Many people believe estate planning is mostly about money, especially taxes. A good estate plan is much more. Estate planning and retirement planning sometimes require us to consider questions that make us uncomfortable. But if we don’t consider those questions now, there’s a high probability our future well-being and that of our family will be diminished.
An estate plan isn’t all about what happens after you’re gone. A good part of the plan ensures personal and financial security for the rest of your years. The plan should cover how you’ll be taken care of if you need help. Key elements of the plan should be where you’ll be taken care of, who will provide the care and how the care will be funded. A health care crisis is one of the realities of aging for most families. If you haven’t planned what will happen in such a crisis, the financial and emotional costs of the crisis will be much higher than they could have been. With the baby boomers all scheduled to be age 65 or older by 2030, such planning is critical for them.
The first steps are those we discussed in past issues and bear repeating. Be sure your medical insurance covers a range of situations. Some people develop multiple chronic conditions that require regular medication and treatment. Many people have a serious illness or injury at some point, caused by either an accident or disease. Usually these health issues can’t be predicted, but you can prepare for all of them.
Recognize that Medicare doesn’t cover everything. If you have original Medicare, you also should have Medicare supplemental insurance (also known as Medigap), plus Part D prescription drug coverage.
An alternative is to enroll in a Medicare Advantage plan instead of original Medicare. In the next few issues we’ll have more details on how to make these decisions during the upcoming 2019 Medicare open enrollment period. You also want a plan to pay for any long-term care you might need. Traditional long-term care policies generally have fallen out of favor because of rising premiums, reduced coverage and fewer insurers offering the policies. Attractive alternatives are annuities and permanent life insurance that have long-term care riders or coverage attached. We’ve discussed these options many times in the past, most recently in the July 2019 issue.
Of course, you need the key estate planning documents: powers of attorney and an advance medical directive, also known as a health care proxy. Before having these documents drafted, however, you should have discussions with key family members.
You want to choose carefully who will act and make decisions when you might not be able to do so. Not all family members are both able and willing to take on these roles. Some members are better suited than others.
Often, naming more than one person to act jointly is the best route, provided they can work together and live close enough to each other and to you that logistics aren’t a problem. Establishing a succession process for the powers of attorney and advance medical directive also is important. Who will act when one or more of your designated agents is unable to do it?
Make sure your medical professionals have copies of the documents and the contact information for your agents. It is important that one person be designated as the primary contact in case of an emergency and that there be one or two others designated in case the primary contact isn’t available right away. The documents won’t be worth much if you don’t take these steps. It is important to consider establishing a health care advocate.
Most families don’t have someone who knows the health care system, insurance processes and how to make a medical decision in difficult circumstances. When requested by the family, the advocate can take the lead in gathering the information needed to make decisions and to navigate the process to allow the best care to be obtained and that it is paid for by someone.
The advocate, who often is a professional, can be valuable help to family members and your agents. In some cases, the primary care physician and the physician’s staff can perform much of this role. If you’re in a Medicare Advantage plan, there might be someone appointed by the plan to help coordinate care and assist with the process.
Otherwise, you should consider the ability of your family members to deal with the medical care system and make informed decisions. If your family doesn’t have the skill set, search for someone to help perform the role of an advocate when one is needed. Another good step is to be sure the key decision makers know the basic details of your medical history and they can access your medical records. The best action probably is to have your medical records digitized and put in a form that allows your decision makers to access them.
Ideally, key people are able to access the records remotely, such as by having them in a secure account that can be accessed on the internet through passwords or other security features. Some medical plans provide online access to digital versions of your medical history. The best way to develop these plans is to remember medical emergencies and crises that happened to neighbors, family members and friends in the past.
Consider what would happen to you and your spouse in such situations. Who would be contacted? Who is authorized to make or help with decisions?
Who should know about your doctors, insurance coverage and other details? Medical emergencies, especially medical crises, can wreak havoc on families both emotionally and financially. A good estate plan takes action to minimize the damage. Of course, once the system is in place, you need to keep it up to date. An out-of-date plan is only a little better than no plan.