Estate Planning Musts When You Or A Or A Loved One Has A Chronic Illness

Lend a planning hand to a loved one with chronic illness.


If you or a loved one is living with a chronic disease,  such as Parkinson’s, multiple sclerosis, or Alzheimer’s, your estate planning likely should reflect that challenge.

Chronic illness is more common than most imagine

More than 130 million Americans are living with chronic illness. By 2020, about 157 million Americans will be living with chronic illnesses. 9 million people are cancer survivors with various side effects from treatment. A quarter of those ages 65-74 have had their lives significantly impacted by chronic illness. So, the impact of chronic disease is significant on many affected. The percentage significantly impacted grows dramatically with age. Half of those age 85 and older have had some cognitive impairment. This statistic alone is critical to the estate planning process. Well before age 85 is reached you should have in place not just an estate plan, but a robust holistic plan that deals with the issues of aging and health problems.

Estate planning documents for those living with chronic illness

If you or a loved one are living with one or more chronic illnesses you will likely need the same estate planning documents most people should have. However, those documents might need to be modified to better serve your needs, or address your challenges. If your chronic illness has progressed significantly, it might impede your ability to understand and hence sign the advisable legal documents. Therefore, it is likely to be safer for you to tackle getting documents and planning in place soon after your diagnosis. That could be difficult as you might be dealing with overwhelming medical decisions that you have to make, the shock and perhaps depression of learning of the diagnosis, and much more. You don’t necessarily need to hire advisers who have specific expertise in dealing with chronic illness, just advisers with sufficient empathy and a willingness to tailor some of their usual approaches to meet your specific needs.

Here are the key estate planning documents most people might benefit from, along with some suggestions that might help you tailor those documents to your unique challenges because of chronic illness.

HIPAA releases

“HIPAA” stands for the Health Insurance Portability and Accountability Act of 1996. This law governs requirements about maintaining the confidentiality of protected health information (PHI). It is also referred to as personal health information. The law prevents the distribution of PHI to unauthorized persons. So, what a HIPPA Release does is authorize someone you want (and a successor) to access your protected health information. Such a release may be essential for the people that are helping you to interact with your medical providers. If you’re ill, can your daughter-in-law the doctor get to see your patient chart to monitor your care? If you are too ill, e.g. you have an exacerbation or flare-up from our disease, to follow your treatment at that particular time, having another trusted person named to be involved on your behalf may be important.

As part of the general array of documents you should have is a HIPPA release designating a trusted person and one or more successors to access your PHI.

The authorization should be in writing and should acknowledge that it is being made voluntarily. It should describe the health information that is permitted to be disclosed. This could be your entire medical record or only specified items. It could specify that only your medical records between certain dates be released. It should state which medical provider is authorized to disclose. This could be a specific physician or hospital or a list of providers. A broader approach could be used to indicate a category of providers. For example, “any physicians, hospitals or other medical providers who have provided treatment, other medical services through and including the date of this Authorization.”

When does the authorization to disclose PHI expire? This could be “2 years from the signing of this authorization.” But consider that if you have a progressive illness it may be preferable not to have a termination date.  Include a statement that you retain the right to revoke any authorization to disclose your PHI. The purpose of the disclosure should be explained. This might be limited to the minimum information to determine whether you have the ability to function as a trustee or should be replaced, or only that information necessary to underwrite you for life insurance. If you are naming a family member or loved one to help you during a flare-up it might be best to expressly provide that there are no limitations.

Be cautious of the “standard” form. There are lots of standard forms that will be thrust upon you with the suggestion that they are standard and that you should just sign it. Read what you are going to sign. There may be nothing wrong with an insurance company or other third party needed access to some of your private health information to fulfill their obligations to you, but you should be wary of merely signing anything. Some of the so-called standard forms can be overbroad and inappropriate.

Living wills and chronic illness

A living will is a statement of your health care wishes. It may address end of life decisions but also many other matters. It could clarify whether you have any religious beliefs that might affect your health care decisions (or if you do not want such restrictions).  If you are living with a chronic illness there are several special considerations you might wish to make in having a living will prepared. You might modify the general language to indicate and explain your specific disease. But be careful, the mere fact that you are living with PD, or AD, doesn’t mean that you might not face another health issue. So, if you make modifications you might make them as examples of specific changes but retain the broad language that might be more typically used. That said, you might address what disease you have, at what stage and with what anticipated disease course – how if at all should these matters be reflected. You might wish to address experimental treatments. You might wish to have even experimental procedures and drug therapies if they might help. If so, provide a specification to provide non-proven experimental treatment is a common modification. Address whether the agent under the financial power of attorney must fund this. Tissue and organ donations are another matter commonly modified by those with chronic illness. Since AD can only be confirmed 100% through a brain autopsy, many suffering with AD may wish to include a specific consent in their living will directing that a brain autopsy be permitted and their brain be donated to promote scientific research into AD.

