Left unchecked, hypo/mania and its associated impulsivity can wreck your wallet. For the best tips to guard against overspending and other common monetary risks, we consulted with the experts: financial planners who have experience advising relatives or clients with bipolar disorder.
During a manic episode, it is common to overspend, gamble, accrue new debts, and otherwise risk significant financial losses. Fortunately, some financial planners, including Martin M. Shenkman and Annie McQuilken, have experience with, and sound advice for, protecting against the potential fallout of a manic episode.
Shenkman, an attorney in Paramus, New Jersey, has developed expertise in estate planning for people with a chronic disease or disability such as bipolar disorder. McQuilken, based in Fairport, New York, has over 20 years of experience in financial management, counseling, and education, and she is a contributor to NAPFA Advisor, a publication of the National Association of Personal Financial Advisors (NAPFA).
Here they share their top tips for safeguarding your wallet from the impulsivity associated with hypo/mania.
#1 Bank On It
Have one bank account for bills such as rent and utilities, and leave the checkbook for that at home. Consider setting up email notifications to a trusted person in case of any unusual activity. Establish a separate account for personal expenses, and keep just enough funds in it for one month. If you opt for a debit card, make sure it’s set up to deny any overdraft spending.
#2 Be Diligent with Record-Keeping
Shenkman strongly recommends maintaining a detailed record of spending, regardless of mood state, so that someone who is brought in to help knows what expenditures are expected and reasonable. Computer software such as Quicken or reliable online sites for tracking expenses can be helpful.
#3 Protect Your Credit
Contact the credit reporting agencies—Experian, Equifax, and TransUnion—to lock your account so that any requests for a new credit card or line of credit will be refused. You can also have the agencies email a trusted family member any time a credit check is performed.
#4 Secure Your Assets
Consider keeping ownership of assets such as a house in the name of the partner without bipolar, to protect it from the claims of creditors. You might also establish a trust that requires the approval of co-trustees for any spending. “This means giving up partial control of your assets,” says McQuilken, “but [it] gives you protection from yourself, assuming your co-trustee can tell when you are manic and when you are not.”
#5 Create a Living Trust
Consider creating a living trust. Take, for example, one aging couple who set up a revocable living trust: the husband is in his 70s, the wife, who has bipolar, is in her 60s.
If something happens to him, she has access to a bank account in her name with a specified amount of money that is automatically replenished if there are no signs of mishandling money.
To succeed the husband as trustee, they named a trust company that has experience dealing with health and aging issues. A less expensive option, says Shenkman, would be to have a family member as successor trustee.
#6 Arrange for a Power of Attorney
It’s important to set up multiple lines of defense. In the example above, with the living trust, what if the husband gets sick or is hospitalized? Does he have a durable power of attorney in place for a trusted individual? “You always need a Plan B and a Plan C,” says Shenkman.
#7 Enlist a Family Hold Back to Avoid Enabling
McQuilken recommends that relatives of someone with bipolar do not cosign loans. Also, be aware that loaning money or paying off debts may only enable the overspending, gambling, or other activities associated with manic episodes.
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