Summary: Physician letters are commonly obtained for a myriad of estate and financial planning matters. Determining maximum sustainable spending rates should not ignore real life expectancy. If you’re planning a sale of assets for a private annuity your current medical status is important. If you have a shortened life expectancy the actuarial tables that are normally used to calculate the annuity amount may be inappropriate. Rev. Rul. 66-307, 1966-2 C.B. 429; Treas. Reg. Sec. 1.7520-3; 20.7520-3(b)(3). But too often medical letters are a generic non-committal paragraph that get stuck in a file but don’t really corroborate what is required. What should these medical letters address? Consider the following checklist as a starting point to be tailored to the particular planning goal and your health situation.
√Medical History. Provide a general medical history beginning at least several years prior to any contemplated transactions, not merely a current snapshot. Too often medical letters describe a patient’s current status and nothing more. This can often be inadequate. The history will help establish a baseline of the status of your medical health. It also provides a context to the progression (or stability as the case may be) of your health status.
√Acute Conditions. If you had or have any acute medical conditions, e.g. pneumonia, these should be indicated and their status explained. Explain the course, medical management and whether or not there are (or expected to be) any residual affects, or instead was there (or is there expected to be) complete resolution? A conclusion that the acute condition should not have a significant negative impact on life expectancy may be helpful.
√Chronic Conditions. If you have any chronic medical conditions these should be indicated and their status explained. Are they stable? How are they medically managed?
√Stability. Describe whether from all indications you were in reasonably stable medical condition despite the chronic illnesses or other health issues you were living with and that are described in the letter.
√Life Expectancy: Do any of your known health conditions independently, or will several in the aggregate, significantly shorten your life expectancy? Specifically, which if any of conditions create life expectancy limitations?
√Attention to Medical Care: Do you visit your physician on a regular basis for health care maintenance? How often? Do you see any specialists? Have you sought and received appropriate medical treatment for any health conditions.
√Medical Regime: What is your medical regime? This should describe what medications you take, how often you take them, when you began taking them, whether you have a special diet (and what it is) or regular exercise program (and what it is)? Are you were compliant with your medical regime? Providing some level of detail, rather than just broad statements, is preferable.
√Future Testing: Is there any planned medical testing or monitoring that has been scheduled or even recommended after the date of your last complete physical examination? What tests have been recommended, when and for what purpose. Example: If you had an abnormal EKG, is a stress test planned to rule out the presence of ischemic heart disease? What follow is recommended? Oftentimes when a patient enters the hospital for even routine surgery, studies are done to rule out pre-existing diseases. Be certain your physician summarizes the results of any such tests as part of the medical letter. This can be valuable if a later acute condition occurs by corroborating that there was no knowledge or even anticipation of that acute condition at the earlier test date.
√Social Habits: Do you smoke, drink alcohol, are significantly overweight, and how regularly you tend to your medical needs. An affirmative statement that you do not smoke or drink in any excess, or use recreational drugs, can be important. If you had engaged in these, or other, activities in the past, the letter should provide a history and indication of when you stopped.√Conclusions: If feasible, an affirmative statement that you do not have "an incurable illness or other deteriorating physical condition such that there would be a meaningful impact on life expectancy. If the purpose of the letter is to support a sale of your assets for a private annuity, if feasible a conclusion that there is not “a 50 percent or greater probability that you will die within 1 ½ years as a result of any identified medical conditions," Example: “Although the patient has a history of multiple medical problems, all are stable and managed appropriately. The patient's chronic health issues so not present any specific life expectancy limitations. I expect to be serving the patient for years to come."
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