By Grace S. Yung, CFP
While end-of-life planning is usually not a topic that people enjoy discussing, there will come a time when these conversations need to be initiated. Unfortunately, unexpected terminal illnesses can and do happen, so it is always better to have an idea of what is necessary in terms of planning in these circumstances.
Since this type of planning involves healthcare, legal, and financial issues, it is best to work with professionals in each of these areas who can assist you in implementing the plans that will meet your specific needs.
Stating Your Intentions Through a Living Will
The best way to make your wishes known regarding the type of medical treatment you want at the end of life is to draw up a living will. Also known as a medical directive, this document states your intentions with regard to your desire to die without the use of measures that may artificially prolong life. Your directive can also request certain types of treatment and/or pain relief if you are unable to do so yourself, as well as inform medical professionals whether procedures such as artificial respiration or ventilation should be either used or withheld.
It is important to note that states have different requirements for documenting medical decisions. Therefore, if you spend a significant amount of time in other states—either while traveling on business or vacations—it may be wise to execute documents that are specific to those states.
There are also options available for appointing someone to make medical decisions for you, should you become unable to do so yourself. A healthcare proxy is a person who is authorized to make treatment decisions in the event that you become incompetent or incapable of communicating.
If you have not created a living will (or have a court-appointed guardian) and you become terminally ill and unable to communicate, medical providers in Texas are required to consult with your family members in this order with regard to decisions about your healthcare: spouse, adult children, parents, nearest living relative.
Therefore, by having a living will drawn up and placed in the hands of your loved ones, you will have much more control over who makes your medical decisions, and the type of decisions that you want them to make for you.
End-of-Life Care Options
When doctors determine that an individual has a life expectancy of six months or less, hospice care is often considered. This type of care focuses not on curing the patient, but rather on helping them to reduce pain and to enjoy their final days as much as possible surrounded by their loved ones.
Depending on the person’s condition, hospice care can be provided in various facilities or even in the patient’s own home. The cost of hospice care is often paid for by individual health insurance.
If an individual is age 65 or over and enrolled in Medicare, Part A will usually pick up all of the costs of hospice care and inpatient respite care (except for prescription medications).
Pre-Planning Funeral Arrangements
Many people today prefer to pre-purchase a burial plot, and even to pre-pay for their funeral arrangements. In some instances, the cost of a funeral (including a burial a plot, headstone, and a memorial service) can exceed $10,000. By pre-paying, it may be less costly and less of a burden for loved ones to deal with at an already difficult time. This can also help to ensure that your specific wishes will be carried out.
Distributing Your Assets
It is also important to consider how you want your assets to be distributed. Several items need to be checked in order to ensure that they are up-to-date, including the following:
• Will – Make sure that your will and your beneficiary designations are up-to-date. If you do not have a will, the state will typically disburse your assets through probate. In Texas, if you die
without a will, what your spouse gets will depend in part on how you each owned your property—either as separate property or community property. Typically, community property is considered to be property that you acquired while you were married, and separate property is that which you obtained prior to marriage. However, there are some exceptions. These include gifts and inheritances that were given to one spouse as separate property—even if the inheritance was obtained during the time of the marriage. (Source: Nolo http://www.nolo.com/legal-encyclopedia/intestate-succession-texas.html)
• Life Insurance – Make note of any life insurance policies that you have, along with the contact information for the insurance carrier(s). An original policy will be helpful for your beneficiary to claim the benefits. This includes both individual- and group-owned policies. The life insurance company will also typically require a death certificate and proper identification in order for the beneficiary to claim benefits, along with a marriage license if the beneficiary is a spouse.
• Property – Make a list of any property that you own, such as your home, rental property, vacation property, etc., and the location of their deeds and/or mortgage statements.
• Estate Information – Make a list of contact information for your executor, attorney, accountant, and financial advisor. This will make it easier when the time comes so that these people can get in touch with one another if necessary.
• Pet Care – While most people take steps to ensure the financial well-being of children and other loved ones, there may be four-legged family members that will also require care upon your passing. If this is the case, consider leaving an allowance to those individuals who will take good care of your pet(s) going forward. One way to do so is to set up a pet trust. A pet trust allows you to leave money that can be used for the care of your pet by placing someone in charge of managing and spending the funds and following a set of written instructions that you provide.
While making all of these preparations may be difficult, it will provide your loved ones with invaluable information that can help them to move forward during an already emotional time.
For additional information about these and other ways that you can help prepare for end-of-life needs, it is best to work closely with your financial professional who can help ensure that you’ve covered all of the necessary bases.
Personal finance-related questions may be emailed to [email protected]
Grace S. Yung, CFP, is a certified financial planner practitioner with experience in helping domestic partners plan their finances since 1994. She is a principal at Midtown Financial LLC in Houston and was recognized as a “Five-Star Wealth Manager” in the 2014 September issue of Texas Monthly.