By: Martin M. Shenkman, JD, and Nicholas G. LaRocca  Vice President, Health Care Delivery and Policy Research, of the National Multiple Sclerosis Society

 

Disclaimer and Caveat

lNothing in these slides or any accompanying presentation is to be considered tax, legal, investment or other professional advice. The information is merely provided for educational purposes and no action should be taken without the individual consulting his or her own tax, estate, legal, financial, investment, insurance and other advisors

lThe National Multiple Sclerosis Society, and any hosts, sponsors, moderator, panelists or others associated with this program are NOT responsible for its content or accuracy

 

Introduction: What is estate and financial planning?

lThe process of providing peace of mind for you, and your loved ones (however you define the term)

lIt should address both the issues you may face while you’re alive, and those that might occur after your death, including the variables and uncertainties associated with having a chronic illness.

lIt is more about planning for life  rather than death

lIt is an integrated plan that coordinates your investments, insurance, emergency and disability planning, retirement and other needs

lDefine what “estate planning” means to you

 

 

What is estate and financial planning if you are living with Multiple Sclerosis?

lSame process as for everyone just tailored to fit your special circumstances – your experience with MS

lEven more so it must be about planning for life rather than death

lAn integrated plan that coordinates your investments, insurance, emergency and disability planning, retirement and other needs – but each component must be modified as required

lDefine what “estate planning” means to you in light of your, or your loved ones, living with the challenges of MS

Examples: Planning if you are living with Multiple Sclerosis

lPowers of Attorney – everyone names an agent to handle financial and legal matters, but your document might need to differ:

–Standard forms might not suffice – e.g. what about compensation if the agent might handle all your finances for years

–Perhaps a special limited power (handle banking, don’t sell my house) effective immediately is a better way to protect you from an exacerbation or sudden hospitalization – most people don’t consider this but it might be best

–An immediate single agent “limited power” contrasted with a springing or co-agent “general power” (may permit the sale of your house, change of your beneficiary designations and more) may retain greater control but help address challenges

Estate and Financial Planning For Life: In 12 Steps

Introduction to the 12 Steps

lEvery person is unique – it has to be your plan and address your challenges

lReflect your personal wishes and circumstances

lCreate a strong foundation of documents, steps and a plan, to build upon

lIt’s a process, not signing a document

lBegin the process

lBreak the process into manageable steps

lStick with it

lDo as many steps at a time as you can handle properly and comfortably – staying committed to the process is more important than how many steps you tackle at once

lMake an Action Plan – We’ll show you how … Step by Step

Before you Begin

lGather information

lSelect advisors

–Attorney

–CPA

–Investment advisor or financial planner

–Insurance consultant

lStart thinking about the process

 

Action Step: 12 Steps Begin by Informing Your Advisors

Your Advisors Need to Understand: Chronic Illness is a Common Challenge

lAt least 400,000 Americans are living with Multiple Sclerosis, therefore planning for MS and, for that matter, any chronic illness is something every attorney, CPA, etc. should understand in order to help their clients – it should not be a favor for you

l120 million Americans are living with chronic illness or disability

lBy 2020, about 157 million Americans will be affected by chronic illnesses

lThe lives of 26% of those ages 65-74 have been significantly impacted by chronic illness

l50% of those age 85 and older have had some cognitive impairment

Example: What to Explain if you are living with MS

–My symptoms can be physical, emotional, and/or cognitive – because of the tremendous variability in MS symptoms explain yours, for instance:

–Visual symptoms are one component of my challenges

–Fatigue is a significant issue for me. It’s serious and is often one of the key reasons people with multiple sclerosis leave the work force. It is not analogous to how you feel when you had a late night. A cup of coffee won’t help. It feels like I’m drowning in quicksand and I can’t function

–Fatigue and other symptoms fluctuate during the day – please book appointments during my better times and be understanding if I need to cut a meeting short

–Explain exacerbations, what they mean and the impact they may have

 

Step #1: Organize: Organize Emergency, Financial, Information and Advisors Information

lPasswords and Security Codes

lExisting estate planning documents

lLegal documents (contracts)

lIncome and expense info

lAny budget or financial plan

lAdvisor contact info (name, firm

Phone number, email, etc.)

