How to Plan for the Unforeseen

How to Plan for the Unforeseen


Another option is disability insurance, which is intended for healthy working-age people, who are more likely to become disabled than die.

Disability insurance is more expensive than life insurance, but these two planning solutions require comparatively little effort. Most people understand they should have both forms of insurance, though not everyone chooses to buy it.

The planning becomes more complex with the so-called softer issues: the questions to which there are multiple but sometimes conflicting answers. Who should be contacted if something goes wrong? How do I want my personal possessions divided? What are my thoughts about going into a nursing home? Do I want to be resuscitated if I go into cardiac arrest? Any thoughts on a funeral?

“The best way to plan for an event you can’t control is to put your own plan in place,” said Sharon Klein, president of the New York metropolitan region for Wilmington Trust. “Otherwise, someone else is going to be putting a plan in place for you.”

Clients of a firm like Wilmington Trust are wealthy and receive a higher level of attention from advisers. But there are plenty of web-based services that aim to help anyone plan.

Everplans is one site. It guides users through a list of documents and discussions that need to be considered: wills, insurance, a health care directive, passwords for email and social media accounts, funeral planning. But it also has sections for storing keepsakes like family recipes or for leaving instructions about pet care or how things work in the home.

“We want to help people think of the unexpected,” said Abby Schneiderman, co-founder and co-chief executive of Everplans. “It could be anything unexpected. Natural disaster, flood, fire, illness, a death — you don’t know. The idea is: Don’t wait until it’s too late.”

The service, which costs individuals $75 a year, prods users to do more. It offers a 10-minute “just in case” plan that asks people to put down as much information as they know from memory, Ms Schneiderman said.

“We want to be a one-stop shop, but we also try to get people to take it a piece at a time,” she said. For instance, the service sends out electronic reminders to prompt users to take one more step.

Final Roadmap is another such site. It was born out of a nurse’s frustration with families being unprepared for the decisions and logistical considerations that happen at the end of life.

Steve Byrne, a co-founder of Final Roadmap, said the website, which charges a one-time fee of $249, held legal and financial documents, instructions for death, and messages for loved ones.

“All of those notifications can prevent problems that supersede money problems,” he said. Without proper instructions, those decisions “can blow up and result in siblings not ever talking to each other.”

Wealthier people tend to rely on advisers who are privy to a raft of information to help them, especially when it comes to tax planning, which could become more urgent if President Trump’s proposal to repeal the estate and other transfer taxes is passed. Adam von Poblitz, head of Citi Private Bank’s North American trust division, said the repeal of a tax that took 40 percent of a couple’s assets above the current $11 million exemption would increase the need for creating a trust because more money would pass to heirs.

“You need trusts to protect the assets from creditors but also from the beneficiaries themselves,” he said. “That protection aspect doesn’t go away” if the estate tax is repealed.

Not planning for the expected can also cause unnecessary confusion and stress.

“There’s a growing emphasis placed on how do you want to live the end of your days,” said Rachel J. Sherman, vice president of client service at Market Street Trust Company, which began as the family office for the founders of Corning Glass Works. “It needs more attention. People don’t want to be a burden.”

Monette Booth, 73, who lives in the Virgin Islands, said she had learned from her mother and aunt to keep her affairs in order. They “stressed to us children that life is never guaranteed and one should always plan for the future,” she said.

After her husband, Peter, a retired Corning executive, died in 2011, she stepped up her planning to ensure that she could grow old where she wanted, that she would not burden her relatives and that her assets would eventually be disposed of as she wished.

“For practicality and having no children, I recognized that at some point in my life, I will need help,” she said. “It’s taken a load off my mind to have made the decision.”

Ms. Booth said she had become part of a “circle of friends” in which she and others shared information that someone would need if one of them became incapacitated.

She said the planning was not difficult to contemplate. “I thought it made a lot of sense,” she said. “Otherwise, one is being an ostrich and not paying attention. This is part of an inevitable process.”

Most people are not this pragmatic, let alone proactive and organized. One solution for affluent people is a revocable trust, which can be used as a repository for financial assets but also documents to guide the family.

Ms. Klein of Wilmington Trust said many clients had revocable trusts drafted so that they became irrevocable in the event of disability or death. She said they could then function as a more sophisticated power of attorney; they could also help avoid the probate process of a will that delays access to the assets.

Yet deciding what to do to prepare, for example, for the possibility of becoming incapacitated by illness is a test of managing expectations around the unexpected. Jeffrey Maurer, chief executive of Evercore Wealth Management, said he presented the case rationally.

“My major concern for clients, friends and family, for myself, is what is the likelihood, if one were a gambling person, that I’m going to outlive my current cognitive abilities?” he said.

The answer determines what protections people should put in place, if they can afford them.

Plans can have limits. Barry Sinrod, who retired early as a market researcher and went on to write several best-selling books, said he and his wife, Shelly, had thought they planned well in case one of them became incapacitated. They even had a provision for assisted suicide.

His wife learned in 2003 that she had Parkinson’s disease but managed well until she learned that she had dementia. By 2010, he said, she did not know him or their children. He looked for someone to assist his wife in dying but found there was no one who would do it, because by that point, she was not competent to appear before a judge.

She died in 2014. “I said, I don’t want this to happen to me,” said Mr. Sinrod, 75, of Delray Beach, Fla.

When he met his second wife, whom he married in January, he brought up his desire to die with dignity, he said.

“Now, I have this document that says my second wife will take me to the Netherlands to die if my kids won’t take me,” Mr. Sinrod said. “My kids don’t like the idea of this, but they understand.”

And they do because he has been so explicit in planning his wishes.



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