Longevity Planning: Covering All The Bases
(Image courtesy of Bedel Financial Consulting Inc.)
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowYou’ve executed a last will and testament and created a plan for divvying up your assets when you pass. You’re covered, right? Not completely! What happens if calamity strikes and your final years aren’t so vibrant? Do you have a plan for that?
Longevity planning considers your financial security as well your physical and mental well-being as you age. Saving for a comfortable retirement is very important, but don’t overlook the need to plan for a change in your health.
It’s difficult to think about aging and the potential deterioration of your mind, body, and spirit – much less talk about it. But planning for these conditions while you’re healthy is the ideal time. Both you and your family may go into denial if you wait until medical-related issues creep up on you. At that point, the plan may never be completed.
The Consequences of Inaction
If you haven’t legally executed a power of attorney or health care representative document, the courts will appoint a guardian for you. This appointed guardian would have the ability to make financial and non-financial decisions on your behalf. In Indiana the statutory preference is to appoint a family member. If you are married and/or have children, your spouse or adult child would be appointed to act. If you aren’t married and don’t have children, the courts will likely look to another family member, qualified individual, or an institution.
You may have a great relationship with your nephew, but the courts could appoint your niece who doesn’t know – or care – what’s important to you. And what happens if you’re unmarried, but have a "significant other?" The courts will likely bypass him or her in favor of a family member.
No one knows what the future holds. Acting now is key.
What Legal Documents Will You Need?
- Incapacity documents allow others to act on your behalf if you are unable to do so yourself. They include:
- Power of attorney: Indicates the individual you authorize to conduct legal or financial matters on your behalf. Several types of POAs exist – durable, limited, springing, and general. Each provides different guidelines for your POA. Investigate each to see which works best for your situation.
- Health care representative: (aka healthcare power of attorney, agent, proxy or surrogate) Names the individual who will make medical decisions on your behalf.
- Living will: Indicates your wishes regarding health care, including life support systems, if you become terminally ill.
Only 20 percent of Americans have executed these documents. Consider this: 84 percent of Medicare patients prefer not to take life-prolonging drugs if their quality of life would be compromised. Without a directive, it’s likely they would be given these drugs, causing them to live longer, with potentially a lower quality of life, and incurring unnecessary medical expenses.
"The Five Wishes"
This advanced directive was created by the non-profit organization, Aging with Dignity. It’s legal in 42 states, but Indiana isn’t one of them. It’s still beneficial to create this document (or something similar) to complement your incapacity documents. These additional steps will provide a guideline for your loved ones regarding your more personal preferences. The five wishes encompass:
- Who do I want to make decisions regarding my care if I can’t? (equivalent to health care representative)
- What kind of medical treatment do I prefer if I am unable to communicate it to others? (aka living will)
- How comfortable do I want to be? (living arrangements, personal grooming, pain management)
- How do I want people to treat me? (talk with me daily, play my favorite music, pray at my bedside)
- What do I want my loved ones to know? (passing on a family legacy, extending forgiveness, how you wish to be remembered, preferred funeral/burial arrangements)
Conduct a Meeting
It’s beneficial to share your end-of-life wishes with your family and others who are included in your plan by inviting them to a group meeting. It would be appropriate to also include your estate attorney and financial advisor.
The conversation could be difficult as well as emotional, but it allows everyone involved to learn their role in your plan, including an understanding of your wishes. It also gives your loved ones the opportunity to meet your advisors prior to an incapacitating health issue, making communication more comfortable down the road.
Summary
It’s important to have a plan for crossing “home plate.” But make sure you also have a strategy in place for dealing with obstacles along the way. Execute your incapacity documents, write down additional wishes regarding your care and end-of life-needs, and share these wishes and appointed responsibilities with those involved. Then enjoy the days ahead knowing you’ve covered all your bases!
Kathy Hower, CFP, is a Senior Wealth Advisor at Bedel Financial Consulting, Inc., a wealth management firm located in Indianapolis. For more information, visit their website at BedelFinancial.com or email Kathy.