Addressing health care concerns in your estate plan

Help protect your medical wishes and your assets in the event of declining health with these estate planning steps.

Estate planning isn’t only about what happens after you’re gone. It can also be an essential tool for addressing medical issues and health care concerns while you’re still alive.

If you can no longer make decisions for yourself or end up needing long-term care, a well-crafted estate plan can help ensure your wishes are followed while preserving your assets and providing peace of mind for your loved ones.

We will help you and your estate planning team craft a strategy that addresses financial and health care considerations. Here are key steps to consider:

In this article: 

  1. Document your health care wishes with an advanced health care directive
  2. Name a health care proxy and durable power of attorney
  3. Evaluate your options for covering long-term care costs
  4. Questions to discuss with us

1. Document your health care wishes with an advanced health care directive

What is an advanced health care directive? In case of a health emergency, it’s important that your loved ones understand your wishes and are empowered to advocate for you if needed. An advanced directive, also known as a health care directive or living will, establishes your wishes if you are physically or mentally incapacitated. It can outline the circumstances where medical treatments should – or should not – be used to prolong your life.

How to create an advanced health care directive: The rules governing health care directives vary from state to state, so work with an attorney to ensure yours is valid where you live. If you already have an advanced directive, it should include a HIPAA release form, which allows your designated representative to access your medical records.

Who should have a copy? In case of an emergency, your family, friends, doctors and caregiving team should be aware of your advanced directive and have easy access to a copy.

Learn more: Getting started on estate planning: Key actions to take

2. Name a health care proxy and durable power of attorney

Selecting a health care proxy and a durable power of attorney are vital tools for addressing health care concerns in your estate plan. Here’s how they work:

Health care proxy

What is a health care proxy? A health care proxy is a power of attorney for health care decisions: a document allowing you to name someone you trust — often a spouse, partner, or family member — to make medical decisions on your behalf. Often coupled with an advanced directive or living will, a health care proxy allows your representative to take on responsibilities such as hiring medical personnel, choosing providers or even getting court authorization to act if a doctor or hospital is not following your wishes.

Considerations when choosing a proxy: Given the weight of the responsibilities involved, your proxy should feel confident with their ability to understand complex medical information, handle the stress of health care decisions and follow your wishes regardless of their own beliefs. You should also name a secondary choice if your first choice is unable or unwilling to accept the responsibility.  For unmarried couples, a health care proxy is particularly important if you want to make sure your partner will be the one making decisions on your behalf.

How to create a proxy: As with advanced directives, you’ll want to work with an attorney to ensure your health care proxy is legally binding in your state and ensure the documents include a HIPAA release form.

Who should have your proxy? Once your proxy is finalized, share your directive with your designated medical agent(s) and medical team so they can follow it.

Durable power of attorney

What is a durable power of attorney? In the event you ever become incapacitated, a durable power of attorney (DPOA) can help you to make financial decisions. A DPOA allows your representative to serve as your agent, giving them control over your financial accounts while you are alive.

You can define the conditions under which the durable power of attorney goes into effect. Still, you will want to choose someone you trust, who shares your philosophies about money and investing, and who understands what’s expected of them. As with a health care proxy, a durable power of attorney can be essential for unmarried couples who want to ensure their partner is making decisions on their behalf. You’ll also want to name an alternate should your first choice become unable or unwilling to take on the role. 

Advice spotlight

Many financial institutions — including Ameriprise Financial — have their own processes for recognizing a durable power of attorney, so review the policies of the firms where you have your accounts or hold insurance policies. In an emergency, doing so will help limit the paperwork your representative will need to assume control of your accounts.

Learn more: How to choose an estate planning team: Attorneys, trustees and executors

3. Evaluate your options for covering long-term care costs

With life expectancy increasing, so does the likelihood of needing long-term care as you age. In fact, someone turning age 65 today has almost a 70% chance of needing some type of long-term care in their remaining years.1

Whether you choose to receive care in-home or at a care facility, long-term care expenses can be significant. You have several options for managing these costs, including using savings, family support and government assistance – but long-term care insurance, including life insurance with optional riders, can help you transfer the risk and avoid depleting the assets you hope to pass on.

A few insurance options to consider:

  • Long-term care insurance, which reimburses policyholders for long-term care services. However, the cost of such policies can vary significantly based on the type of care covered, reimbursement limits, policyholder age and optional benefits.
  • Life insurance with a long-term care rider: With this option, you can access a portion of your life insurance policy’s death benefit to pay for long-term care expenses. A long-term care rider also allows your heirs to get the death benefit if you don’t end up needing long-term care. Keep in mind that a long-term care rider can usually be included in a permanent policy such as universal life insurance or whole life insurance, but not term life insurance policies.
  • Life insurance with asset-based or hybrid life and long-term care insurance: This policy provides a sizeable amount of money for long-term care while also maintaining a death benefit for your beneficiary, provided you don’t max out the long-term care benefits.

Prepare now for the unexpected

As part of your overall estate plan, your estate planning team and I will help you plan for the possibility of health challenges that may affect your finances.

Questions to discuss with us

  • How can I start the process of estate planning?
  • How might I plan for the costs of long-term care?
  • What long-term care financial considerations could affect my partner?

Learn more: Strategies for unique estate planning situations