Now is the Time to Get Your Ducks in a Row
Financial planning is always important, but becomes crucial during times of transition. The most significant transition of all deals with a person’s transition at the end of life.
In recent years the health care industry has improved resources and awareness surrounding a person’s end of life care. Most of us have come to know the term Hospice Care – which is health care designed to give supportive care to people in the final phase of a terminal illness and focus on comfort and quality of life, rather than cure. The goal is to enable patients to be comfortable and free of pain, so that they live each day as fully as possible.
In the same way that health care transitions in the final months of life, so too does financial planning. If you or a loved one is going through this phase of life, here are a few things to consider:
- If you haven’t reviewed them lately, take a fresh look at estate planning documents to make sure they still meet your wishes. Make an appointment with your estate planning attorney to determine if any updates are recommended.
- If the estate is taxable, discuss if gifting makes sense to lower estate tax.
- Review the beneficiary designations for all retirement accounts, annuities, and life insurance policies to ensure they coordinate with your estate planning documents. Bring copies of these designations to the meeting with your estate planning attorney.
- Plan specific bequests of personal property.
- Make sure your agents are familiar with your financesand where they can access important papers. Consolidate accounts as appropriate so that transition is easier. Have a list of usernames and passwords for all of your online accounts, including photos and music accounts. Have a joint meeting with your trusted advisors, executors and Powers of Attorney so they can more easily communicate in the days ahead.
- Create an inventory of life insurance policies and make sure to share these with agents and executors.
- If you will need help with financial accounts during this time, work with financial institutions so that your agents can act on your behalf. Many times financial institutions will require more than a Durable Power of Attorney.
- Work with a financial adviser or tax preparer to determine if a Roth conversion make sense. High health care expenses will lower taxable income and make Roth conversions less expensive. A Roth conversion may also make sense if the person inheriting the IRA is in a higher tax bracket than the current owner.
- If you are in a Community Property state (like Wisconsin) hold off on selling highly appreciated assists, as those assets will receive a step-up in basis after death.
- If filing as a single tax payer, use up carry-forward losses, which otherwise will be lost at death.
- If you are married and if there are pensions that have not started, determine if they should be started so that you can elect the 100% joint and survivor option (in some cases, if a pension is not yet started, it will default to 50% to survivor option).
- Review other employee benefits and look for opportunities to increase survivor benefits.
- Consider creating a document or video for your family describing what is important to you.
- Don’t go it alone. Work with your financial adviser (or find one) who can help you through this task list.
Many of these items can be taken care of now, when everyone is feeling good (and of sound mind), before reaching the final phase of life. A good adviser will act as both a coach and an advocate, guiding and supporting you through the process. Handling these issues before you are forced to worry about them can allow you to spend final days visiting your loved one, reminiscing, filling them with love, and saying your goodbyes. As you enter your final days, know that your legacy lives on in the love that you have shared.