One of the hardest things that any of us ever has to face is losing a loved one. Regardless of whether that person’s passing is a result of a difficult illness, is untimely, or comes gracefully after a long, full life, the absence we are left to deal with can be staggering. The last thing we want to face as we attempt to process loss, is unfortunately, something that demands our immediate attention. Paperwork, bills, and a myriad of responsibilities can burden our time in the days and months following our loved one’s passing. Even with a plan in place, it can be overwhelming to navigate through our daily lives while adjusting to a new normal. What can further complicate things is if end of life planning had not been previously addressed. We may find ourselves thrust into new roles that we feel unqualified for, such as suddenly becoming the head of a household. We cannot alleviate grief, but is there a way to transition through end-of-life care and prepare for what comes tomorrow?
What is end of life planning?
End of life planning is more than making final arrangements. While it does involve decisions and preparations for the end of one’s life, it also provides the opportunity to make sure that your loved ones will be financially protected and capable of carrying on in their lives from a foundation of stability.
Consider a scenario where a couple have been married for decades. It is common for lifestyle routines to fall into place and maybe one spouse has taken on the responsibility of managing the couple’s financial matters. Perhaps the husband paid all the bills, managed the savings and investments, and was the one to work with a financial advisor. What if that husband has a new medical diagnosis that limits his remaining time? What can be done to offer some peace of mind? How can he help his wife prepare for a future where she is now tasked with the financial responsibilities that he always handled?
There are steps that the couple can take to assist in a peaceful, dignified transition that accounts for the needs of each. Estate planning is a vital part of end of life planning, but it is only one part. It can be hard to know where to begin, especially when confronting the unknown of what’s to come. To ease that burden, one of the most helpful things to start with is enlisting the assistance of a financial advisor who is an expert in end of life planning. There are so many moving parts to consider and there is no need to attempt to travel the road alone. A compassionate professional who is well-versed in the emotional and logistical aspects of preparing family members for care at the end of life can serve as a guide through these important steps:
- Create or update estate planning documents. This specific set of legal documents will dictate how your medical care will be handled if you become incapable of making decisions for yourself, how your loved ones will be taken care of in the event of your passing, and how your assets will be transferred. A financial advisor can review the documents in your estate plan to make sure that they reflect your wishes and appropriately meet your needs. They can make recommendations for any updates that may minimize tax implications and help your loved ones avoid the lengthy and expensive probate process.
- Discuss end of life care decisions. Is there a need for hospice care planning or nursing care at the end of life? Will care be provided at home or in a facility? Are there health insurance or out-of-pocket costs to factor in? Some costs may be covered by Medicare/Medicaid, private health care insurance, or long-term care insurance. Other expenses may not be covered and can add up quickly. According to the most recent Genworth Cost of Care Survey, the annual median cost of 24/7 nursing home care in the New York area is $149,650 for a semi-private room and $162,425 for a private one. The cost of 24/7 home health aide care can be significantly more expensive. Your financial advisor can help you review the options and work with you to create an appropriate financial plan to address the expenses related to care at the end of life.
- Legacy planning. Some families have traditions of donating to causes or charitable organizations. During end of life preparation, conversations may reveal ways in which a loved one may want to be remembered or have their charitable works carried on in their name.
- Funeral and Burial Arrangements. Final arrangement costs can vary significantly. Ensuring that financial resources are available to pay for these end of life options can alleviate stress and uncertainty for loved ones. Expressing thoughts about particular burial, cremation, or other services at this time can also help family members take comfort in knowing they will be honoring their loved one’s wishes.
- Ensure your loved ones have the financial education and resources they need. If you have been the one to handle the family’s financial matters, your loved ones may struggle to assume the responsibility of these tasks without guidance. With so many pressing concerns and emotions leading up to this time of transition, your financial advisor can become a valuable ally in helping your family. You may elect to meet with your advisor alongside your family so that they can establish a connection, and so that your loved ones can be reassured that they have a dedicated professional they can count on for support.
How does estate planning fit into end of life planning?
There is overlap between end-of-life planning and estate planning. They both serve to ensure that your wishes are respected, and your loved ones are taken care of after you pass away. Estate planning can be done as soon as someone turns eighteen, but estate planning documents should be regularly reviewed and updated every three to five years as milestone events occur. As a person’s family and financial assets grow, their estate plan will change.
Regardless of a person’s current stage in life, estate planning documents are always crafted with end of life planning in mind. Yet, when a loved one is suddenly facing a terminal illness or now needs care at the end of life, it is vital that those documents are reviewed. Health care planning, providing for beneficiaries, and financial planning for the tax-advantaged transfer of assets are just some of the components of a comprehensive estate plan.
Here are key elements of estate planning that are part of end of life planning:
- Wills and Trusts – A will specifies your wishes regarding how you’d like your assets to be distributed and, if applicable, allows you to name guardians for minor children. A trust is a tool that facilitates the transfer of assets according to your wishes while potentially minimizing tax implications and avoiding probate.
- Financial Power of Attorney – This document lets you designate someone to act on your behalf in financial matters.
- Beneficiary Designations – These are instructions on accounts like retirement funds or life insurance policies, directing who will inherit these assets.
- Living Will and Healthcare Proxy – These documents outline your wishes regarding medical treatment if you are unable to communicate them yourself and tells medical providers who can make decisions on your behalf. You can address things such as heroic measures, pain management and organ donation.
- Letter of Last Instruction – While this is not a legally binding document, you can use this to express your wishes for funeral and burial arrangements.
It can be incredibly difficult to have conversations that involve our mortality, but they can be some of the most important. A spouse who has been diagnosed with a terminal illness and has always been the one who handles the finances, can offer one of the greatest acts of caring by providing their surviving spouse with the resources he or she needs to take on these responsibilities. A financial advisor who is experienced in end of life planning can offer a holistic approach to assessing the unique circumstances and family dynamics that are involved, while serving as a compassionate guide throughout the entire process. If you would like more information about the ways a financial advisor can help you and your loved ones prepare for care at the end of life, please contact us.
