Second, how to balance the need for financial freedom with dependence on children during one’s lifetime. Third, how to provide for the care and comfort of the surviving spouse when one has passed away.

The first question has been answered in an earlier column. Simplifying one’s finances is always a good policy in retirement, especially if one crosses the age of 80. There’s nothing sacrosanct about this number in this day and age, but simplification helps both the investor and his heirs. The first step is to complete any pending asset-related processes. Verify and update nominations, check and organise title deeds, consolidate multiple accounts and folios, close dormant accounts, dematerialise paper shares, and review joint holdings for proper operation.

The second important step in estate planning for the elderly is making assets accessible to heirs. Many investors leave their children unaware of their assets, causing confusion after they pass away. Consolidate assets and record details, including e-mail and Internet banking access, in a notebook or spreadsheet for easy reference. With advancing age, either trust heirs with account details or ensure they can easily access them after one’s passing.

The third step in accessibility is to liquidate assets that are cumbersome to deal with after the investor has passed. Land, property, jewels and such physical assets are tough to access and use, or liquidate if the heirs are residents in another country. Financial assets are relatively easier to operate and transfer.

It is important to consult professionals to understand how laws regarding gifts, estates and taxes apply to heirs. While my friend wants to clean up and consolidate all his financial assets and keep them in a few mutual fund folios and bank accounts, he is not sure how he wants to deal with the two residential properties. Since his son is a resident of a foreign country, if he decides to sell these, he must ensure repatriation of he funds and leverage tax credits for payments made in India.

Balancing financial freedom and dependence is challenging. Many modern parents prefer independent living after retirement, relying on pensions, savings and investments. Well-off children are usually willing to cover large expenses, and in amicable relationships, some dependence for emergencies is not frowned upon.

Things begin to change with advancing age. The confidence about managing independently takes a hit when when one parent falls ill or suffers a fall. Dependence is often scary for children living far away. Not everyone has a circle of friends or extended family, and even if they do, one is not sure how long others may be able to help ageing and unwell elders. Children arrange caregivers, work with agencies that offer such services for food, physiotherapy and other routine care, ask parents to move into assisted living, or to move in with them.

These choices directly impact the sense of independence of the elderly. They are most reluctant to leave the house they have lived in and move elsewhere, even if they understand the benefits of doing so. Depending on the nature of their relationship with their children, choosing to be with them or in assisted living facilities is more practical than being alone.

Children who truly care for their parents— and this tribe is constantly on the rise —would not like them to be alone. My friend understands that he would leave his son anxious and worried if he and his wife lived alone in India. However, winding up everything and moving seems like too much change for their age. It is important to negotiate with children the choices for living in old age and meet in the middle. Living with children works if the parents are comfortable in a new place and have the space and privacy they desire. If it seems like a choice that closes other options, and offers too little by way of interaction and community living, assisted living might work. Being adamant about living alone is a problem many elders and their children grapple with these days.

The third question is about caring for the spouse. As one ages, one realises that the couple won’t leave the world together. In the classic mold, the husband worries about the wife’s ability to manage money and the wife worries about the husband’s ability to manage food and health without the other. I would propose that the years in retirement be spent in acquiring these skills rather than ringing one’s hand in despair. Neither cooking, nor investing is rocket science, and it is never too late to learn life skills and be in charge.

If this does not appeal to the other, there is no choice but to involve children and their families to assign responsibility and to provide for allocations from the estate to keep the other financially stable. As a rule, assets should vest with the surviving spouse and pass on to heirs only after the spouse’s passing. Keeping assets simple, clean and accessible to begin with helps this cause the most. There is no cure for victimhood and helplessness. Structuring the assets to provide a stable income to spouse is also a good choice to provide them with a sense of empowerment and liquidity, even if they are well taken care of by children.

To summarise for my senior friend, it is advisable is to keep a target of 6-12 months to consolidate and simplify assets. Address each asset individually, involve professionals to sell assets, transfer funds, and create a will. Use this time to educate the spouse about operating the bank and investment accounts, and inform the children about the assets. It is never too early to simplify one’s finances.


(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

Leave a comment

Your email address will not be published. Required fields are marked *