NEW YORK — New York--Terminal illness is just coming out of the closet a a fit subject for financial planning. Few attorneys, planners and insurance agents even know much about it. Their professional organizations don't insist that they learn in order to get their certifications.
That's wrong. By squeamishly averting their eyes from death, these unschooled "professionals" are costing their clients a lot of money. Here's a checklist from Richard Bandfield of Bandfield Associates, a New York financial planning firm, and David
Petersen, a retired planner who has AIDS and who now writes and lectures on planning for the seriously ill:
* Tell your lawyer, accountant and financial adviser about your illness (or the illness of a family member) right away. The sooner they know, the more they can do. If all they say is, "Gee, I'm sorry. Do you have a will?" you need a different adviser.
Associations that help persons with specific diseases, such as cancer or AIDS, may be able to refer you to an expert.
* Look into entitlement programs for the disabled to see if you're eligible. There are 16 such programs, Mr. Petersen says.
One source of information, written for people with AIDS but relevant to anyone terminally ill, is "AIDS Benefits Handbook" by Thomas McCormack, Yale University Press, available in paperback through any bookstore for $8.95.
* Reorganize your finances. You need investments that throw off more income and can be easily converted into cash.
Anyone with money to spare shouldn't sell investments that have risen greatly in value. If you leave those investments to your heirs, no taxes will be due on the capital gains. The best assets to sell are those that have declined in value. That creates a loss to offset income (assuming that there's another tax return).
* Many terminally ill patients have an urge to clear up all their TTC debts. But don't repay loans that are covered by credit life insurance. At death, these loans must be paid by the insurance carrier. Prior to death, the insurer may make the monthly loan payments if you took credit disability or unemployment insurance. Government-guaranteed student loans are forgiven if you become totally and permanently disabled or die.
* If you're taking a new loan or mortgage and are offered credit-life insurance without evidence of insurability, take a close look at the terms.If the policies cover pre-existing conditions, snap them up.
Banks may also offer such policies to credit-card holders, so be sure to read all your mail! The coverage may cost about 30 cents for each $100 of your outstanding balance each month.
Once you have insurance on a credit card, you can charge what you want and know that your debt will be covered, up to the limit of the policy.
* Get a statement from Social Security, showing the amount of your disability benefit and the benefit to your family after your death (just call 800-234-5772 and ask for the form that will get you your Earnings and Benefit Estimate Statement). If you're still employed, the statement will show whether you've worked long enough to qualify for Social Security payments. If you haven't,you'll see how much longer you have to work to get on the rolls.
* When you leave work, disclose that you're terminally ill 'N (something that many people are reluctant to do).
If you just quit, you can continue your health insurance, at your expense, for up to 18 months, if your company employs 20 people or more. But when you quit and disclose your disability, your coverage can continue for up to 29 months -- when Medicare kicks in. What's more, you may be able to receive disability benefits from your employer and convert group-life insurance into individual coverage.
* Sign a durable power of attorney, which allows someone to make financial decisions for you. (Some financial institutions won't accept a durable power unless it's written on their own form, so check.) Make a living will, if you don't want to be kept alive artificially. Sign a health-care proxy, giving someone the right to make medical decisions on your behalf. Update your will.
* You may collect up to 95 percent of the face value of your life insurance policy while still alive, if your insurer permits it. Check your state's rules. Only New York doesn't yet allow these payments. Alternatively, you can often sell your policy for 50 percent to 70 percent of its face value.