In the aftermath of being diagnosed with a life-limiting illness, medical care and not financial planning will inevitably be top-of-mind – and understandably so. In time, however, it will be necessary to re-calibrate one’s financial planning to take into account the diagnosis and subsequent prognosis. From a financial and estate planning perspective, there is much for a terminally ill person to consider. In the first part of this article, we take a closer look at some immediate financial planning issues to be considered; while in the second part of the article, we discuss some legacy planning factors that may become important towards end of life.
After diagnosis, you may want to reassess your medical aid plan option, review any potential insurance claims you might have, and consider caring options for the future. While you are able, consider the following:
Medical aid & gap cover
Following your diagnosis, it is important to assess whether your current medical plan remains suitable for your evolving needs. Keep in mind that most medical schemes only allow upgrades at the start of each benefit year. Once you have clarity on your required medical treatment, you can select a plan option that best meets your future healthcare needs. When evaluating your options, consider whether your illness is classified as a chronic condition and how comprehensively your medication will be covered. Additionally, review benefits related to costly procedures such as MRI and CT scans, scopes, pathology, and X-rays. If hospitalisation is expected as part of your treatment, it may be wise to opt for a comprehensive hospital plan and consider gap cover for additional protection.
Insurance cover
If you have disability or severe illness cover at the time of diagnosis, you may be eligible to claim from your insurer. Depending on your policy, you might be able to submit a claim upon initial diagnosis, with the potential for additional claims as your condition progresses. If your illness impairs your ability to earn an income, you could also claim from your income protection benefit. The claims process can be demanding, often requiring extensive medical reports, test results, and other documentation. It is wise to consult your financial planner early in the process to ensure that you receive the necessary guidance and support.
Early retirement
Depending on the severity of your illness, you may be able to retire early from your retirement fund as a result of your ill health. If you become severely incapacitated, the trustees of your retirement fund may decide to allow you to take early ill-health retirement. This means that you would be able to access your retirement funds before the regulated retirement age. Once again, your financial adviser should be able to guide you through the process of applying for early retirement as a result of ill health.
Policies and investments
It is advisable to compile a list of all your policies and investments to ensure your loved ones are aware of them. While doing so, review the beneficiary nominations on your policies to confirm that the proceeds will go to the intended recipients upon your death. If your estate is named as the beneficiary of a life policy, the payout will become part of the estate and subject to the winding-up process. Naming a beneficiary directly ensures quicker payment of the proceeds, bypassing the estate and streamlining the process.
Estate costs
Your financial planner will be able to prepare an estate plan for you so that you have a full understanding of the costs to your estate in the event of your passing. In doing so, they will take into account any liabilities, CGT and taxes owing. Their calculations will include an assessment of the Master & Executor’s Fees, Estate Duty and other administrative costs. They should also be able to advise you on how to structure your estate so as to reduce your tax liability and ensure liquidity.
Legal documentation
The Executor of your estate will be responsible for submitting a comprehensive set of documents to the Master’s Office. They will likely need assistance from your loved ones in locating these documents, which can lead to significant delays if your paperwork is not well-organized. To avoid this, it is advisable to create a folder containing essential documents such as your birth certificate, marriage certificates, divorce and maintenance orders, ID, passport, SARS tax reference, trust deeds, gun licenses, and share certificates. Additionally, consider having a family member or friend store certified copies to safeguard against fire, theft, or loss.
Home care & hospice
Palliative care providers, such as Hospice, offer support to individuals with terminal illnesses, focusing on enhancing their quality of life. Typically, palliative care involves mobile teams of caregivers who provide home-based care for patients. However, if pain management becomes challenging or a patient lacks adequate support at home, admission to an inpatient unit may be necessary. It is advisable to make arrangements with a local palliative care provider well in advance to ensure they are prepared to assist when needed.
Funeral costs
Depending on your specific wishes, a funeral can cost anywhere between R10 000 and R80 000 and these costs can be planned for in advance. If you do not have a spouse or life partner who is able to take care of the funeral arrangements after your passing, it makes sense to make advance arrangements with a close family member or friend, including financial arrangements. If you have a funeral policy in place, let your loved ones know about its existence. Funeral policies generally pay out within 48 hours and can assist with the costs of the funeral.
Funeral & burial wishes
Documenting your funeral and burial wishes as part of your end-of-life planning is a thoughtful gesture that will be deeply appreciated by your loved ones. It is advisable not to include these wishes in your Last Will and Testament, but rather in a separate funeral plan that your family is aware of beforehand. Since your Will may only be read after the funeral, any instructions within it could be overlooked. Your funeral plan can specify your preferred church, minister, type of service, and any special requests such as hymns, music, flowers, or readings. Additionally, you can indicate your preference for burial or cremation, including details about your desired burial location or where you would like your ashes to be scattered.
Have a great day.
Sue
