End-of-life financial planning

If you’re living with a terminal or life-limiting illness, facing end-of-life realities may be very hard to contemplate especially when you are trying to remain positive, hopeful and strong. But, leaving your affairs inadequately attended to can cause further emotional stress for your loved ones, and it is highly advisable to set your affairs in order sooner rather than later.

General power of attorney

Depending on the nature of your illness and your prognosis, you may want to consider giving your spouse or a loved one general power of attorney over your affairs. Through a power of attorney you (the ‘principal’) are able to give someone (the ‘agent’) a mandate to act on your behalf if you are physically unable to do so. While you might feel physically strong, keep in mind that there may be days when you feel exhausted or need to prioritise rest, which is when a power of attorney can be very useful. Remember that in terms of South African law, a general power of attorney falls away as soon as the principal loses mental capacity. This means that your power of attorney will only remain effective while you retain full mental capacity and if your illness results in loss of mental acuity, the power of attorney becomes null and void.

Insurance claims

The costs of your medical care will no doubt be of great concern to you, keeping in mind that even if you have a fully comprehensive medical aid, there will be out-of-pockets expenses that need covering. Costs such as emergency travel, upfront payments, treatments not paid for by medical aid, wigs, medical appliances, special home aids, and home nursing all add up. Be sure to check your long-term insurance cover for any benefits that you can claim from as a result of your terminal illness. If you have disability cover in place, you may be able to claim from these benefits if your condition meets the criteria set out in your policy, and your financial advisor should be able to guide you on this. Similarly, if you have dread disease cover in place, check whether your diagnosis falls within the definition of your policy as you may be eligible for a pay out or part pay out. Dread disease cover is a highly technical area of insurance so make sure you have an experienced financial advisor to guide you through the claims process.

Your Will and estate plan

While naturally updating your Last Will and Testament is essential, it goes hand-in-hand with reviewing your entire estate plan to ensure that the two are fully aligned. Even if you think your will is up-to-date and valid, take it out and double-check that it fully expresses your wishes. Check that your will is dated and signed, that the witnesses have signed on each page, that all previous wills have been revoked, and that none of your witnesses are named as beneficiaries in your Will. Further, check the spelling and ID numbers of all named beneficiaries, heirs, legatees, guardians, and trustees. If you have set up a testamentary trust in terms of your Will for the purposes of bequeathing assets to our minor children, confirm that you are happy with your nominated trustees and that those people are aware of the appointment. Make sure that you are happy with the duties, responsibilities and mandate of the trustees as set out in your Will. Check your executor appointment to ensure that the person is still alive and/or the appointed company is still in existence. Ideally, ensure that the executor is someone known and respected by your loved ones, and who you can rely on to provide a professional service. When it comes to your various policies and investments, take time to check your beneficiary nominations. Be cautious of nominating minor children as beneficiaries to your life policies as this could result in the funds being managed on their behalf by their legal guardian. Instead, consider nominating the testamentary trust as the beneficiary to the life policy as this will mean the proceeds will be paid directly into the trust in the event of your death, and that the funds will be managed by the trustees for the benefit of your children. Finally, take time to collate all documents required for the winding up of your estate as this will save your executor time and ensure that your estate can be wound up quicker. Your executor will need a copy of your birth certificate, ID documentation, passport, marriage certificate, ante-nuptial contract, divorce orders and maintenance agreements. You will also need copies of any title deeds in respect of fixed property owned by you, your tax reference number, share certificates, trust deeds, bank account statements and jewellery valuation certificates. If your nominated heirs or beneficiaries live abroad, your executor will require copies of their ID documents so you can expedite the process by keeping a copy of their IDs in your estate planning file.

Early retirement from retirement annuity

While generally speaking, you are not permitted to retire from a retirement annuity before the age of 55, most funds make provision for retirement from the fund as a result of ill-health or disability, but you would need to meet the criteria set out by the fund in order to qualify. If you have less than R247 500 in your fund, you are entitled to withdraw the full amount. If the amount is greater, you will have the option of taking a one-third withdrawal while using the balance to purchase an annuity income, keeping in mind that any withdrawals are taxable. The criteria of ‘permanent disability’ when it comes to retirement annuities is generally less stringent that in the case of an insurance claim because a disability claim effectively poses no risk to the fund. In making a determination, the trustees will rely heavily on the medical opinions provided by your doctors and specialists. One significant advantage of applying for early retirement is that you can transfer your funds into a living annuity structure which is a more effective estate planning tool. While housed in a retirement annuity, the allocation of your funds amongst your financial dependants in the event of your death is at the discretion of the fund trustees. On the other hand, when setting up a living annuity, you can nominate your beneficiaries and, upon your death, the funds will be available almost immediately to your loved ones.

Advance healthcare directive

If you’re suffering from a terminal illness, planning for your end-of-life medical care will no doubt be important for you. An advance healthcare directive is a comprehensive document which allows you to make decisions about your medical care and to appoint a medical proxy or representative to speak on your behalf if you are unable to. While a living will can be used to express your desire not to be kept alive artificially if there is no hope of recovery and where death is inevitable, an advance health directive can provide specific guidelines and instructions relating to medical treatment, interventions, pain management, infection control and palliative care. Through an advance healthcare directive, you can provide your medical proxy with comfort that the decisions they are making are in line with your wishes. For instance, you can include guidelines on when to allow artificial life support, organ and tissue donation, brain autopsy (in the case of dementia or Alzheimer’s disease), feeding tubes, IV hydration, CPR, the use of antibiotics, and blood transfusions. Most importantly, ensure that your nominated medical representative and your loved ones are aware of the existence of your advance healthcare directive, and ideally keep the document filed separately from your Last Will and Testament.

There’s no doubt that putting your affairs in order is one of the greatest gifts you can provide for your loved ones.

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