|Six key components of financial plans for the chronically ill
While part of any good financial plan, these best practices take on a special urgency for ill or cognitively impaired clients, their families, and their caregivers.
December 20, 2012
When designing a financial plan for a cognitively or physically impaired elderly client, more than the cost of care needs to be taken into account. The plan itself must make allowances for a number of other factors that affect the client.
First, in almost all cases of chronic illness, someone else will be involved in the planning. The client may give his or her adult child (or children) permission to be involved in the process. This means that planning may now be done by committee. This often requires consensus-building and reaching a final decision may take much longer than otherwise would be the case.
If the client is no longer capable of making decisions, the planner may be meeting with a guardian or the person holding the power of attorney for property rather than with the client.
Secondly, the meeting’s structure may change. If the client has suffered a stroke, the meetings may have to be longer, giving the client more time to absorb new information and respond to questions. A client with Parkinson’s disease or multiple sclerosis may be able to meet only in the morning when he or she is physically up to it, and he or she may tire quickly. Each chronic illness presents its own special challenges. Meetings may have to take place in the client’s home due to his or her inability to travel and the meeting agenda may have to be shorter than before the illness.
For a CPA planner there is another consideration—professional rules regarding confidentiality. The client should give the CPA planner permission to work with anyone designated as assisting with the financial planning. If the impairment is such that the client is no longer in a position to provide permission, the planner will likely be working with the person holding the client’s power of attorney for property. In other cases, the CPA planner may be working with a court-appointed guardian.
Too often there is a casual sharing of private financial information. Issues regarding the sharing of financial information should be clarified and documented from the beginning of the engagement.
Six best practices of financial planning for the chronically ill
For the chronically ill, a successful financial plan must have six key characteristics. These provisions apply to all financial plans, but are especially important when the client is chronically ill.
All of these factors are part of any good financial plan but take on added urgency for ill or cognitively impaired clients, their families, and their caregivers.
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James Sullivan, CPA/PFS, is a financial planner in Naperville, Ill., who specializes in working with individuals suffering from chronic illness and their families.
* The AICPA PFP Section provides information, tools, advocacy, and guidance to CPAs who specialize in providing tax, retirement, estate, risk management, and investment advice to individuals and their closely held entities. All members of the AICPA are eligible to join the PFP section. CPAs who want to demonstrate their expertise in this subject matter can apply to become a PFS credential holder. For more topics such as this, join us at the 2013 Advanced PFP Conference on January 21-23, 2013 in Las Vegas. There are classes before the conference as well: Implementing PFP Services and the PFS Exam Review Class.