Financial advisor Paula Mogan preaches the importance of financial independence to her clients, especially as they begin to approach age 50.
That’s because Mogan, who has been in the industry for more than two decades, has heard many “‘horror” stories of older people who do not have extended family to care for them or a financial plan in place.
“I have been taking care of people for a long time and I am really passionate about trying to make a difference in peoples’ lives and protect them,” said Mogan of Mogan Wealth Management of UBS in Rockland, Mass.
Mogan said her practice encourages clients to start focusing on a plan when they get to around 50. “Certainly, by age 60, it’s really critical to make sure that people put a plan in place to protect themselves and their spouse or partner if they have one,” she said.
For those who do not have a partner or children, that plan to securing financial independence becomes even more critical, Mogan said.
Estate Planning
An estate plan is vital, Mogan said. She said her team, which includes her two sons, takes a financial planning approach to everything they do. “The estate planning box has to be checked to make certain our clients get it done,” she said.
Mogan suggests working with an elder law attorney. The estate plan, she said, does not have to be sophisticated and expensive. “You just need a basic statement to make sure your wishes are carried out,” she said. “It’s shocking how many people don’t do that.”
While everyone needs an estate plan, Mogan noted that it is especially important for individuals so that they can control what happens to them as they get older or should they get incapacitated. She warned that without the estate plan, the state intestacy law would come into play, meaning the state would make decisions on who would get your assets.
It puts in writing who is going to make decisions for you if you become incapacitated, and who is going to get your assets when you die, Mogan said.
Estate planning packages typically include documents such as a revocable trust, which carries out client wishes after death; a power of attorney that gives someone the right to help with matters such as financial decision; a living will that specifies a client's wishes for end-of-life medical care; and a healthcare proxy that designates who will make decisions if a client ends up hospitalized and unable to communicate.
Unlike a will, which is a written document that becomes active after death and expresses wishes for things like naming guardians for minor children and bequeathing physical items and cash assets to relatives and friends, assets in the revocable trust are directed to a trust and can be amended anytime. It is also active at the time it is created.