Did you know La Crosse, Wisconsin, spends less on end-of-life healthcare than anywhere else in America?
The weird thing is, it wasn’t even on purpose.
The story of La Crosse goes that one man didn’t want the "moral distress" of families having to choose how to handle a loved one who couldn’t make their own healthcare choices. So he encouraged people to create advance directives – instructions on how they wanted to die.
Ninety-six percent of deaths in La Crosse involve an advance directive, compared to 30% nationwide. This not only saves families from having to make hard choices about letting someone die – those choices have already been made by the person themselves – but also saves money by not keeping people alive beyond their wishes.
Having an estate plan is a necessity for everyone. I sat down with Tyler End, PolicyGenius’ resident expert and CFP (and, coincidentally, a Wisconsin native), who shared the three most important aspects of end-of-life planning.
Have an advance directive in place
The most important thing when it comes to end-of-life planning, according to End, is to "figure out how you want end-of-life decisions made and, if you’re incapable, who makes them. Put it in writing and tell the person." When it comes to an advance directive – the legal documentation outlining what happens if a person can’t make health decisions on their own – you should have both a living will and durable power of attorney in place.
A living will lets the people in your life, both doctors and loved ones, know what your wishes are regarding your end-of-life care. Your living will includes stipulations like do-not-resuscitate orders. If complications arise and there are decisions to make on whether you should be kept alive or how you should be treated, your living will is consulted.
Durable power of attorney comes in two forms: one for healthcare and one for finances. A durable power of attorney for healthcare lets a designated individual make your healthcare decisions when you’re unable to. Unlike a living will, which will be consulted to make specific decisions about what you want to happen, a durable power of attorney lets someone else make choices that aren’t outlined in the living will.
A durable power of attorney for finances, on the other hand, lets an individual make financial decisions for you. This can range from tax matters to real estate transactions. You can outline exactly what abilities you’re granting someone over your finances, so they can only perform the types of transactions you want them to control.
Each state has their own regulations regarding what entails a valid advance directive, so check your state’s guidelines and be sure to consult a lawyer when drafting your documents.
Outline your disposition of assets
Everyone knows that family can be messy. That’s why you should cut off any arguments before they even happen by outlining what happens with all of your assets well ahead of time.
Making a will is pretty easy. You can do it yourself (online, even) or you can see a lawyer to help make sure you’ve crossed all of your T’s and dotted all of your I’s. The most important thing is that you’re outlining what assets you have and who will receive them in the event of your death. This can be money, property, real estate, or anything else you want passed down.
You may have also set up a trust that allows, for example, a guardian to take care of your children while the trust administrator handles expenses. This provides the best of both worlds: someone looking after your loved ones and the assets you want to leave to them. You want the rules of the trust to be clearly outlined so there’s no confusion. Again, a legal professional can help you ensure that you’re doing everything properly, so you should consult one with any specific questions you might have.
Make sure you have insurance
Life insurance and long-term care insurance are the two most important insurance types that determine the legacy and assets you’ll leave behind after you’re gone.
End says that life insurance helps you reach the goals you want to set for your legacy. Do you want your family to be able to afford the house they grew up in? Do you want your children to be able to pay for college? Do you want to leave money for your kids and grandchildren, or even bequeath a gift to your favorite museum? You can do all of that with life insurance.
Talking about your life insurance policy is part of the open communication that’s so important. If you don’t tell your loved ones who your beneficiary is, or if you don’t tell the beneficiary him or herself, you risk difficulty in getting the money to where it’s supposed to go. There are ways for people to find lost life insurance policies, but it’s best to tell the involved parties about the policy and give them a copy so they can claim the death benefit without any hassle.
If you’re worried about a chronic health condition depleting your assets, consider long-term care insurance. End-of-life care can be expensive: According to Genworth, home health care aide and services can cost over $7,600 a month; adult day health care can cast over $1,400 a month; an assisted living facility can cost over $3,600 a month; and a private room in a nursing home can cost nearly $7,700 a month.
If you have a chronic condition that you won’t recover from that makes it difficult to care for yourself, like Alzheimer's, long-term care insurance can help defray potentially years of expenses. It can also cover expensive hospice costs during your final days. These costs can add up and eat into the assets you want to leave for your loved ones if you don’t have the proper protection.
If you’re unsure what types of insurance protection you need, or where to find them, see a financial advisor or independent insurance broker. They’ll be able to guide you on the proper coverage and help you get the best policies at the best price.
Whatever your plans are, make everyone who should know does know. End stresses that, "Open communication will save everyone grief down the line." There won’t be any arguments or confusion. Asset transfer won’t be tied up in court, which can be lengthy and expensive.
Talking about death isn’t necessarily fun, but if you can get over your hangups around discussing it, it can provide valuable peace of mind – for you and your loved ones.