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
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
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:
- 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
- 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.
- Guardianships. Courts will
appoint guardians for persons who
become incompetent – an often
cumbersome, costly and timeconsuming
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.