The “Power of Three” When a Diagnosis Happens: Medical, Financial, Legal

When David was 66, he and his wife, Kristin, met with their elder law attorney to plan for the second half of their lives. Two years later, David was diagnosed with cancer. In the course of treatment, he had a stroke and needed to be moved to a nursing home. Kristin called their attorney and they set into motion the plan they had in case something like this happened. She assumed the legal responsibility for David’s healthcare decisions based on his wishes, and she didn’t need to worry about losing her home or her assets. She could instead focus her entire attention on David.

When people receive a major medical diagnosis, such as cancer or dementia, or when disability occurs from accident or injury, they are often overwhelmed. Their attention is consumed by medical treatments and financial concerns, and they don’t often take into account an important third consideration: the legal ramifications of a serious diagnosis or disability.

If you were in David’s shoes, your spouse or children might need to make decisions for you regarding your medical treatment, taxes, insurance, finances, real estate, or other issues—but they don’t automatically have the authority to act on your behalf. While it is important to discuss your wishes with your family, if you don’t have the proper legal documents in place, your family may be forced to go to court to obtain the legal authority to carry out the wishes you have expressed. This is known as guardianship, and it can be an expensive and time-consuming process, one that can be avoided when the proper planning is done ahead of time.

So what kind of legal planning would you need to prepare for the future? Let’s look at some of the ways to protect yourself and your family.

Durable Power of Attorney. In a DPA, you select one or more people to act on your behalf if you become incapacitated and can’t make your own decisions. A DPA allows your agent(s) to deal with personal, financial, and real estate matters. It also authorizes an agent of your choice to make medical decisions on your behalf when you are unable to do so. It’s important that you discuss your wishes with your agent before any need arises so that he or she knows what you would want to do in the event of a medical crisis. You also need to consider a related document, a Health Care Directive, that clearly states your wishes around end of life medical decisions, so that there is no confusion over what you want to happen if the time comes that such decisions need to be made.

Long-term care planning. If you receive a diagnosis for an illness that may lead to incapacity, you will need to consider how this will affect you and your family. Will you be able to receive the care you need at home, or will you need care in an adult family home or a nursing home? Either option can be very expensive, and without legal planning, you may have to pay for some or all of these expenses yourself. The average cost of skilled nursing care per day in Washington is now $323.00, which is over $9,800.00 per month. Medicare will only provide for you on a short-term basis, and you need to meet certain asset and income qualifications to be eligible for Medicaid. Long-term care insurance may be available, but you must purchase it prior to being diagnosed, and good policies are now usually difficult to come by.

In addition to the legal planning needed during life, there is also planning to ensure your wishes are honored when you die.

A Last Will and Testament or a Trust. These documents direct your estate after you die. A trust has powerful, additional benefits in planning for asset management during your life if you become incapacitated. You should speak with an elder law attorney to determine which one is the best vehicle for carrying out your wishes. If you have a very large estate, you may also need some estate or income tax planning considered.

If you already have a will or trust in place, make sure that your plan is up-to-date and that your named agents and beneficiaries are current. If you drafted your will or trust when you had minor children, you may need to update it once they are of legal age.

Once you have your documents in place, let your trusted family or friends know about them and where they are located. You should also keep in a safe place a list of your financial accounts, insurance and tax information, any other important papers, and the names and contact information for your medical, financial, and legal professionals. Be certain someone you trust has access to these documents in case something happens to you.

Planning for the future may seem daunting, but when guided by competent, capable, and experienced attorneys who know the intricacies of your legal options and can help you plan for all stages of the second half of life, it’s not. People often regret that they didn’t speak with an attorney before a serious illness or diagnosis. Phelan Webber Pettis P.S. can help you customize a plan best suited for ensuring your wishes are carried out. Hopefully, you’ll never suffer a serious diagnosis or disability, but if you do, you can have peace of mind knowing that a plan is in place to handle whatever life throws at you.

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