Estate planning for the terminally ill
Financial planning for the terminally ill can help bring peace of mind after a medical diagnosis.
The diagnosis of a terminal illness is an emotional event, and while money might not be the first thing that comes to mind in such a situation, estate planning is important. Here are five considerations to keep in mind for terminally ill individuals and their families.
1. Make a will
A will is a legal document specifying who will receive your assets and who will act as guardian for any minor children. People who pass away without a will are said to have died “intestate,” which means state law will determine who receives their assets. The rules of intestacy vary by state. Your wishes can be respected if your will is in order.
2. Make sure your will is up to date
If you already have a will, you can add an addition or supplement, typically called a codicil, which allows you to make changes without having to rewrite your entire will.
3. Prepare a living will and a health care power of attorney
A living will is a legal document that outlines your health care wishes in the event you become incapacitated. You may not be able to anticipate every possible health care situation, so it’s important to also create a health care power of attorney. A health care power of attorney is a legal document giving power to another person to make health care decisions on your behalf when you become unable to do so for yourself.
4. Consider final expense insurance
Final expense insurance (also called burial insurance or funeral insurance) can help cover funeral costs. Terminally ill individuals who purchase a final expense insurance policy can help ease the burden on loved ones during an especially emotional and stressful time.
5. Put your documents in order
Consider keeping your emergency and financial information in one safe place, so it is easier for someone else to help manage your affairs once you are no longer capable. Consider including any of the following that apply:
- Funeral plans
- Insurance policies
- Wills and trusts
- Pension and retirement account documents
- Bank documents
- Investment information
Many of these estate planning steps can be taken long before a terminal diagnosis makes them more pressing. Likewise, other financial planning tools, such as long-term care insurance, are more viable options before a diagnosis is made.