Expecting the Unexpected: Estate Planning for a Catastrophic Illness

A patient in a hospital gown

While estate planning is often associated with enjoying assets while you are alive and then preparing for their disposition to inheritors after death, there are more outcomes estate plans can aid in to adequately protect the quality of your life and that of your loved ones. Being prepared means not having to feel afraid of the possibility of unexpected circumstances, as an estate plan can allow you to enjoy life as it comes.

In the event of catastrophic illness, for example, estate planning can ease the burden for both you and your family, allowing you to have a course of action in place which can assist you in financial and medical decisions. To that end, a Seattle estate planning attorney can help guide you through several resources that will best support your wishes if such an illness occurs.

While the process of estate planning for catastrophic illnesses can feel daunting, this preparation can benefit you and your loved ones significantly. Having a plan in place can empower you to feel secure in the future. With an estate plan, you can also protect your family from having to guess what you would want both financially and medically should a catastrophic illness occur.

But first, it is important to understand what a catastrophic illness is. And then why it is so critical to provide for catastrophic illnesses in your estate plan.

What is a catastrophic illness?

Life is full of surprises that can change the course of an individual’s condition. While some are positive, others can cause extreme distress for those experiencing them along with their loved ones. Catastrophic illnesses are just such surprises, occurring without warning and completely altering the lives of the afflicted and their families.

A catastrophic illness can be defined as a severe and sustained illness that is life-threatening or results in significant disability. It can prevent an individual from performing their job, thereby reducing or eliminating income from gainful employment. A catastrophic illness also often requires expensive, exhausting, and vigorous treatments.

The three most common catastrophic illnesses are heart disease, cancer, and stroke. Heart disease is the number one cause of death in the United States, killing one person every thirty-six seconds. According to the American Cancer Society, the estimates are equally grim; 1.9 million new cancer cases are expected to be diagnosed in 2022 along with 609,360 deaths in the United States alone. In 2019, cardiovascular disease was responsible for 874,613 deaths in the United States, stroke 150,000 deaths. Many of those who live through these illnesses find themselves with significant medical bills, continued treatments, and altered health.

These illnesses can come on very suddenly and without warning, which makes preparing for the possibility of experiencing them so necessary. In addition, if an individual becomes ill and has not worked with an estate planning attorney before, these complex decisions can often fall on their families, which can make the process extremely taxing for everyone involved, emotionally and financially.

Why do I need to prepare for a catastrophic illness in my estate plan?

Catastrophic illnesses can result in significant life changes for both individuals and their family units. A combination of an inability to continue employment, along with aggressive treatments, can wreak financial and emotional havoc. Both patients and their families can experience immense costs from these combined and unexpected burdens.

Many people believe that their will covers illness or incapacity. It does not, since a will only goes into effect upon the testator’s death. Fortunately, there are other documents that can protect you if you include them in your estate plan.

By preparing for a catastrophic illness, individuals can better protect themselves and their families from the extreme financial hardships of lifetime care, rehabilitation, and other medical costs. In addition, including these preparations in your estate plan will allow for flexibility, namely, a range of options that can serve as protections for these unexpected hardships.

Your estate planning attorney can be of service to you in exploring available resources such as the best use of retirement savings, whether you would qualify for national government programs like Medicare and Medicaid, as well as insurance plans specifically built for catastrophic illness.

What estate planning documents will I need to prepare for a catastrophic illness?

  • Medical power of attorney. This is a legal document (also known as a POA) in which you authorize someone to make significant decisions about your medical care. These decisions can include treatment options, medications, and end-of-life care.
  • Financial power of attorney. Similar to the medical POA, this document authorizes someone to make decisions on your behalf, except the financial POA allows them to make specific choices regarding your finances, property, and other financial matters.
  • Advanced healthcare directive or living will. These documents allow you to decide if there are medical treatments that you do or do not want should you become incapacitated or are uninterested in receiving further treatment under certain circumstances.
  • HIPAA authorization. By consenting to this document, you are enabling your family to obtain your otherwise protected medical information, including your medical history, current diagnoses, and physician recommendations.

If I have an estate plan already, am I automatically prepared for a catastrophic illness?

If your estate plan does not presently include preparation for catastrophic illness, you should update it to outline your course of action should such an event transpire. In general, you should update your estate plan regularly.

Specifically, you should both review and update your estate plan every two to three years. The only limits on updating your estate plan are when you pass away or if you are mentally incapable of doing so. That means you can ensure your estate plan is the absolute best for both your and your loved ones throughout your lifetime.

Estate plans need to be changed or updated every time you experience a major life change. Aspects of life such as divorce or death of a spouse, remarriage, the birth of children or grandchildren, and parents’ deaths can all be causes for altering your estate plan. Your estate plan should reflect your most current situation.

By keeping your estate plan current, you can ensure your assets go to the inheritors you intend and you will receive the care you want. Your life most likely has changed since you first created your estate plan, and so have your relationships. In the event of a catastrophic illness, an estate plan that accounts for such developments and outcomes is the best protection you can offer yourself and your family. 

Find an estate planning attorney who can help you prepare for illness and injury.

Especially if you are young, healthy, or both, it is hard to visualize what life would look like should you experience a catastrophic illness. But the time when you are healthy is the time to review your estate plan and plan for precisely such situations.

When an emergency occurs, you need time on your side and your loved ones by your side, not off somewhere scrambling to file the appropriate documents so they can care for you in the way you and they would want. With an estate plan, you can prevent this from happening.

Whether you have an existing estate plan in need of a review or you would like to create a new one, our Seattle estate planning attorneys can help. Call us today.


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