Death is an inevitability we all face, but the end of life can often be so overwhelming – or feel so far in the future – that people put off thinking of all the details, issues and decisions that could be left behind for loved ones to handle. Since pre-planning involves not only end-of-life choices, such as burial and memorial services, but also key financial arrangements, health care preferences and long-term care, we asked four local experts to share their advice on the right ways – and the best time – to put together an effective plan.
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Why is it important to preplan?
Most people recognize the importance of planning in advance of a health care crisis. We all want to make sure that, once we can’t make and communicate our own decisions, we still receive the medical treatments, procedures and care we want, but also that we aren’t subjected to the ones we don’t. Pre-planning is the only way for everyone to gain confidence that their wishes are known and carried out.
That said, there is another equally, if not more, important reason for health care planning that often gets overlooked and involves those who would be forced to step in and make decisions in a person’s stead. If these proxy decision-makers – often, family members – were at least partially assured that they knew their loved one’s health care preferences, the difficult decisions they faced would take on a completely different feel.
Now, the goal would be to honor choices already made, rather than having to figure out what was right. By potentially easing this tremendous burden, preplanning can be such a gift to those you most care about!
People who don’t pre-plan find themselves in some of the worst situations of their lives. It is important to pre-plan because you are not in crisis mode. It’s harder to make decisions in stressful environments. Certainly, waiting until there’s a crisis to plan is not going to be any professional’s recommendation.
I’ve had clients who don’t want to do any pre-planning because they think it is wishing a calamity upon themselves. Whether it’s simply ignoring it all together, superstition, or the perspective that it is just something old people need to do, it’s hard for me to fully understand why folks don’t want to be better prepared.
In addition to what I’ve dealt with in terms of my clients over the last 19 years, I lost my father-in-law at the age of 61 this year. It was when he was diagnosed with cancer that it became critical to preplan. He beat cancer but, two years later, it came back and there was an issue that required him to go into the hospital. The next day, he was in a medically induced coma and never came out.
He had melanoma in his brain. As obviously life-threatening as that is, it was a sudden complication that changed everything instantaneously in a situation in which most people would assume you have more time to plan.
Pre-planning is important not only because everyone’s going to be under stress in the moment of the crisis, but also, when something happens, you can’t wait until that moment, because medical complications could remove that opportunity.
Pre-planning offers control and peace of mind for your end-of-life care. Often, people think planning for the worst means planning for death by using a Will to distribute their estate to loved ones. But planning for the worst in an elder law context actually contemplates living in an incapacitated state requiring expensive care for the rest of your life.
When planning for the worst, I work with clients to ensure their own care needs will be met indefinitely and their loved ones will be protected, as well.
Pre-planning is important for learning what kinds of housing options, care options and resources are available. It offers the opportunity to discuss these options with trusted loved ones when there is no added stress of a health crisis. If or when a health crisis arises, you and your family will have a plan in place. Pre-planning offers invaluable relief for families!
Pre-planning allows you to fulfill your final wishes by choosing your burial style, music, readings, location and other key decisions. And it frees loved ones of the stress of guessing your wishes.
Pre-planning can also ease survivors’ financial burden, since pre-planning allows for pre-paying. And it locks in the price at today’s cost, saving money by avoiding inflation. The average funeral price is approximately $10,000.
Pre-planning provides emotional relief by allowing your family and friends to move past all of the logistics and financial decisions and start the grieving process and, more importantly, focus on celebrating your life.
How does preplanning ensure a person’s wishes are met?
When you express your health care wishes in a legal document, such as a Health Care Power of Attorney with Advanced Directives, your loved ones will be required to follow them. You can identify which trusted people get to make medical decisions and consult with health care providers on your behalf when you cannot voice those decisions for yourself.
Having your wishes for funeral arrangements expressed in this same document prevents family members from having to guess – or argue about – how to dispose of your body. To ensure those same wishes are carried out, I often advise clients to purchase a pre-paid, irrevocable contract for cremation, burial or funeral plans.
Making the decisions, writing them down, and pre-paying are all steps to make your wishes clear and create the legal documents for your family and the funeral director to follow.
When there is an end-of-life experience in a family, there is no way to ensure anything. Not only are there often critical health care decisions to be made, there may also be overwhelming emotional responses, legal and financial issues, family conflict, and social/ community pressures to deal with. When facing these barriers, even the best-laid plans may falter.
