Financial Triage: Navigating a Poor Health Diagnosis
Financial Triage: Navigating a Poor Health Diagnosis – Throughout my career, I’ve supported clients navigating poor health diagnoses, some of whom ultimately passed away. Understandably, their immediate focus often shifts to finding the best possible care and managing the numerous appointments that come with treatment. While maintaining hope for recovery is essential, preparing for the worst-case scenario is equally important. Ideally, these preparations should begin soon after the initial diagnosis, when the individual still has the energy to make thoughtful decisions.
What tasks are most urgent when time is of the essence?
#1 Assemble Your Team
Ensure your estate plan reflects your current circumstances and considers the latest estate laws. Key documents and individuals to consider for the team include:
Power of Attorney for Health Care: This agent makes medical decisions on your behalf if you become incapacitated. Although you can name successor agents, only one person holds this authority at a time. Ensure your healthcare providers and hospital have a copy of this document.
Living Will: This document outlines your preferences for end-of-life care. Make sure healthcare providers have it on file.
Power of Attorney for Property: This agent manages your financial affairs if you’re unable to do so. Like the healthcare power of attorney, this authority ends at death.
Estate Attorney: Your attorney can evaluate whether your estate plan requires updates and expedite necessary changes.
Financial Advisor: Your advisor can review asset titling, beneficiary designations, and cash flow to support you during treatment and adjust your financial plan as needed.
Executor: Appointed in your will, the executor manages your estate after death. Ensure they have the authority to handle your digital accounts and assets.
Successor Trustee: If you have a trust, the successor trustee will oversee long-term administration.
CPA: Your accountant will handle final tax returns and assess future tax implications.
#2 Reassess the Terms of Your Trust
Are the provisions of your trust still appropriate? Consider whether the ages of distribution for beneficiaries align with their current life circumstances. For instance, if one of your children has financial challenges or an unstable marriage, you might extend the trust’s duration for added protection. Also, confirm that the successor trustee will carry out your wishes as intended.
#3 Review How Wealth Will Transfer
Carefully examine how each asset is titled and ensure it aligns with your estate plan. This includes bank accounts, CDs, real estate, and timeshares—often overlooked assets. Review deeds and update them as necessary. Pay special attention to beneficiary designations on IRAs, life insurance policies, and annuities.
If you own a business, create a succession plan and update any operating agreements promptly. Also, locate your original will, which must be filed with the county after death. Set up a bank account for your executor to cover final expenses, such as funeral costs and property maintenance. If you own unique collectibles, plan for their disposition.
#4 Consider Intergenerational Tax Planning
Ensure any required minimum distributions (RMDs) on IRAs are made in the year of death. If the account holder is in a lower tax bracket than the beneficiaries, completing the RMD before death may result in tax savings.
For charitable giving, consider leaving tax-advantaged assets like IRAs or annuities to charities. This strategy preserves the step-up in basis for your heirs on trust assets, maximizing their value.
#5 Complete Savant’s Estate and Trust Administrator’s Guide
Document your financial footprint, including account passwords, credit cards, memberships, and contacts for notification. A comprehensive guide will ease the administrative burden on your loved ones during a difficult time.
Final Thoughts
A neurosurgeon once wisely remarked, “Your whole life can change in a minute, and you need to be ready.” Advance preparation can help offer peace of mind and comfort for you and your family during a period of uncertainty.
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant. Please consult your investment professional regarding your unique situation
Allison A. Alexander
Financial Advisor
CFP®, CPA, CDFA®