Serious Medical Diagnosis? Four Financial Steps to Take

As a wealth manager, I often guide clients through unexpected financial and health care challenges, including receiving a life-altering medical diagnosis.

According to the National Institutes of Health, 85% of Americans over 65 years of age have at least one chronic health condition, and 60% have at least two chronic conditions.

Receiving a diagnosis of a serious condition, such as cardiovascular disease, cancer, chronic respiratory disease or diabetes, can bring up a wide range of emotions. Many people feel shock, fear or anxiety as they process what the diagnosis means for their future.

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Others may feel sadness, frustration or even denial, especially if they were not expecting the news. Some might experience relief if the diagnosis explains ongoing symptoms and opens the door to treatment.

If you’re affluent, financial security may not be your primary concern, but structuring wealth to align with new health realities is crucial.

When faced with such news, the first step is to organize your priorities and ensure that your health care, legal and financial strategies support your evolving needs.

1. Establishing a health care plan

Your medical diagnosis will dictate various aspects of your future planning. Consider asking your health care team these key questions:

• What does your treatment plan entail?
• Where will you receive care — in your home, a specialized community or a hospital?
• Who needs to be involved in your care management?
• How might your health change over time?
• Who in your circle — family, friends or medical professionals — will take an active role in making decisions with you?

By clarifying these priorities, you can develop a strategy that aligns with what matters most to you.

Whether your top priority is staying at home, ensuring your spouse’s financial stability or securing the best medical care available, identifying these objectives early leads to a more effective financial plan.

2. Organizing your finances

Once your health care plan is clear, the next step is reviewing your financial landscape. As your medical professionals will have a plan for your health, your financial team will need to come up with a plan for your finances based on your diagnosis.

Even for high-net-worth individuals, cash flow, liquidity and asset structuring are vital to ensuring financial stability through medical transitions, and organizing these key items is essential.

Here’s a list of what you will need:

• Comprehensive asset inventory. Create a detailed list of all assets, including real estate, investment accounts, business holdings, valuable personal property and any other financial resources.
• Identify and project income sources. Assess all sources of income, including Social Security benefits, pensions, veterans’ benefits, annuities, dividends, rental income and other passive income streams.
• Evaluate health care and long-term care costs. Examine current and projected medical expenses, including insurance coverage, out-of-pocket costs, and potential long-term care needs.
• Ownership structure and estate planning review. Confirm that beneficiary designations are up to date. Review the ownership structure of investment accounts, trusts and real estate holdings to ensure they align with estate planning goals.
• Assess financial decision-makers. Evaluate whether designated financial decision-makers — such as power of attorney agents, trustees or financial advisers — are still the best individuals for the role. Consider their financial acumen, trustworthiness and willingness to act in your best interest, and update documents as necessary.

A well-prepared financial plan should address not only current needs but also future scenarios, including increased health care costs, the need for more structured wealth distribution strategies, or potential liquidity needs in the future.

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Consider how these expenses will impact overall cash flow and whether adjustments to spending or investment strategies are necessary.

3. Legal considerations and estate planning

With a clearer understanding of your health and financial priorities, you can update your legal documents accordingly, including:

• Wills and trusts that reflect your new health care and financial priorities
• Powers of attorney for financial and health care decisions, ensuring the right individuals are authorized to act on your behalf if you were to become incapacitated
• Health care directives specifying your preferences for medical treatment
• Beneficiary designations on retirement accounts, insurance policies and investment vehicles

Estate planning is not just about wealth transfer but also about ensuring that your wishes regarding health care and financial management are followed precisely.

4. Communicating with successor decision-makers

The final step is sharing your updated plan with those who will fulfill your wishes, including:

• Your spouse or immediate family members
• Trustees or executors
• Financial and legal advisers
• Health care proxies or designated decision-makers

Having open conversations ensures that your financial, legal and health care plans are executed smoothly when the time comes, avoiding unnecessary stress for your loved ones.

Conclusion

A shocking medical diagnosis can be overwhelming, but with a structured approach, you can regain control of your financial, legal, and health care future.

By aligning your wealth management strategy with your new reality, you ensure that your assets support your priorities, allowing you to focus on what truly matters — your well-being and quality of life with your loved ones.

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