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Death & Dying

Planning for Your Own Death - Financial Affairs

Kathryn Patricelli, MA

pile of papersIn addition to legal considerations surrounding the disposition of your assets and estate, and making your medical wishes known, there are also day-to-day financial considerations that need to be thought through when planning for death.

  • Beneficiary Information. It is important to make sure that beneficiaries are appropriately and currently named on all important financial assets you may have, including retirement accounts (such as pensions and 401k accounts, etc.), life insurance plans and other assets. Such assets are not likely to be covered by a durable power of attorney, and it can be difficult, if not impossible, to change or arrange for disbursement of these assets upon someone's death if beneficiary information is outdated or incorrect.
  • Medicare and Social Security. Adults approaching retirement age (generally 65-68 years of age depending on the year of birth) should file for Medicare and social security benefits. Generally, it makes sense to apply for such benefits between three and six months prior to the enrollment age to allow for necessary processing time. Social Security benefit payments are determined by the amount of Social Security taxes you paid over your entire employment history.

    Medicare is a national American health insurance program for people 65 years of age and older, some disabled people under 65 years of age, and people with end-stage renal disease (permanent kidney failure treated with dialysis or a transplant). Medicare's program has three parts which cover different medical concerns. Part A pays for eligible inpatient stays and home health expenses, while part B pays for eligible doctor visits on an outpatient basis, as well as some psychological, physical, occupational, and speech therapy services. Part D, which was introduced in 2007, provides prescription coverage through ten different types of plans. Supplemental health care policies (sometimes called Medigap coverage) may be purchased to cover medical expenses and prescriptions that are not covered by Parts A, B, or D.

  • Supplemental Insurance. Unfortunately, Medicare does not cover numerous medical services and expenses. In addition, no one knows whether Social Security will remain solvent (able to pay full benefits to all recipients) in the future. For these reasons, you may consider purchasing a long-term care insurance policy, and/or a supplemental medical insurance policy. These policies can help pay for needed care facilities and treatments that Medicare will not. Be sure to do your homework in investigating these plans. Many have strict stipulations and rules governing coverage. Most of these policies have a lifetime maximum benefit level, and many have daily and monthly maximums as well. There are also usually set criteria that trigger coverage, so not all conditions or situations will result in benefits even though the insurances have been paid for in advance. Because such plans may also have eligibility requirements, those who are already have a pre-existing condition may be denied coverage.
  • Trusts. A trust is a legal device into which a person's assets can be contributed. Monies contributed into the trust are no longer the property of the individual (called the grantor, donor, or settlor), but instead now belong to the trust. The trust can be set up in various ways, but many are designed to pay a small amount to the beneficiary during the grantor's lifetime, and then disburse the remainder of the assets upon the grantor's death. One benefit of setting up a trust is that they can be used to shield assets that would otherwise need to be sold off to pay for your care (e.g., such as your house) before you become eligible for government health care benefits. In order for this trick to work, however, the trust must be set up years in advance of your need for care. Trusts are a complex legal device that can only be created and managed by a knowledgeable lawyer. Consult with a lawyer who handles estate planning for further information on trusts.

 

 

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