The Importance of Proper Planning for a Physically Ill Spouse or Loved OneSubmitted by Avenue Advisors, LLC. on November 16th, 2020
Proper financial planning should always be a focus, but for those who are dealing with a physically ill spouse or loved one, it is crucial. There are several financial considerations that you will need to ponder, and naturally, these will not work with every situation, and chatting with a professional financial planner is always the best place to start.
If your spouse or loved one is still in the workforce, you may be able to receive significant disability benefits that can help with cashflow. These benefits could include group disability benefits through the employer, workers compensation benefits if the illness was as a result of the industry or a job, and social security disability. Some of these benefits may be taxable, but they can certainly help if your loved one was the primary breadwinner in their home.
Utilizing a Life Insurance Policy
Depending on the policy, your loved one and their beneficiaries may be able to use some or part of the life insurance payout before the person passes. You will need to chat with the provider, but some life insurance policies have this benefit if the individual can pass specific tests. As well, you may be able to borrow against, withdraw the cash value or even exchange the policy for an annuity if money is tight.
For those who are dealing with illness, and especially for those who are dealing with a terminal illness, estate planning sessions are integral early on. A review of the estate with a financial planner can help answer any specific questions and work through the various processes and the tax implications. As well, you will want to go through the will and update it if necessary, as, without an updated will, all the person's possessions may end up in an unfavorable position in terms of taxes, and other issues such as estranged children or other family members contesting the will or estate could arise.
Filling the Gaps
Not everyone can or should go in a will, and thus it may be a good idea to create a letter of instruction for your executor or spouse to have in case things go south. This letter can have everything from who will take care of your beloved pet to your funeral arrangements, but the important part is that you will have your wishes taken care of in case you are unable to let the right people know about them. This is not a binding letter, but rather it is a roadmap to help your loved ones deal with some of the about your home or estate.
Finally, you may want to complete the other documents that will be needed at the end of life, such as power of attorney. You can either designate someone as a durable power of attorney or springing power of attorney, depending on your wishes. An estate lawyer is generally best to chat to before making any decisions, and they will be the ones to draft the power of attorney when the times comes.
Planning for a loved one who is dealing with a physical injury is not a simple process, but with a great financial advisor and estate lawyer, you will be well on your way to success. This is a difficult time but spending the time early in prognosis will ensure that you can focus on what is essential, and that is spending time with your loved one instead of dealing with bureaucracy during the most challenging times.
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