Financial Moves Families Dealing With a Terminal Illness Need to Make
Since conception people carry the weight of death. It is a balancing act that everyone is going to eventually lose though some sooner than others. Those who are terminally ill know that the moment may be coming, so they need to make the right kind of financial moves for those left behind. This is a conversation to have with everyone you love who will be affected by your demise or the demise of a loved one. Keep in mind that letting this hang over your heads could further depress the person who is ill.
Pay Close Attention to Taxable Income
A person who is suffering a terminal illness is probably going to have a hard time earning income. This means that taxes are going to change a bit by the time income tax season comes around. Lack of income could force your loved one into a new income tax bracket, which could affect how much taxes will have to be paid by the party inheriting money afterwards.
You should definitely consider helping your loved one remain in his or her tax bracket the remainder of life to make sure you do not end up paying more than you need to if you inherit your loved one's parting gifts. One way that ignoring this particular problem could lead to an issue is the loss of deductions owed to your loved one. A person who is terminal will likely gather all sorts of medical expenses as he or she treats this illness. These expenses give your loved one sizable deductions that he or she can only take advantage of if one earns enough.
Making sure that he or she earns enough that year could be done in a number of ways; for example, you can begin to help him or her make necessary withdrawals from a retirement account.
Smart Administration of the Estate
Another thing you have to take into consideration is the size of your estate and how it can be administered before your loved one dies or in the event of death. There are some states that allow the owner to probate his or her estate, depending on the value and what he or she owns. For example, some parts of an estate can be gifted to members of the family to reduce how much the government can take.
Some assets can be transferred to another person in the family using the "transfer on death" option, which varies state to state. It might be a good idea for families who are going through something like this to talk to a financial advisor to make sure you are making sound moves. An estate planning attorney could also make this step a little easier on you and explain it so that you are not in the dark about anything.
Responsibility Transfer if Necessary
Finances are complicated and require a sound mind, but this is something that some people suffering from a terminal illness may not have. This means that his or her decisions regarding money cannot be trusted. Furthermore, a person with a terminal illness may no longer be able to handle certain responsibilities regarding things like life insurance.
It is at this point that the policyholder should think about transferring his or her responsibility to someone else who can take care of the premiums, which can be done. The person who will become responsible for the policy is sometimes referred to as the viatical provider. Becoming a viatical provider is complicated, and it does require you to go through the viatical settlement process, meaning that it is best to talk to a settlement provider so that you can use their explanation to make wise decisions.
A person who can no longer pay his or her premiums could lose everything, so selling it through this process could offer some value to the person who may pass on soon. This process is also good for people who are terminally ill but no longer have children or a spouse to worry about. Sure, you will not get the entire value of your policy, but you also won't lose it all, and that money can be helpful.
Hopefully, some of this information makes it easier for you to be at peace and to concentrate on your health or the health of your loved one. No one said this time was going to be easy, but it does not need to be unnecessarily difficult either.