After being diagnosed with a terminal illness, financial planning may be the last thing that you want to focus on. But, it’s an important step to take to make your intentions for your finances clear, spare your family members from uncertainty, reduce or eliminate the amount of debt you pass on, and give yourself some peace of mind about your family’s future. The following tips can help you start navigating your family’s financial future.
1. Start with Power of Attorney
To ensure that your financial plans will be carried out even if you are unable to make financial decisions yourself, assign power of attorney to the person who is the most qualified to fairly handle your end of life finances. This is often a spouse, adult child, or other close relative.
2. Organize Your Assets
Next, sit down and make a list of your assets, including personal property, bank accounts, safe deposit boxes, investments, stocks and bonds, real estate, retirement accounts, and life insurance plans. This list should be saved alongside other key pieces of information: copies of past three years of income tax returns, bank and investment account statements, passwords to any relevant accounts, titles and leases to vehicles, deeds to any real estate properties, and copies of all life insurance policies and other employee benefit plans.
If you need guidance or don’t know where to start, there are online estate planning resources such as Everplans, which provides guides to help you create a plan that contains everything your beneficiaries will need.
3. Your Will and Beneficiaries
After identifying the extent of your assets, identify who will inherit each one and draft or update your last will and testament. Ensure that the beneficiaries on your insurance policies and retirement plans are similarly up to date. Consult a financial and legal checklist to make sure everything is addressed.
4. Help Offset Costs
To minimize the financial burden that your family members will face, make a list of your debts: loans, credit cards, leased cars, mortgages, monthly bills, estimated tax payments, and outstanding medical bills. Mark out how you’re going to pay them – it may even be possible to pay them off in one lump sum. You can also plan for burial costs and even seek burial insurance, which will cover everything related to the funeral.
If your medical costs outweigh your liquid assets, there are numerous options for seeking additional funds. You can withdraw from your 401k early (a terminal illness may be grounds to waive the early withdrawal penalty) or review government resources. Medicare and Medicaid may be able to pay for hospice care, and Social Security may pay disability income if your illness makes you unable to work.
Another option is to access funds from your life insurance policy. With Fifth Season Financial’s Funds for Living Program, you can maintain ownership of your life insurance policy, receive an advance of its face value (death benefit), and preserve funds for your beneficiaries to receive in the future. If you think the Funds For Living Program can help you as you begin your end of life financial planning, contact Fifth Season Financial today.
Disclaimer: Fifth Season Financial is not a financial advisor or consultant and recommends that you speak to an advisor or expert before making any significant financial decisions.