However, there is still hope – not necessarily in the planning process itself, which is still important – but more so in the conversations that follow the planning. There’s nothing earth-shattering about saying that people generally shy away from talking about death and dying, but when we do – when we are brave enough to face the elephant in the room – we can then address some of these potential conflicts, pressures and issues before the crisis. And if that happens – if families hammer out those details ahead of time – just maybe we can be a little more assured that our wishes will be honored.
Pre-planning encompasses a lot of different things. My father-in-law picked out the musical arrangements during his service. He chose the people he wanted to have sing them. He had things he wanted to say to people in the family and even folks in his professional life.
Because of his cancer diagnosis, he sat down with his pastor and went through his service. Although he did not sit down with the funeral home and do some of the things that I am encouraging everyone to do, he did complete some of the pre-planning around his death and it was such an ease and blessing to the family.
With some pre-planning, he would have gone over other details, too, including an obituary, and would have likely pre-paid, minimizing or even eliminating administrative and financial issues that his wife had to go through. A spouse is faced with lots of big decisions, so pre-planning is the best way decisions will be as close to the person’s wishes as possible.
What age or stage in life should people begin pre-planning?
As soon as possible. Preplanning offers financial savings, such as locked-in prices and pre-payment.
Preplanned funeral arrangements are also often funded with an insurance product, allowing for full-coverage benefits from the first day and first payment.
With cemetery pre-planning and financing with Dignity Memorial, there are clear benefits to planning young. When starting your arrangements before the age of 65, we offer a plan to forgive up to $5,000 of your unpaid balance if you should pass before your agreement is paid in full.
None of us are promised tomorrow. Often, people believe that they will make their arrangements later when they are older, and sometimes later doesn’t come. Accidents happen. The unexpected happens. Why take the chance?
At Pathfinder, we categorize everyone’s life into four phases. There is the first phase – getting started on your financial path in life. Then there’s the phase I call the years of maturity, where your kids are getting older and you’re starting to think about retirement. Then there is the retirement phase and, finally, a phase we call the path to legacy, where the focus is on future generations and maintaining your health. This is also where many face late-life housing and health care decisions.
There may be more financial implications for legacy for someone who is 92 versus someone who is 32, but that 32-year-old may have a spouse, kids, mortgage and/or a business, and death can cause devastating financial implications. And it’s not just the financial implications.
My advice is that everyone who considers themselves an adult should do some pre-planning. I would suggest you think about it for your child before they’re able to, as well. There’s no reason not to have these things in place, and it just helps you think longer-term in life anyway.
By thinking about the end and working your way back to today, you may take advantage of life a little bit more than someone who doesn’t appreciate how short life can be. We call it living a life by design and not by chance.
Because none of us know exactly how long we’re going to live, it’s simply better to plan. We always say the best time to plan was a long time ago. The second-best time is to start right now.
As you age from a young adult to middle age to your golden years, planning needs will vary and will require different methods. It’s never too early to pre-plan to ensure your goals are achieved and your loved ones are protected.
Young adults’ assets may be minimal, and they may not have young children, so they may only need to ensure they have beneficiaries named on financial accounts, a Durable Power of Attorney, a Health Care Power of Attorney, and a Will. These three foundational legal documents are important at any stage in life.
Middle-aged adults need those same items but will likely want to consider appointing a guardian for any minor children in a Will or explore whether a Revocable Trust makes sense for their circumstances. They may want to purchase a life insurance policy that would replace their income and provide for their families in case of early death.
At this stage in life, building and reinforcing a retirement nest egg is vital. Many times, these middle-aged adults are part of a “sandwich generation” and must manage the needs of both their younger children and their aging parents. Pre-planning should contemplate all needs.
Seniors’ pre-planning needs use the same foundation. However, seniors want to ensure their life savings will outlive them, so they can age and receive care at home or provide for a spouse. Seniors will need to account for their physical health, any long-term care needs, and the needs of their spouses, if any. Seniors’ pre-planning might include using a combination of tools, like long-term care insurance or Irrevocable Trusts.
At any stage of life, my rule of thumb for pre-planning turns on three things: a change in familial circumstances, a change in health conditions, or a significant change in finances.
Every semester, I speak to a class of college students at UNCW and I ask them, “Are you now an adult who makes your own decisions?” After they all shake their heads in affirmation, I follow with, “If you were facing your own death, would you have any thoughts or preferences about what was done to or for you?”
If a person can answer yes to these two simple questions, no matter what stage of life, he or she should consider doing some advance care planning.
Sadly, this is made apparent when there is a health care crisis – whether it be disease or injury – for a person early in life. When younger, healthier people are faced with these kinds of crises, family members and medical professionals often face decisions that are even more emotionally charged and sometimes ethically complex.