Health care proxies and chronic illness

A health proxy or medical power of attorney is a legal document in which you designate a trusted person, called your “agent” to make medical decisions for you if you are unable to do so. An important point for all health proxies is agent selection. This is even more important if you already know you have the decisions attendant to your significant health challenge. Consider whether you might also grant the agent the right to change your residence. While that is most often viewed as a tax power (to move you to a lower tax jurisdiction) it can have profound medical decision-making implications.  You might also wish to expressly address guardianship. If your health challenges might result in your becoming incapacitated you might wish to indicate that the agent appointed under your health proxy should also be named as your guardian of the person should a guardianship proceeding ever occur. While this might not be binding on the court it may be persuasive.

Physician Order for Life-Sustaining Treatment (POLST)

This is a document that your health care provider will guide you to complete and which, when completed and signed, will be included as part of your medical records. That will make the document accessible by your physicians at any time it might be needed. A POLST is intended for the end of life medical decisions and thus may not be as broad as what you might accomplish with a health proxy or living will. However, if you have no family to name, or want more assurance that your end-of-life wishes will be respected, a POLST may offer somewhat of a solution.

The financial power of attorney

A financial power of attorney is a legal document in which you designate a trusted person to handle legal, tax, and financial matters if you cannot do so. While this is a basic document every adult should have, there are a number of unique considerations for those living with chronic illness. A key question is how much control should be given up now? When? If you have a neurologic condition, e.g. Alzheimer’s disease, depending on your current status, perhaps you might only provide a limited amount of authority to your agent, and grant only broad authorities when your situation mandates it. How much control you relinquish is a difficult decision, but one worthy of attention and tailoring for your personal situation. You should relinquish sufficient control so you can be assisted to the degree necessary, but not more than you need at any point in time.

There are many different types of variations of powers of attorney. One concept is based on when the agent’s powers become effective. A “springing power” becomes effective only on your disability. While that approach is seductive because it leaves you in control until you need an agent to act. But some state laws do not recognize springing powers. There is also the practical problem of what mechanism is used to “spring” the power of attorney into effect. If a physician note is required, will a physician be willing to take the risk of declaring you disabled so that another person can take over your finances? How is “disabled” to be defined? The problems of triggering a springing power are common to all who might use it. If you choose to use a springing power (and confirm state law permits it), the power may only have to be triggered once, when the level of incapacity reaches a point where an agent has to permanently takes over. What you are faced with sporadic relapses from your disease? That makes “springing” a more complex matter. Also, some state laws do not permit springing powers.

Another characteristic for your powers of attorney is whether you should sign a special power, which limits the agents actions to certain specified items, or a general power that provides broad and almost unlimited powers to the agent, i.e. to do anything you can do. In reality, there are many variations in that you can use a power of attorney that is generally broad but contains specific restrictions. For example, you might broadly authorize your agent to do any act you can, but expressly prohibit the agent from changing the beneficiaries on your retirement accounts or life insurance.

Another point to address in most powers of attorney is the compensation of the agent. Many forms ignore compensation and some even provide that there should be no compensation. But is that appropriate if you have a chronic illness? Your agent may have to act for years or decades to assist you, so compensation may be more important than for others. Consider what should be done if the agent has to take quick action for a short duration during a period when you experience an exacerbation, flare-up or an attack. How should that be compensated for?

Example: With Chronic Obstructive Pulmonary Disease (COPD), stress can trigger an attack and result in hospitalization. The flare-up can result in permanent damage. Coordinating finances and arranging for appropriate assistance can mitigate stress and perhaps avoid financial issues during such an event. If you are vulnerable and isolated (e.g. no near family or other trusted persons to rely on) you might consider more, such as using a fully funded revocable trust,  to minimize the use and importance of the power of attorney. With a revocable trust, you can transfer assets to the name of the trust today which might make it easier for those helping you to assist. In contrast, with a power of attorney assets remain in your name.

Example: Many people living with multiple sclerosis (MS) may have long periods when they are capable of handling all financial matters. These may be interrupted by brief periods of exacerbations lasting days or weeks when it is difficult or impossible to cope without an agent’s assistance. These exacerbations are unpredictable, and even the causes that trigger them are uncertain. If the appointment of the agent is effective immediately upon execution, unencumbered by the springing mechanism, the agent may better be able to help during a short term exacerbation or relapse, and then can cede control back to the client as soon as feasible.

Revocable trust and chronic illness

Revocable trusts are commonly used in estate planning. Often the primary purpose for a revocable trust is to avoid the publicity, costs, and difficulties, of probate. But if you or a loved one are living with a chronic illness, using a revocable trust may be a better way to provide for succession of management for your finances. These benefits may stem from the safeguards that might be easier to incorporate into a revocable trust. For example, if appropriate for your health status, the revocable trust could mandate that a care manager be required to complete a review or assessment each year, or even more frequently, and provide a report to specified persons. That could be an important safeguard for you.  The trust could provide that an independent CPA serve as a monitor, to receive and review trust bank and brokerage statements,  to add more protection. You can add a newer position called a “trust protector” for protection and accountability. The trust protector may be given the right to demand a formal accounting of trust finances from the trustee or be empowered to remove and replace a trustee.

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