NEW YORK - How can you tell whether any of your clients have a chronic illness that will affect their financial plan?

There's a simple answer, estate planner (and Financial Planning contributor) Martin Shenkman told an audience of planners at the FPA New York Spring Forum: You can't.

"You must ask everyone who comes into your office: Do you have a health problem?" he cautioned advisors in attendance on Tuesday. "If you don't ask, they are not going to tell." 

Chronic disease may be invisible, but it has major planning consequences for clients, he said, affecting lifespan, medical costs, insurance needs, tax planning and more.


Even client meetings can be affected. Shenkman suggested planners schedule shorter, more frequent meetings for clients with fatigue issues; for people who have tremors or other trouble taking notes, offer bulleted to-do lists and summary printouts.

Among the other areas Shenkman highlighted during his almost two-hour session included:

  • Tax planning: Tax liabilities may be affected by the way clients paid their disability insurance premiums, he said, as well as by the characterization of any settlement awards from discrimination cases. Home modifications for mobility-impaired clients may be deductible, he said, if clients get appraisals before and after the work is complete to show there was no increase in the home's value.
  • Portfolios & accounts: Not only may investing horizons need to change, but clients probably need to have their investments hyperorganized and simplified.To help fatigued clients better manage their financial files, Shenkman suggested that advisors consolidate accounts where possible.
  • Cost of care: Budgets and cash flow may be affected by care costs, so Shenkman suggested bring on a care manager to develop a "needs analysis" - and update it yearly, if needed.
  • Insurance: Start examining existing insurance policies, he said. Among the questions to ask: What does an existing long-term care policy provide? Does the term life insurance policy have a conversion clause, and does it make sense to exercise it?

While not all ill clients will have cognitive impairments, Shenkman also offered one final piece of advice for advisors whose clients begin developing dementia, Alzheimer's or other mental illness.
"Competency is a legal decision, not a medical decision," he cautioned. Even if your client's doctor writes a letter saying the client can no longer make decisions for herself, he said, pass that on to your client's attorney to get a legal determination of competency before you make any changes to trusts, investing strategy or other planning elements: "Protect yourself."


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