Handling Financial Matters and Chronic Illness
This blog will provide tips for handling financial matters when a loved one receives a difficult diagnosis of a chronic illness. Wealth Planning Corporation has been working with individuals and families for forty years and during that time we have witnessed our clients’ many stages of life. Getting older is not easy and for some, it can become even more difficult with the diagnosis of a chronic illness or progressive disease. In fact, chronic diseases are the leading cause of illness, disability, and death in the United States. It is important to consider this fact as you save and plan for retirement.
What is a chronic disease?
It is a condition that usually lasts for more than 3 months and worsens over time. Chronic disease tends to occur in older adults and is controllable but not curable. Commonly known types include cancer, heart disease, stroke, diabetes, arthritis, epilepsy, Alzheimer’s disease, multiple sclerosis, and Parkinson’s disease.
What to know and how to be prepared?
No one really knows how well they will age or what may come their way. However, it is important to try to live a healthy lifestyle by exercising, eating right, drinking alcohol in moderation, and scheduling your preventative annual exams. People are now living longer on average, and we are seeing more people diagnosed with diseases and illnesses which progress slowly over time. As financial advisors we discuss this difficult topic in planning meetings very early on. We talk through how these situations could impact one’s long-term retirement plan. In the event a client receives this difficult news, we want them to be able to focus on the health decisions at hand. We do not want them consumed with financial stress.
Step one is to prepare in advance and set the stage with family.
Take some time to look ahead and understand at least theoretically how it could affect your savings and spending. During this preparation phase, it is important to think about and discuss likely scenarios based on family history. Also, consider other experiences you’ve heard of through friends. Initiate family wealth conversations while everyone is still fully capable with those who will be a part of the future care scenario. In these conversations do not only outline wishes and expectations, but also provide the necessary financial and legal information so they will be able to do the job. Be sure each person who has a role is clear on 1) why you appointed them and 2) what they are responsible for actually doing.
Move through this first stage early, slowly, and calmly. Answer questions, revisit concerns and find more resources if necessary, so that everyone involved is comfortable and confident in what is to come.
Step two is to review your financial portfolio.
Be sure to educate and communicate with your loved ones how you do your banking, bill paying, and investing. They will need to know how you pay your bills or where to access funds for replenishing the checking account. Increase everyone’s confidence in what resources are available by sharing bank statements, investment account statements, long-term care policy information, pension payments, Social Security and Medicare information, other health insurance provider information. Also provide them with a list of your monthly living expenses (utilities, phone/internet, insurance, etc.) and any outstanding debts, so payments will be kept current. If a current net worth statement is available, this one-page document can provide a quick macro view of one’s entire financial situation.
Powers of attorney will need to be added to financial accounts, so your POA’s have the authority to sign for and fulfill instructions on your behalf. It is important to do this while one can sign legibly. Keep in mind that it is a digital world so provide passwords where needed to access online accounts and initiate transfers/bill pays in that method.
Now is also a good time to freeze your credit, close unnecessary lines of credit, and contact financial and insurance companies to add a trusted contact to your account profile.
Step three is to review your estate plans.
After being diagnosed with Parkinson’s Disease Alan Alda said in an interview “I’m more convinced than ever that life is adapting, adjusting and revising.” It could not be said any better. Adjusting or revising your legal documents may be top of the list depending on when you last updated them. People you appointed years ago may not be available or the right people for the job.
Review wills, living wills, powers of attorneys, trust agreements for appointed agents and beneficiary designations. Is there a need to establish or modify a trust? Do you need to make changes to your documents? Many questions will come to mind and seeking answers sooner than later is advisable. Depending on how fast the disease progresses one could find they are unable to make changes to these documents as a result of deteriorating physical or mental capabilities.
Get the legal help you need to review and execute documents in a timely fashion.
Step four is to seek help and get expert answers.
You may need help in a number of different areas, and it is important to get expert help such as attorneys, financial planners, accountants, handyman contractors and healthcare professionals. Do not be shy about reaching out and getting answers. Also look for support groups or organizations that can provide you with information specific to the disease you are facing.
If you are seeking more guidance in working through a chronic illness or financial questions in general for yourself or a loved one, give us a call. We have lead advisors available for complimentary Discovery Meetings. During a Discovery Meeting you will have the opportunity to meet and discuss your financial questions with an advisor. You can then determine if working with a WPC advisor is in your best interest. Also check out our Final Wishes Preparation Checklist which can help organize your important information into one document.
Read more about our services and investment approach at www.wealthp.com. We have been planning, coaching and advising clients since 1984.
