New Diagnosis: Chronic Illness
Loved One Recently Diagnosed
If a loved one was recently diagnosed with a chronic illness, there are a number of important financial, estate, investment, insurance and other planning steps you all need to address. While dealing with the emotional and medical decision making is perhaps the initial priority, don’t put off these other matters for long.
You’re Not Alone
Recognizing that your family is not alone might help. Chronic illness affects 125 million Americans and 22% are living with more than one chronic illness. Unfortunately, in spite of chronic illness being so common many people, and even professional advisers, operate under misconceptions about how chronic illness affects planning.
Details are Key, Get Specific
The most significant factor is for you to understand exactly what illness your loved one is living with, what his specific disease course is likely to be, and how that affects your personal situation. There is tremendous variation in how different chronic illnesses affect people, and even among people with the same chronic illness, their personal experience of that illness (e.g., rate of progression) can vary dramatically.
Since your loved one was recently diagnosed, devote initial efforts to understanding his illness, what steps should be taken to help him, what drug and other therapies are available, and how it will affect you and your loved ones. Once these vital personal issues are being addressed, there is a range of financial, estate and other matters that you’ll need to turn to, including those below.
A diagnosis of a chronic illness can be tough. Get support to help you through the process and in dealing with the myriad of issues above. Many of the chronic illnesses have specific organizations dedicated to helping those living with that particular illness. They can often provide a tremendous amount of information, support services, and more. Don’t be afraid to ask for help. It can and will be forthcoming and your hands will likely be full with the myriad of issues that you’ll have to address. If you have a close friend or family member that can help you through this trying initial phase, enlist their help. Ask them to review major decisions you make, even attend some meetings you have, and help you take notes. However level headed you are, it is tough initially not to be overwhelmed (by emotions, the scores of issues you have to address, the complex jargon necessary to navigate to deal with each particular disease, etc.). Having a resource person, partner, assistant, can be a huge benefit.
Reassess your financial situation and what impact your loved one’s illness might have. While very difficult to do, the best approach is to plan for the worst while hoping for the best.
In short, your family needs to meet with a financial planner and reassess everything. Remember, small changes made now, might make a huge difference in the quality of life you will all have in the future. Delaying significant decisions, however difficult emotionally to make with what you are likely going through after a recent diagnosis, may result in financial hardships that could have been avoided.
Reassess your investment planning to fit your new circumstances. Some advisers erroneously assume that anyone living with a chronic illness should favor liquid conservative assets in their investment plan. However, say your loved one is likely to be able to work for 8-10 more years. In that case, you have a time horizon in which to plan for retirement and a more aggressive allocation of investments to equities to grow a retirement plan might be appropriate.
Does your loved one have disability insurance? What is required to collect on that, how much will it pay and for how long? Does your loved one have life insurance? If it is term coverage can he convert it to permanent coverage if his illness will prevent him from ever obtaining additional life insurance (or if he can at much more costly rates)? What type of medical coverage do you have? If your loved one looses his job how will that affect coverage?
The entire family needs to revise its estate planning documents. Your loved one’s family may reassess who they leave assets to, and how much. They might have thought your loved one prior to his diagnosis was less in need of help than may now be the case. They should also speak with a elder law attorney to determine if any bequests for your loved one should be made into a special trust that won’t prevent him from qualifying for governmental and other aid (called a “special needs trust”). Even if that is not necessary, it might be advisable for any bequest from you or your loved one’s family to him to be made in a trust with trustees designated to help him manage the assets. Family members might best be advised to revise all of their documents that listed your loved one as a trustee or agent and name others if he is not be likely to be handling the additional responsibility in the not too distant future. Your loved one should have a durable power of attorney. This is a document in which he designates a person, his agent, to handle legal, tax and financial matters when he can’t. The term “durable” means it will remain valid even if he becomes incapacitated. He should revise his living will and health care proxy with the guidance of his neurologist or other attending physician to reflect the realities of his diagnosis.
Yes, it’s tough and overwhelming. But if you begin to methodically address the many legal, tax, estate, investment, insurance and other issues, it will be less difficult and provide more favorable options. Bear in mind, your situation is now different than before because of the diagnosis, and “standard” planning (whatever that means!) is not sufficient. Get informed and educated about the illness, what you can do, and how it affects your planning and that of your loved one.
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