A life-changing diagnosis often brings a shift in perspective, especially regarding finances and estate planning. Jonathan Clements, a respected personal finance journalist, shared his insights in a recent Morningstar article titled “How Illness Can Change the Way You Approach Your Finances.” Diagnosed with advanced cancer and given a year to live, Clements recounted the financial and estate planning changes he made to prepare his family for the future.
Accelerated Giving to Children
Clements prioritized giving to his children and funding his grandchildren’s 529 college savings plans. Living in Pennsylvania, one of the few states with an inheritance tax, he aimed to minimize the financial burden on his children, who will face a 4.5% tax on inherited assets.
Streamlining Financial Accounts
Before his diagnosis, Clements simplified his financial accounts, reducing his credit cards from four to two. He highlighted the time and effort required to close accounts, encouraging others to streamline their finances sooner rather than later.
Shredding Old Records
Clements tackled decades’ worth of old bank records and tax returns, using a shredder to pare down his documents to just seven years’ worth of tax returns and supporting materials.
Updating Powers of Attorney
Despite his financial acumen, Clements admitted he didn’t update his Power of Attorney (POA) after moving from New York to Pennsylvania four years ago. This common oversight underscores the importance of updating legal documents after relocating.
Clements likened his delay in estate planning to the saying, “The cobbler’s children have no shoes.” Many people procrastinate when it comes to creating or updating their estate plans. However, having an estate plan prepared by an experienced attorney—and revising it after life changes like moving, having children, or remarrying—is essential to prevent unnecessary burdens on loved ones.
Even with his expertise, Clements found that his family didn’t fully understand the complexities of his estate plan, including probate, beneficiary designations, and asset distribution. The initial conversation was followed by many discussions to clarify details about Roth IRAs, traditional IRAs, and other financial matters.
Starting these conversations early, ideally, before a terminal diagnosis, ensures that loved ones understand your wishes and minimizes confusion. Leaving behind an organized and well-planned estate is one of the most meaningful gifts you can give your family.
At The Werner Law Firm, we understand the profound impact that life changes, including serious diagnoses, can have on estate planning. Our experienced estate planning attorneys are here to help you navigate these challenges, ensuring your loved ones are cared for and your wishes are honored.
If you have any questions, schedule a free appointment with us through our online appointment page.
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Reference: Morningstar (Oct. 20, 2024) “How Illness Can Change the Way You Approach Your Finances”
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