 

This is the planning you should undertake to make it easier for you to deal with legal issues and finances as your MS progresses

 

Step 1: Organize Emergency, Financial, Information and Advisors Information

lMedical information (neurologist and other physician contact info; current health status, etc.)

lEmergency contact info (names, relationships, phone numbers, email addresses)

lSpecific financial information (account numbers, contact person, address, phone number)

 

Investment and Financial Information is Critical to Organize

lTitle (ownership) of Accounts:

–Revocable trust – tool to manage assets, address cognitive and fatigue issues

–Joint accounts – exercise caution

lAccount Management

–Duplicate statements – no cost protective tool

–Consolidation and simplification – retain control longer

–Access to safe deposit box

lAutomation

–Organizing records

–On line payments – this can relieve you of a lot of paperwork

–Set up on computer so can enlarge visually/auto-read – optic neuritis

–Automatic deposits – reduce paperwork and chance for error

 

Financial Planning is Essential

lBudget

–Core of your financial plan

–Foundation of insurance decisions

–Prerequisite to gift and other planning

lInvestment allocation

–Time horizon (disease course)

–Risk level

–Coordination of all accounts

lAnalogies to help you plan

–Rocket ship – if you’re off 1” now you could miss by 100s of miles

–Sailboat – can’t sail into the wind – tack back and forth – adjust every year

–60 Second financial plan – can you live on 4% x your savings plus other cash flow sources

 

Action Steps #1: Emergency Info

lType up a list on your computer so you can update it, email it, and back it up

lDisseminate the list to key people, ask for their help, and tell them what they might need to do to help and when

lEach professional advisor should have the list in their file

lOrganize the list by category (e.g., banking, religious advisor, professional advisors, family, neighbors)

lList info needed for emergency action (e.g., account number, policy number, etc.)

 

Action Steps #1: Financial Plan

lPrepare a budget

lConsider significant expenditures that might be required, e.g. making your home more accessible

lReview your investments

lCreate a financial plan

lImplement changes suggested by the plan

lUpdate, review and revise

 

Step #2: Power of Attorney: Designate a Person to Handle Financial and Legal Issues

lGeneral vs. Limited

lAgent (Successors)

lCompensation

lBegin date (Trigger)

lPowers (Authority)

lDurable (Disability)

Step 2: Tailoring Your Power to Address Multiple Sclerosis

lYour challenges, especially cognitive issues affect when effective and scope of powers granted your agent

lConsider naming co-agents to build in safeguards and to share work

lPlan for exacerbations (unless you have primary progressive MS which tends not to bring exacerbations), organize finances to facilitate management during a short term disability -- consider limited durable power of attorney coupled with a broad general power of attorney if you become permanently disabled at a future date

lConsider special provisions – example, don’t sell my home, modify my home to make it accessible even if the cost won’t be recoverable when the home is sold, etc.

 

Action Steps: Power of Attorney

lChoose a trusted agent and several successors

lHire a lawyer to draft powers tailored to your disease course and financial situation

lDiscuss modifications to standard forms:

–Limited power for short term hospitalizations and broad power for permanent disability

–Compensation to agent

–Definition of disability – how/when begins/ends (e.g., exacerbation)

lSign several originals, distribute them to the appropriate people and instruct them as to what to do in an emergency

lOrganize and simplify assets so an agent can act easily

lCreate a monitor relationship

 

Step #3: Health Proxy: Designate a Person to Make Health Care Decisions

lAgent (successors)

lPowers (medical decisions)

lSignature (State law)

lMove (state; facility)

lReligious Concerns

 

