Hero Banner
There are many events in life—like the birth of a child or grandchild, retirement, or the loss of a spouse—that we expect will eventually affect our best-laid financial plans. But there are other equally dramatic and life-changing circumstances that we might not remember to consider in our planning such as longevity, incapacity of a spouse or partner, or our own illness or disability. Preparing for the impact that these situations can have on your financial strategies is critically important too.



Planning for a longer life

For example, when we think of longevity, we may associate it with more years of traveling and enjoying the golden years, but not in terms of financing a longer time in retirement or helping an ailing spouse. Yet, today, more than one in three 65 year olds will live to the age of 90 and more than one in seven will live to the age of 95.[1]In addition, someone turning age 65 today has a 70% chance of needing some type of long-term nursing care services.[2]

That makes planning for a long life essential, not only in terms of its financial aspects, but also in terms of having a plan in place to maintain what I think of as your “Quality of Life.” 

We all need to consider the finan­cial aspects of longevity and prepare to make our income last. But we must also consider the nonfinancial consequences of a longer life too, and create a plan for the unexpected illness or disability of ourselves or a loved one. (Of course, even if we do not live longer, it is always a good idea to have a plan in place to maintain or improve the quality of our lives.) 


Preparing for illness or disability

As we age, the chances of experiencing a serious illness or disability increase for ourselves, for our spouses, and for our parents.  Yet without some advance preparation to handle these situations, it can be a very difficult time for you—and for them.
Laying the essential groundwork is critical in handling the unexpected. The people and advisors whom you count on will need to know in advance where your assets are located, how they are titled, where the key legal documents are, how they work, and whether they are up to date.
What would your spouse do, for example, if you had a sudden illness, were hospitalized for weeks, and then passed away leaving your surviving spouse all alone? If you are the one who pays all the bills and handles all the finances, and your surviving spouse has no idea where your funds are located, who will your spouse call for assistance, and how are the bills going to be paid (includ­ing the funeral bill)?  That is where a Quality of Life Plan can help.



Developing a Quality of Life Plan 

Creating a Quality of Life Plan involves organizing the appropriate documents, selecting the team that will help implement your plan, keeping legal documents up to date, and communicating regularly with all of the key players involved.


First: Organize your documents.

You can begin your Quality of Life plan preparation by gathering and organizing information about:

  • your assets
  • your workplace benefits and insurance coverage (including life, health, long-term care, and homeowners)
  • your income and expenses
  • your bank, retirement, and investment accounts
  • your advisors’ names and contact information
  • your medical history, healthcare wishes, and burial wishes 

Then, make sure all of this material is accessible to your spouse, partner, attorney-in-fact, health care agent, trustee, and/or personal representative/executor. Also, make sure the person who will be in charge of your affairs knows the location of all legal documents he or she will need if you are incapacitated. 

An Estate Notebook with electronic back up is a great way to organize your plan. If the Notebook is in your home and you are unable to get to your home during a natural disaster, having the same information in a safe deposit box or electronic storage elsewhere will be important as well. That way, you and the people you rely on will have all of the important information together in one location.


Second: Select a team.

You will need key players on your team to serve as:

  • your health care agent under a health care proxy for medical decisions, 
  • attorney-in-fact under a durable power of attorney for handling financial matters, 
  • guardian for minor children, 
  • trustee, and 
  • personal representative/executor. 

These roles may be filled by family, friends, or trusted advisers such as an accountant, lawyer, or trust officer. Ideally, they will be people you trust and with whom you can communicate easily and comfortably. They also should be willing and able to assist whenever needed to make decisions on your behalf—or to seek additional help when appropriate. Make sure they under­stand in advance what you expect from them. 

Third: Have the appropriate legal documents in place for key team members.

The basic documents include: 

  • a health care proxy (and/or advance directive),
  • a durable power of attorney, 
  • a will, and
  • if appropriate, a revocable trust. 

Your attorney may suggest additional documents depending upon whether you own a business or investment properties. The legal documents you need depend on the type of assets you own. 


Fourth: Make sure your assets are titled properly and your beneficiaries are up to date.

Only assets titled solely in your name pass under your will. Assets with a beneficiary designation such as IRAs or life insurance pass directly to the beneficiary you named. Assets in the name of the trustee of a revocable trust stay in the trust and pass according to the terms of the trust. 

You may have a great estate plan in place, but if your assets are not titled properly or your beneficiary designations are not up to date, that plan may not work. Here are two scenarios that illustrate what can go wrong:  

Scenario #1: Not titling assets correctly

In this situation, a woman whom we will call Kate, was married previously and has children from her first marriage. Kate holds all of her assets in a jointly held account (with rights of survivorship) with her second husband. She also has an estate plan with a will and instructions to create a testamentary trust and put all of her assets under her will into that trust. She believes the trust, which would be created at her death, will take care of her husband during his lifetime (if he survives her) and, on his death, will pass the remaining assets to her children. 

The problem: Because Kate’s assets are jointly titled with her husband, all of them will pass directly to him, if he survives her, and nothing will go to the trust for her children as she intended. Instead, her husband will be able to pass the assets to heirs according to his own wishes and not hers.  

The solution: Kate needs to check with her legal and financial advisors to make sure that her assets are titled properly so they transfer directly to her children in the future.

Scenario #2: Not keeping beneficiary designations up to date.

In this case a single man, whom we’ll call Nate, has several IRAs and 401(k) plans that he has contributed to over a long career with a number of job changes. Each of these retirement accounts has a form on file naming a different benefi­ciary. In addition, the balances in each plan, which started with similar amounts, now vary widely due to investment results. 

The problem: Because the accounts have performed differently over time, some of Nate’s designated beneficiaries will receive substantially more than others. And, although he says in his will that he wants to treat all beneficiaries fairly, he does not have a specific provision in his will to equalize these payments. Also, because retirement assets with a beneficiary designation pass to heirs outside of the will, he will need to find a way to adjust how much each beneficiary receives. 

The solution: Nate needs to do a thorough review of all of the beneficiary designations for his retirement accounts to make sure they are accurate. He might also consider establishing a testamentary trust in his will that can receive the retirement account proceeds and reflect his intentions by equalizing his bequests to his heirs.

Fifth: Keep your legal documents up to date.

As your life evolves and your family changes, make sure your will and trusts change along with them. For example, if you have a child who develops health issues, you may want to consider putting assets in a trust to ensure that he or she has adequate money for lifetime care, with the remainder going to your grandchildren. 

Remember also to regularly review and update your plan with your attorney and tax advisor to make sure it reflects any new tax law changes. 

Finally: Communicate, communicate, communicate. 

As you stayorganized and up-to-date on all aspects of your Quality of Life Plan, remember also to communicate this information to your key players. In addition, your attorney must know your wishes to prepare the legal documents that will give each player on your team the authority to act on your behalf. 
Open and frequent communication is the best way to ensure that your wishes are carried out during your lifetime and after your death. As the examples above suggest, the extra effort you make to communicate and plan can markedly improve your ability to respond to all of life’s changes. 

This article is for informational purposes only and should not be construed as investment or legal advice.