Few experiences are more devastating than when a loved one, maybe a mother or father, has an unexpected illness or other hospital emergency. You are going about your daily life, managing the busy-ness of it all when suddenly your world is rocked, and things are put into perspective. We all go through this at some time. It is a sad reality of life.
We get to the hospital to find our loved one in a bed with monitors everywhere. We just want to be near our family and say a prayer. Not a top priority is how to handle the assets of our mother our father in that situation. The time will come up though. As a financial planning resource, we want to ensure everything is squared-away with your family’s financial accounts so there is no added stress.
Luckily there are steps we can take today, when things are calm, to prevent anxiety when the stormy times inevitably occur. Step one is getting your financial house in order. While mom and dad are healthy, put them to work! Try to get them to realize that it is their responsibility to ensure their wishes are planned out in writing via documents such as a living will & testament, health care proxy, and power of attorney form.
Beneficiary designation forms are easy-peasy to complete and those accounts (like IRAs, 401(k)s, and life insurance) bypass the will which is a good thing. Checking and savings accounts often have a Transfer on Death (TOD) feature which works very similarly to an IRA’s beneficiary designation form and should be completed as well. So that’s the homework for ma & pa (or if YOU are a ma or pa – there you go!). Take this as a friendly reminder that it is time to update your beneficiary forms for all your accounts. You are never too young or old to get your plans in order.
What if you or your family member who ends up in the hospital does not have their financial house in order? The scene can quickly turn from bereavement to strife among family members. All it takes is one disgruntled person to turn the situation ugly. Maybe you have someone coming to mind (hopefully not!). This is why documents like a living will or medical directive form are so important. These documents outline the wishes for continuing medical treatment when the health situation is very serious.
Other important documents to have in the event of sickness include a Letter of Instruction. The LOI contains an outline of what to do in the event you or a loved one cannot make decisions on your or his/her own. The LOI also has important contact information of legal and financial advisors as well as a catalog of assets and how to access them. Think of it as a narrative or context of final wishes from a very practical perspective.
The Health Care Proxy document identifies the person who will make decisions when you are unable to communicate your wishes. The last thing you want is to try to sign off on this legal paperwork in the hospital room. Do it now.
Power of Attorney forms are something perhaps you may be already familiar with. The POA grants authority for someone else to act on behalf of another individual. A Durable POA goes on longer than a POA – it extends potentially past the time of death (depending on the terms set forth in the document).
A final important document to help ease the burden of sickness or death of you or a close family member is the Health Insurance Portability and Accountability Act (HIPAA) Release. It’s a mouthful but important when it comes to releasing your medical records to doctors. The release form outlines the medical staff who can visit you and who can access your medical history.
Those are just some of the documents that will help organize an individual’s financial life in the event of a health-related tragedy. Getting your plans in order now will save time, money and stress later on.
Here’s the point
- Emergency hospitalizations are often an inevitable part of life.
- While the events are unpredictable, you can plan for it now when life is relatively at ease
- There are several key documents to complete to make the help the situation later on
Action items
- Sit down with TFC to review what documents you need to complete for yourself or perhaps for an aging parent
- Talk to your family about what to do in the event of hospitalizations. It’s not a fun topic, but getting everyone involved is very helpful.
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This was Blog Post # 4 in our Estate Planning Series. Make sure you circle back to check out all the posts in this series if you have not yet had the chance to read them!
Estate Planning Series Post #1: What is Estate Planning?
Estate Planning Series Post #2: Establishing an Estate Plan: What is the process?
Estate Planning Series Post # 3: What Age Should You Start to Consider Estate Planning?
Estate Planning Series Post # 4: What is the Difference Between a Will & a Trust?
Featured Image: Photo by Bruno Aguirre on Unsplash