Step 3: Tailoring Your Health Proxy to Address Multiple Sclerosis

lDoes your agent have sufficient knowledge of Multiple Sclerosis and the decisions that might be required

lIs your agent geographically close enough to respond to a sudden emergency

lDo your medical wishes contradict religious beliefs of your agent or family that you need to address

lAre there specific powers or rights which you do/don’t want your agent to have

 

Action Steps #2: Health Care Proxy

lChoose an agent and several successors who understand your health situation/wishes

lHire a lawyer to draft a health proxy that accomplishes your personal goals

lDetermine specific powers to give/not give agent

lSign several originals, distribute them, be sure a copy is included in your medical chart

lDiscuss your decisions with family, friends and most importantly, your agents

Step #4: Living Will: Communicating Your Health Care Wishes

lStatement of health care wishes to guide/direct your health care agent

lAddress broad array of decisions:

–Lifestyle (nursing facility or home)

–Health (experimental treatments)

–End of life (heroic measures)

–Other (funeral, burial, etc.)

 

Step 4: Tailor Your Living Will to address your Particular MS Challenges

lWhat some call “heroic” may be essential to you

lDifferentiate level of treatments at different stages of your disease course

lCarefully modify quality of life decisions to reflect MS issues

lDirect home modifications

lWith multiple sclerosis you may wish to mandate donation of brain and CNS tissues to further MS research

lIf you experience pain you may wish to specific maximum pain relief even if it shortens life

 

Action Steps #4: Living Will

lReview and consider personal wishes that should be reflected, e.g. religious observances, care instructions

lHire a lawyer to draft a living will that communicates your personal decisions

lDiscuss modifications to forms: Religious restrictions; Organ donations – e.g., CNS to foster MS research; Experimental or non-traditional treatments; Pain relief perhaps regardless of the impact on life expectancy

lSign several originals, distribute them, be sure one is included in your medical chart

lDiscuss your decisions with family and agents

 

Step #5: Protect Your Child Protect Your Minor Child With an Emergency Child Medical Form

lDisclose child’s care information

lIndicate medical data

lDisclose insurance coverage

 

Step 5: Tailoring Planning for your Children to Address MS

lNaming a guardian is all most people do but your child may need formal care arrangements if you are alive but disabled and a guardian appointment under a will won’t accomplish this

lPower of attorney should address expenditures for children not just you

lYour financial resources may be limited and disability and life insurance may not be available or limited to what you had pre-diagnosis – financial planning is vital

 

Action Steps #5: Protecting Children

lReview all aspects of protecting your children with your advisors

lName trustees under a revocable trust while you are alive and disabled and direct payments for care of children, and trustees and guardians under your will, to provide care

lFinancial planning – Set up 529 plans, Review resources

lPrepare and sign child emergency medical form

lWrite a personal letter of instruction

lInclude directions in your power of attorney addressing children

 

Step #6: Sign a Will

lName executors and guardians

lDistribute assets

lTax planning (bypass and martial trusts)

lTrusts for heirs

lPlan flexibly – laws and life change

lConsider caps on amounts bequeathed to different trusts

 

Step 6: Request that Others Tailor Their Wills to Address MS

lDoes it make sense for loved ones to name you executor or guardian? If not suggest they revise their documents

lIf you are named a beneficiary suggest that your possible benefactor name a trust designed to protect you, rather than name you outright

 

Action Steps #6: Sign a Will

lWills 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

lInclude personal letters of instruction

lConsider trusts for minor children

lDonate to charities that have helped you – even modest donations send an important “thank you”

lOpt for flexibility in case you cannot update the document to reflect future changes

lSuggest others establish trusts for you in their wills

 

Step #7: Create a Revocable Living Trust

lEstablish a personalized (not boilerplate) living trust

lTransfer assets to a trust during your lifetime

lAvoid probate and intestacy

lContains dispositive provisions of your will

lManage assets during disability or illness – unlike a will addresses planning while you are alive and well, or disabled

 

 