I could argue that advance care planning may be more important for folks earlier in their lives, before anything is even on the horizon.
What issues can arise from failing to preplan?
Everything from being faced with an array of financial purchasing decisions to whether the hospital is the place you ultimately pass away.
If not properly planned, everything may turn into a cost issue, and that’s not the way that most of us think about treating our loved ones. We want to honor them and celebrate life. But if you don’t do any preplanning, often you’re forced to make those decisions from a financial perspective. Or, conversely, people throw financial considerations to the wind and make decisions based on their gut, then later have recourse from making poor financial decisions during that time.
Going through this with my mother-in- law this year was a big eye-opener; you walk into a funeral home and there’s literally a showroom of caskets. If you’ve never seen this before, it can be intimidating. You pick out a casket, then you pick the vault. Then, there’s the next decision, and so on. By the time you go through it all, you may have to make six or seven different major financial decisions.
If you pre-planned, that’s not typically an issue, particularly if you get to the point of pre-paying, which is certainly something I recommend. But planning is the always the first step, then paying for it is next.
It can really complicate making decisions for your family. Do they know what you wanted? Are they sure about their choices for you?
Emotions are challenging when you’ve lost a loved one. These emotions start to impact your family dynamics in rather difficult ways and can lead to arguments and, even further, hurt feelings.
Financially, your family will be faced with paying for your arrangements in full at the time of need. If you or your family don’t have access to more than $10,000 in funds, decisions to care for you may be limited and family members may feel guilty for not being able to do more to honor your life.
Often, families search for life insurance policies to pay for final arrangements, which means they need to know who the beneficiary of the policy is and gain their permission and signature to use your life insurance funds for your arrangements.
If no life insurance is available, families are forced to resort to using credit cards – which costs even more in the long run – or asking the community for assistance, and that effort to raise money can be both emotionally challenging and time-consuming.
My answer has four parts, using the acronym, FAIL.
F = Family conflict. Regardless of how well a family is “put together,” relationships may become strained during a health care crisis or end-of-life situation. Each family member has their own perspective and unique relationship with the loved one. If families have not had the planning conversations ahead of the crisis, too often, their time is spent in conflict instead of in support of each other… and that is sad.
A = Added complexities. There are numerous societal characteristics that add to the complexity of end-of-life situations, and when pre-planning is neglected, these characteristics are not addressed:
- Diversity in family structure. With varying relationships, which “family members” are preferred decision-makers and which have authority by law?
- Distance caregiving. No longer does the entire extended family live within decisions made when family members are so far away?
- Medical advancements. At what point do we ask our health care providers, “Just because we can, does it mean we should?” And whose decision is that?
I = Indecision. In the absence of pre-planning, health care decisions can become even more difficult. Often, there is a range of medical options, from various health care providers and an abundance of information from facilities, websites, houses of worship, and both solicited and unsolicited opinions about what direction a loved one’s care should take. When faced with so much, rather than make a wrong or contentious decision, family members often make no decision at all.
L = Lasting memories. After I am gone, my hope is that those closest to me remember the good times and joys of my life, not the turmoil, conflict, burden or regret my death caused. Working in hospice care, too often, we see surviving families forever changed by circumstances that could have been anticipated, planned for and discussed.
Without a plan, you lose control over decisions relating to your care, preferred housing and finances. If you cannot make these decisions for yourself, someone else may be making them on your behalf. It may not be the person you would trust to make the decisions. Worse still, the decisions may not be the ones you would have made.
Without a plan in place, you may be failing to provide for your loved ones or dependents. If you are incapacitated, your failure to plan could devastatingly and financially impact your spouse or family members. You don’t want to impoverish your loved ones with your expensive care needs. Further, upon your death, your assets may not be distributed to those you want or the way you want them to receive it.
And you could experience a financially devastating loss of property or assets during your life. Most people do not want to see their life savings spent on long-term care. Pre-planning offers an element of asset protection, while ensuring that any potential care is covered. Many times, without a plan or even the most foundational legal documents, a person’s only option could be an expensive guardianship in which that person’s property and assets are slowly sold off to pay for care.
What potential legal and financial issues should people be aware of when creating a plan?
I always recommend using a professional. I’ve seen handwritten Wills and Powers of Attorney and template documents downloaded off the internet, but your spouse or kids are not going to know what you know about this self-prepared document.
If your family members have any questions, the first thing they are going to do is hire an attorney, CPA or financial advisor. They’re going to seek a professional to help them with the situation. At that point, it’s crisis mode for the family and it becomes a bigger issue.
