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Inside This Issue

Wartime Promise Kept By Thankful Veteran
Planning for the Risks in Your Life
Change-Your-Mind Gift Options and the American Red Cross


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Planning for the Risks in Your Life

This issue of Legacy is about practical steps you should consider in protecting and preserving your financial security against the onset of illness, disability and other risk factors. We'll also discuss some very personal decisions that people face as they grow older and suggest ideas that may be helpful to you and your loved ones.

Income During Disability.
Middle-aged Americans are five times more likely to suffer a disability that leaves them unable to work than they are to die. Many employees are covered for shortterm disability – three to six months – but far fewer are insured against the long-term loss of earning power. Many financial planners strongly recommend disability insurance. It is designed to replace only a portion of lost income, generally no more than 70%, which starts after an elimination period.

Financial Decision-Making.
Who would take over the management of your financial affairs if – for any reason – you become unable to handle them personally? Several options generally are available:

  1. Power of Attorney. In most areas you can establish a "durable" power of attorney, naming a friend or relative to act for you on a broad or narrow range of activities. Standard forms are generally available, although you may need an attorney's assistance for complex situations.
  2. Trusteeship. You can set up a revocable living trust and name a trustee (money manager) who will act on your behalf as to the assets placed in the trust. The trustee can provide valuable assistance in the event of disability. You could be the trustee at first and provide for a "standby" trustee in case you are disabled.
  3. Guardianships. Courts will appoint guardians for persons who become incompetent – an often cumbersome, costly and timeconsuming arrangement. With trusteeship or a power of attorney, you – not a court – decide who will handle your affairs. Guardianships nonetheless provide the protection of court supervision of all transactions made on your behalf.

Costs of Long-Term Illness.
The expense of catastrophic illness and long-term nursing home care ranks as one of the major concerns of Americans and their families. Most thoughtful people, upon reflection, would prefer not to have health care costs deplete their life savings, effectively disinheriting family members.

What can a person do? It's important to make your plans as early as possible. Long-term care insurance is a possibility. You should investigate carefully the companies and policies before buying. Insurance premiums will vary state to state, as will the costs of care. The most important step you can take is to see an insurance broker who works with a number of companies and can help you sort through the options and costs.

Health Care Directives.
Most thoughtful people give consideration at one time or another to whether they would want life-sustaining medical treatment continued if they were comatose and had no chance of recovery from an accident or illness. You should make your own wishes known, in writing, before the question arises. You can do so through a power of attorney for health care or a "living will."

A power of attorney for health care (some times called a health care "proxy") names a person to make health care decisions for you, in the event you are incapacitated, and specifies the circumstances under which you want life sustaining treatment maintained, withheld or removed.

A "living will" is simply a statement by you, in writing, as to your preferences on lifesustaining treatment, that you give to your doctor and family members. It is important to sign and date your living will, before two witnesses, and to discuss the will with close friends or family members. Additionally, review the document once a year, adding your initials and date to show that you have not changed your mind.

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Disclaimer:

The articles in the issues of the Legacy newsletters are for general illustration purposes only. Information, Gift annuity and tax rates were current as of the time of publication. There can be no guarantee that such information will continue to be accurate in the future. Interested Donors should check with the Gift Planning Office for current rates and deduction amounts before completing their gifts. Calculations of tax deductions will vary based on applicable federal discount rates, which change on a monthly basis. The American National Red Cross is not engaged in rendering legal or tax advisory service. For advice or assistance in specific cases, the services of an attorney or other professional advisor should be obtained. Certain links in this site connect to other Web sites maintained by third parties over whom the American National Red Cross has no control. American National Red Cross makes no representations as to the accuracy or any other aspect of information contained in other Web sites.