It hardly needs to be said that being diagnosed with a terminal illness is a highly emotional and unexpected life event. It can exact a physical and psychological toll, not just on you but on your family members and potential caregivers. It also raises a lot of questions and introduces some new wrinkles for your long-term financial plans. Of course, this includes your estate plans.
Once you receive a diagnosis and have a clearer understanding of the details and timeline of your terminal disease, it can both complicate and clarify your attempts to leave a financial legacy. In this post, we’ll look at some of the estate planning implications of a terminal diagnosis.
Dealing with the Present
The first question to ask yourself is, how will your diagnosis—and any related medical treatments or long-term care options—impact your existing assets and your income sources?
There’s a lot to unpack here; start with the following:
- Are you still working? And if so, will this diagnosis impact your ability to keep going to your job each day?
- Will you qualify for disability insurance, or any other disability benefits, like long-term care insurance?
- Will disability benefits and/or loss of income impact the tax status of your estate plan?
The big picture here is that a terminal diagnosis, along with medical care, can sometimes diminish the estate you leave to your heirs—and as such, it can upend your entire estate plan.
Changing the Plan
As you consider some of the implications of your diagnosis, it’s vital to remember why you have an estate plan in the first place. You’ll certainly have a lot to think about, in terms of your ongoing care needs, but trusts and estates really exist to help you leave a legacy for your heirs. You want to take care of them even after you’ve passed on.
The best approach here is to meet with your trust attorney to go over the specific documents you’ll need to ensure your estate plan is in proper order. Specifically, talk with your trust attorney about tax strategies; about the types of trust you need to augment your will; and about any assets you should sell/liquidate now, as opposed to passing them down to your heirs. All are important points to consider as you refine your estate plan and make it as effective as possible.
Preparing for the Future
Finally, remember that, with any illness, things can move faster than anticipated—and none of us know exactly how much time we have left on this earth.
As such, it’s good to make sure that your estate plan covers all the bases—such as a letter of instruction, which offers some supplemental information that can be added to your estate plan. This list might include passwords to your online accounts, digital banking information, and anything else you’d want you heirs to know.
And of course, it’s always important that your trusts and estates account for any end-of-life decisions that need to be made on your behalf. Powers of attorney and advanced healthcare directives are especially useful here.
Planning for All Contingencies
The point of having living trusts, wills, and other forms of estate planning is to prepare for all possible outcomes—and being diagnosed with a terminal condition can both clarify and also expedite those outcomes. As such, it may be necessary to revise your estate plans accordingly.
Whether you need to know how to start a living trust or simply need to conduct an annual review of your estate plan, our attorneys are here to help. Reach out to Singh Law Firm, a leader in estate planning in California, with any questions or needs you have related to estate planning.