Had you pre-planned and spoken with that attorney, financial advisor and CPA ahead of time, those professionals would be a lot clearer on the issues, and the family has somebody to call on in that time of need.
Don’t try to do it yourself. It will be one of the most critical times in life for your family. Don’t think of it as a permanent decision, either. Everything can be changed unless you choose to make it irrevocable.
Sometimes, people will seek out a Durable Power of Attorney from an attorney who is not experienced with long-term care issues. I see a lot of these documents that lack the kind of long-term care planning provisions clients need.
Even worse, it is often too late to have a client execute a Durable Power of Attorney because their cognitive abilities have diminished significantly. So, those clients are stuck with a legal document that does not maximize their ability to plan for long-term care.
Sometimes, people try to qualify for certain public benefits on their own. Some programs like Medicaid have strict eligibility requirements that mandate spending down assets to qualify for benefits. Many couples without legal counsel spend down their assets at the wrong time and discover they must reduce their assets again later. Other rules strictly prohibit gifts within a five-year period. Some people do not understand gifting rules or how to cure a gift and incur an expensive, lengthy penalty period before they can receive long-term care benefits.
Finally, existing estate plans may not always provide for the needs of loved ones. An estate plan that was created in your youth may not address all your needs for your spouse or family in your golden years. For example, leaving a life insurance policy directly to your children may be short-sighted if your children are irresponsible spenders; a trust may help that money last longer to meet your children’s needs. It’s always a good idea to let an attorney review your existing documents and discuss your needs.
Make sure you have obtained the assistance of a professional to navigate the waters to ensure they help you approach the legal and financial issues.
How can people save for end-of-life matters without impacting other financial goals?
Paying privately for long-term care can financially cripple even the savviest of planners. Fortunately, there are lots of tools to help save for and defray costs.
One effective pre-planning tool is long-term care insurance, which will cover long-term care costs up to a certain dollar amount or through a certain time period. Ideally, when used in conjunction with other planning tools, a long-term care insurance policy would cover all or a portion of long-term care costs.
I work with clients’ insurance agents to explore whether long-term care insurance makes sense for clients’ needs. I also work with financial advisors to explore using IRAs in conjunction with other tools to further long-term care planning goals. One technique is to convert an IRA into an annuity to indirectly fund a long-term care insurance policy. The tax-qualified annuity can make internal distributions to the insurance carrier. With this method, seniors can indirectly pay for long-term care insurance with IRA money without incurring tax penalties.
When facing the prospect of imminent end-of-life care, I advise families of the right time to purchase an irrevocable burial or funeral plan.
The ability to pre-plan your funeral and cemetery arrangements is one of the easiest and wisest financial decisions you can make.
These aren’t expenses you and your family may incur; they will be necessary. We will all pass away at some point, there will be expenses, and they can be costly.
Locking in prices, creating an easy payment plan, and knowing that you have completed it all will offer you and your family peace of mind while protecting your current assets and the financial legacy you will leave.
If you should pass unexpectedly – and possibly at a young age – it could completely change your family’s way of life. If they face a large financial burden due to your unpaid final expenses, it could have a dire effect.
The most common way people structure paying for long-term care is to sell their primary residence. It’s also how folks pay for final expenses, as well. Final expenses or funeral expenses are a little quicker to be paid. If there’s an insurance policy, if you’ve got money in the bank or investments, typically the funeral company gets paid quickly and they often give a discount for paying within a certain number of days. Long-term care costs are more of an issue.
I ask clients if they’d rather earmark money for possible long-term care expenses and not spend it during retirement, and if they don’t need long-term care, it goes to the kids. Or would they rather buy an insurance policy, for example, so they know it’s protected, and then that lump sum money can be used for their lifetime, or you know it’s definitely going to the heirs.
Insurance is a great option, but the typical way of paying for long-term care is to sell the primary house. If someone needs long-term care, they likely won’t be able to maintain their property, so a sale is justified. Of course, family homes are an exception if people want to keep the property for future generations and insurance can protect that goal.
The same is true for passing along other investments. If you want to insure legacy, insurance is something to explore.
For final expenses, I am a big proponent of pre-payment. I would encourage someone to look at it as a debt. If a client has the mindset that they want to pass away debt-free, that’s when I advise them to pay for their final expenses.
You need to consider these areas when you’re building your overall financial plan. Should you save for retirement, should you save for college, or should you save for long-term care? Well, you should save for all three. If you can’t do everything, then you’ve got to make those trade-offs and you just need to be knowledgeable and understand the risks if you’re not able to fund them all to 100 percent.
What are the benefits of an Advance Directive?
