After receiving a serious health diagnosis: How you can reduce financial stress

Post Written by: Paul B. Elfner, CFP®, MSFS

The phone call confirms it.

An unexpected health diagnosis; a change in treatment needs or status; a progression.

Information requiring serious conversations.

As we all age and our bodies begin to fail us, we need to consider what is best for those around us and how we can better prepare them.

There are many things that can lead us to lose our ability to think clearly and make decisions on even the simplest of problems. The news of a terminal illness, dementia, Alzheimer’s, cancer, or other severe diagnoses can bring extreme stress, uncertainty, and worry into relationships.

It is important when this time comes if you receive a serious health diagnosis, that you and your loved ones are adequately prepared for what lies ahead. With the right discussions and plans, you can protect the legacy you’ve created, support your loved ones, and set a clear path forward.

Following are some topics and suggestions to think about should you find yourself, your loved one, or a friend in this situation.

  1. Think About Your Wishes and Communicate Them

Share any wishes and desires you want your loved ones to continue or acknowledge. You may also be thinking about how you want to spend your time moving forward.

Consider estate planning details and trusts to outline your wishes – if these are already in place, you may need to update them according to your thoughts.

If you are able and plan to spend your time fulfilling life goals, seek out those who can help you do so.

As your health may degrade, think about how you would like different medical decisions handled, such as where you would like to receive care. Consult with your attorney to make certain that your Healthcare Power of Attorney and Living Will contain life directives that best represent how your end of life should be planned for.

Consider pre-planning your funeral as one additional way to reduce stress for a surviving spouse or family. This is a way to ensure your wishes are followed and it will reduce the strain on loved ones during that trying time.

  1. Evaluate Your Current Estate Planning Documents

This is an important step in helping to reduce stress should a sudden health diagnosis affect you or your family. The foundations of an estate plan include a Last Will and Testament, Financial Power of Attorney, Healthcare Power of Attorney, and Living Will.

Be sure that your estate planning documents are current and still align with your wishes. While reviewing the documents, it may be wise to see if your Power of Attorney is durable in the event you become incapacitated and can no longer act by yourself. A durable power of attorney will allow the designated agent to act on the incapacitated person’s behalf.

Consider contacting an Elder Law Attorney who is well versed in advanced estate planning techniques for families or individuals to potentially protect assets for the surviving family members. This approach can be very beneficial if a prognosis is serious or health status is requiring entrance into a skilled care nursing facility. An Elder Law Attorney can help you look at ways to protect assets for a surviving spouse or loved one so they may continue to live how they are accustomed.

Show your loved ones where these files are located and how they can contact their attorney should the need arise.

  1. Review Beneficiary Designations

After you review your estate planning documents and perhaps have updates, you should also look at reviewing your beneficiary designations. Are the beneficiary designations still what you desire? Examples of beneficiary designated assets include individual retirement accounts (IRAs), retirement plans, annuities, and life insurances. It’s important to also make sure addresses and contact information of beneficiaries are correct and updated in these account documents.

  1. Talk about Your Finances (it will relieve stress!)

serious health diagnosis dadWorrying about how others will manage the details of finances or navigate related conversations is understandable after someone receives a serious health diagnosis.

It’s common among couples that one partner is more in charge of the finances and knows the details, while the other manages different responsibilities. To alleviate stress, it may be worthwhile to sit down with the partner not used to managing financial minutiae to go over your finances and bills so they understand the big picture and the day-to-day management. Make sure your partner has your financial advisor or professional’s contact information as this person should know all of your details and be able to assist in managing your finances effectively. If your partner has never met your financial advisor, now may be a good time to introduce them and have a meeting. This will give your spouse the opportunity to become familiar with the advisor and ask any questions while you are all present.

If you do not have a financial advisor and your spouse does not have the financial knowledge to independently manage the finances, you should strongly consider finding one who can assist now and be there for your spouse after your death. It is important to find someone who understands estate laws and taxes as well as portfolio and investments that will personally match your spouse’s personality.

Some items to discuss with your partner or loved one:

  • Bank Account/Investment Account/Other Financial Accounts Contact Information
    • Making sure someone other than yourself knows how to contact your financial advisor who can assist with navigating your finances. Knowing account numbers and access information is also important.
  • Schedule/List of bills that are paid monthly, quarterly, semi-annually, and annually
    • Share how you track this information and the mechanism for payment, whether online, via check, or otherwise. Should these be paid online, share how they can find the login information.
  1. Create, or Review and Update Your Financial Plan

A financial plan is an important guideline to your financial success for retirement. A thorough financial plan can help to ensure your spouse or loved one has the assets to continue to live how they are accustomed should one of you pass and/or need long-term care assistance that could deplete assets quickly for the healthy spouse. Consider reaching out to a CFP® Professional or financial advisor who can help you draft a financial plan or prepare an update should you already have one.

  1. Review and Evaluate Your Insurance Coverage

For those who have reached the senior years of life and own long-term care policies, consider reviewing the policy with your agent or financial advisor to determine what the policy covers, should you or a loved one enter a nursing facility or require at-home care. Some policies have riders covering at-home nursing care should the need arise. Also, be sure that your spouse or loved ones know what policies exist and how to contact the insurance company should they need to file a claim.

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If you or a loved one are facing serious health diagnosis or changes, we hope this list can prompt conversations to help you prepare for the potential next chapter in your lives. These conversations are never easy but are vital to have and will assist in alleviating stress for both you and your loved ones should life begin to change.

Seeking assistance to help align your wishes and your finances as you or a loved one may face a serious health diagnosis or change can help you feel peace of mind. If you’d like to start a conversation with a Wealth Advisor to walk you through these and other complexities, get in touch with us today at 855-855-5455 or info@domaniwealth.com.

 

 

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