Step 7: Tailor Your Revocable Living Trust to Address Multiple Sclerosis

lDepending on your current status (e.g., cognitive impairment) you can serve as sole initial trustee, but serving as initial co-trustee may be preferable

lTailor clauses to retain control while protecting you

lTrustee removal clauses should consider your challenges now and likely disease course – e.g. you can’t be removed unless disabled for 30 days to avoid your removal for a short term exacerbation

lInclude details on lifestyle you wish maintained

lAddress care for children and authorize trustee to distribute for them

 

Action Steps #7: Revocable Living Trust

lSee comments for “Wills” above and coordinate

lBoilerplate Trusts designed to avoid probate won’t accomplish your goals – be wary of the trust mills

lFocus of document should be protecting you (and your loved ones) and communicating your wishes as your disease progresses

lTailor trustee replacement, disability and other provisions to the nuances of your anticipated disease course

lFund the trust (transfer assets into the trust name) other than retirement assets or professional practices

 

Step #8: Insurance: Be Sure Your Insurance Coverage is in Order

lProperty and casualty insurance

lBusiness coverage

lLong term care coverage

lDisability income

lLife insurance

lLiability Coverage

 

Step 8: Tailor/Plan Your Insurance to Address MS

lDoes homeowner’s insurance cover home health aids

lIf you have disability coverage are you collecting; are your payments correct

lIf you have life insurance can you borrow against it, convert it to permanent coverage if it is term, can you benefit from a viatical settlement

lDoes your partner/spouse have long term care coverage – consider the impact of your MS on them

 

Action Steps #8: Insurance Coverage

lDon’t make assumptions – MS doesn’t mean you don’t have insurance planning options

lHave all your insurance coverage reviewed at least every 2 years

lEvaluate all options – Can you convert term life insurance to a permanent policy? Can you sell life insurance in the secondary market to free up cash

lStandard homeowners coverage may not suffice – do you need a rider for home health workers/home improvements

 

Step #9: File Beneficiary Designations and Confirm Title to Accounts

lStandard provisions are not always adequate

lCoordinate with Revocable Trust

lWhat powers should agent have

lGive copies to your advisors

lUpdate when banks merge

lRevise when tax laws change

 

Step 9: Request Loved Ones Tailor/Plan Their Beneficiary Designations to Address Your Illness

lShould a trust for your benefit be named instead of you as beneficiary

lShould someone else be named beneficiary instead

 

Action Steps #9: Beneficiary Designations

lConsider all beneficiary designations: life insurance, pensions, IRAs, brokerage accounts and more

lBe cautious about signing beneficiary designations for non-retirement accounts

lObtain copies of the forms you filed and blank forms to facilitate revision

lHave family members who name you as beneficiary instead consider a trust for you

 

Step #10: Give Back

lDemonstrate important values to heirs

lThank those that have helped

lInspire others to give

lGive however you can

 

Action Steps #10: To Give Back

lMake a donation (time, cash, insurance, even stuff)

lInclude a bequest in your will – even small bequests can make a big statement

lWrite a heartfelt letter of instruction to heirs and thanks to those that have helped

lInspire others to give that have the wherewithal to do so

 

Step #11: Communicate

lEducate and inform your fiduciaries

lPreparation of beneficiaries

Action Steps #11: Communicate

lExplain your finances, family, care, disease, and so forth to your advisors – tell all so they can help properly

lDiscuss with family, friends or others involved in your life what help you might need

lCan those you expect to rely on really help – do you Have alternatives

lExpress your wishes in face to face meetings and then confirm key points in writing

lConsider a consultation/evaluation by a licensed independent care manager

 

Step #12: Review – It’s a Process

lNothing remains static

–Tax and property laws

–Family situations

–Assets and net worth

–Health changes

–New medications

 

Estate and Financial Planning For Life: In 12 Steps
Get Started Now

For more information

lSee the National Multiple Sclerosis Society’s website: www.nationalmssociety.org

lSee www.rv4thecause.org or www.chronicillnessplanning.org