Whether it be a Living Will, Healthcare Power of Attorney, medical order, such as a DNR [Do Not Resuscitate], or even the little red organ donation heart on your driver’s license, the value of any Advance Directive is that it provides a foundation for others who may have to make medical decisions for you in the future.
To be sure, Advance Directives have their limitations – they are, admittedly, just pieces of paper that struggle to adjust and respond to the particulars of a potential health care crisis. But they do offer a starting point, a formal piece of evidence of your personal wishes and preferences.
However, it is when these advance care directives are coupled with prior conversations with loved ones, family members, health care advocates, faith leaders, and medical providers that they become the most effective, and consequently most beneficial, tools for making and communicating your decisions.
When a person is incapacitated and unable to make or communicate their own health care decisions, an Advance Directive gives the person control over those decisions. It removes the stress from family members of having to guess whether they are making the right choices during a health crisis. It is also a way to let family members know well in advance of a major health crisis what wishes a person has for end-of-life care. Having these directives in place offers a person peace of mind, as well as the ability to control how end-of-life care should look.
I can provide a real-life example. My father-in-law had an Advance Directive, or a Living Will. He was in a neurosurgical-intensive care unit and basically couldn’t make decisions. The doctors wanted to try a treatment option in which there was a chance he would need to be intubated.
I’ve told this to folks time and time again, but this is the first time I actually was in the middle of it personally – your document will not necessarily be utilized by your medical professional. Most of the time, people think the doctor is going to be the one to make decisions, but if there’s the tiniest bit of chance, the doctor is going to put it back on the family.
In our situation, my mother-in-law looked at her two daughters and said, “This is your decision, girls.” And the girls said, “No, you’re the spouse; that’s your decision.” So, I pulled out my father-in-law’s Advance Directive and said, “Let’s read it.” It is his document. If there’s no family around, the doctors can leverage it, but when there is a family member there, they are not going to go against the family member’s wishes most of the time.
When you have an Advance Directive, it brings peace to the decision family members must make. It’s not going to make them happy. It’s still going to be the most miserable decision they’ve ever made. But looking back, they’ll know their decision was what their loved one wanted. And if nothing else, that’s enough of a reason to do it.
What questions should people ask before deciding on elder care and/or their final wishes?
My number-one question is to ask yourself what you want, because there is something out there that’s going to satisfy that need. If you would like to move into a continuing care retirement community, those are out there.
If you want to stay at home and bring care in, that’s out there. If you want a certain type of funeral or you want a cremation service, someone can provide that.
Once you know what you want, you can start asking the tough questions. I would suggest talking to people who have used those services before, so that it becomes reality for you. Of course, a financial planner can be helpful because this is what we do, and we’ve had a lot of experience with those folks, as well. Your already-trusted advisors are a good place to leverage the questions.
In my opinion, when people aren’t in crisis mode, they have a very different perspective on things. When you think about pre-paying for something, you’ve got to see that there’s some value in it. When you are in crisis mode, you have an immediate need that has to be satisfied, so the perceived value goes up dramatically.
When you’re memorializing someone, unless the company absolutely botches it up, you’re going to fall in love with this company because they helped you through one of the biggest crises in your life. And it’s without regard to price.
There are several questions you should first ask yourself:
- What do you want most for your funeral or memorial service?
- How do you want to be remembered and memorialized?
- Would you like a traditional burial, or would you prefer cremation?
- Where would you like to be laid to rest?
- Who do you want making those decisions or completing those plans for you at the time of your passing?
If you are to be cremated, keep in mind that the mantle of a loved one is not a final resting place. Your family may want a place to place flowers and visit in your honor. Even if you choose to be scattered, often this is still an emotional need for those you leave behind.
First, seek referrals from people you trust. Ask your friends or family members what facilities they trust for their own needs or a loved one’s needs. Elder law attorneys or certified senior advisors can usually make referrals for these services, as they also work closely with both long-term care facilities and funeral and cremation entities.
Next, explore the options available and tour facilities. Consider the entity’s proximity to loved ones, as well as the facility’s cleanliness, records and ratings with the state licensing authority, services offered, and whether they will meet your unique needs.
Once you have selected a facility, ask about the financial commitment. You’ll want to know what services are offered in the basic costs and which ones carry additional charges. For long-term care facilities, ask whether they are experienced in handling long-term care insurance or certain public benefits.
An elder law attorney savvy in preplanning can help plan for long-term care expenses and also advise on the appropriate time to purchase a pre-paid, irrevocable burial or cremation plan.
Above all, trust your instincts!