Estate and Financial Planning for People Living With Chronic Illness

1. Estate and Financial Planning for People Living With Chronic Illness October 6, 2010

2. Seminar Sponsors: Many CPAs find personal financial planning to be a natural extension of their services. The AICPA’s Personal Financial Planning Section is the premier provider of information, tools, advocacy and guidance for CPAs who specialize in providing estate, tax, retirement, risk management and investment planning advice to individuals and closely held entities. CPAs demonstrate their expertise in this subject matter with the Personal Financial Specialist (PFS) credential.

3. Seminar Sponsors: 360 Degrees of Financial Literacy is the volunteer effort of the CPA profession to educate Americans of all ages about managing their finances. The program takes a life stage approach to finances, from childhood to retirement, because what you need to know about your personal finances changes as you go through life. All information and resources on the program's website, www.360financialliteracy.org, are free and free of marketing and advertising.

4. Introduction • Martin M. Shenkman, CPA, MBA, PFS, AEP, JD • Karen Goodfriend, CPA/PFS, CFP®

5. Every person is unique – it has to be your plan and address your challenges Reflect your personal wishes and circumstances Create a strong foundation of documents, steps and a plan to build upon Introduction to the 12 Steps

6. Chronic illness affects every aspect of estate and related planning – don’t use “standard” documents or planning steps You must explain your circumstances to all of your advisers or they will not be able to guide you Larry’s story Those not touched by chronic illness don’t understand the symptoms (96% are invisible), disease course, variability between diseases and among those affected by a particular disease Action Step: 12 Steps Begin by Informing Your Advisors

7. Contact People (names, numbers) Financial Information (account information) Passwords and Security Codes Documents (Estate planning documents, legal documents, and more) Budget and Plan Step 1: Organize Emergency Information and Your Advisors

8. Type up a list on your computer so you can update it Disseminate the list to key people, ask for their help and tell them what they might need to do to help Each professional adviser should have the list in their file Action Steps: Emergency Info #1

9. Organize the list by category (e.g., banking, religious adviser, professional advisers, family, neighbors) Give only the key facts someone will need to act in an emergency (person name, institution, insurance, office/home and cell number, email, etc.) List info needed for emergency action (e.g., account number, policy number, etc.) Action Steps: Emergency Info #2

10. Agent (successors) Compensation Begin date (trigger) Powers (authority) Durability (disability) Step 2: Designate a Person to Handle Financial and Legal Issues Power of Attorney

11. Choose a trusted agent and several successors Hire a lawyer to draft powers that work for your disease course and financial situation Discuss modifications to standard forms: Limited power for short term hospitalizations and broad power for permanent disability) Compensation Definition of disability Sign several originals, distribute them, organize and simplify assets so an agent can act easily and safely Create a monitor relationship Action Steps: Power of Attorney

12. Agent (successors) Powers (religion) Signature (State law) Move (state; facility) Step 3: Designate a Person to Make Health Care Decisions and Access Medical Records Health Care Proxy Medical Power of Attorney

13. Choose an agent and several successors who understand your health situation and wishes Hire a lawyer to draft a health proxy that accomplishes your personal goals Sign several originals, distribute them, be sure one is included in your medical chart Discuss your decisions with family, friends and agents Action Steps: Health Care Proxy

14. Step 4: Communicating Your Health Care Wishes Prepare a Living Will

15. Review and consider personal wishes that should be reflected, e.g. religious observances, care instructions Hire a lawyer to draft a living will that communicates your personal decisions Discuss modifications to forms: Organ donations – e.g., CNS to foster MS research; Experimental or non-traditional treatment; Pain relief Sign several originals, distribute them, be sure one is included in your medical chart Discuss your decisions with family, friends and agents Action Steps: Living Will

16. Disclose child’s care information Step 5: Protect Your Minor Child With an Emergency Child Medical Form

17. Review all aspects of protecting your children with your advisers Trustees under a revocable trust while you are alive and disabled and trustees and guardians under your will to provide care Financial planning – 529 plans, resources Personal letter of instruction Directions in your power of attorney Action Steps: Protecting Children

18. Step 6: Sign a Will A legal document to designate where your assets should be distributed in the event of death

19. Wills are important but if you’re facing a progressive chronic illness it is only one step of many and perhaps not the most important step Include personal letters of instruction Consider trusts for minor children Include a donation to charities that have helped you – even modest donations send an important “thank you” Action Steps: Sign a Will

20. Establish a personalized (not boilerplate) living trust Transfer assets to a trust during your lifetime Probate and intestacy Manage assets during disability or illness Step 7: Create a Revocable Living Trust

21. See comments for “Wills” above and coordinate Boilerplate Trusts designed to avoid probate won’t accomplish your goals Focus of document should be protecting you and communicating your wishes as your disease progresses Tailor trustee replacement, disability and other provisions to the nuances of your anticipated disease course Action Steps: Revocable Living Trust

22. Property and casualty insurance Long term coverage Disability income replacement Life insurance Liability Step 8: Be Sure Your Insurance Coverage is in Order

23. Don’t make assumptions – get every insurance coverage reviewed at least every 2 years Evaluate options – Can you convert term life insurance to a permanent policy? Can you sell life insurance in the secondary market to free up cash? Standard may not work – do you need a rider for home health workers or home improvements? Action Steps: Insurance Coverage

24. Standard provisions are not always adequate Coordinate with Revocable Trust What powers should agent have Give copies to your advisers Update when banks merge Revise when tax laws change Step 9: File Beneficiary Designations and Confirm Title to Accounts

25. Consider all beneficiary designations: life insurance, pensions, IRAs, brokerage accounts and more Obtain copies of the forms you filed and blank forms to facilitate revision Have family members who name you as beneficiary consider a trust for you Action Steps: Beneficiary Designations

26. Demonstrate important values to heirs Thank those that have helped Inspire others to give Step 10: Give Back

27. Make a donation (cash, stuff, insurance) Include a bequest in your will – even small bequests can make a big statement Write a heartfelt letter of instruction to heirs and thanks to those that have helped Inspire others to give that have the wherewithal to do so Action Steps: To Give Back

28. Educate and inform your fiduciaries Preparation of beneficiaries Step 11: Communicate Having a real conversation is one of the most important steps you can take

29. Explain your finances, family, care, disease, and so forth to your advisers – tell all so they can help properly Discuss with family, friends or others involved in your life what help you might need Can those you expect to rely on really help? Have alternatives Express your wishes in face to face meetings and then confirm key points in writing Action Steps: Communicate

30. Nothing remains static Tax and property laws Family situations Assets and net worth Health Step 12: Review, Revisit, Revise

31. Make an Action Plan And Get Started

32. Protect yourself and your loved ones

33. Questions

34. More information • To locate a CPA/PFS: www.findaPFS.com • Consumer Resources at 360 Degrees of Financial Literacy: www.360financialliteracy.org • For CPAs interested in Financial Planning: www.aicpa.org/pfp • www.RV4TheCause.com