Planning for the financial fallout from a fatal disease

When a loved one is diagnosed with a disease such as Alzheimer's or cancer, the first thought that pops into your head probably isn't, "We need to call Bob, our financial planner." But financial planning is something that needs to be addressed -- and as quickly as possible.

It's best to move "cautiously and briskly," says Phil Harriman, a Portland, Me.-based financial adviser with MDRT, an international association of financial professionals. Time is of the essence, particularly with Alzheimer's, since a patient can deteriorate quickly after diagnosis.

"You need to do this on the front end while the person is still tuned in and you can get feedback on what they want to do with their assets," says Jeff Kanaly, vice chairman at Kanaly Trust Company, a financial services and planning firm in Houston.

Collect financial info
Start by gathering all your loved one's financial documents.

Pam Hesselgrave, a certified financial planner and certified senior adviser based in Denver, recommends compiling an "in the event of my death or incapacity" folder. It should contain all the patient's financial information and important documents, including insurance policies (life, disability, long-term care); will and living will; checking, saving and brokerage account information (account numbers and phone numbers); stock and bond certificates, and anything else pertinent to family finances.

"The whole point is to get as much information as you can, so your family can make informed decisions," Kanaly says.

Review the documents and double-check that everything is up to date. A six-year-old will may no longer reflect current wishes. What about a living will? Does your loved one have one? Does he or she want to change it based on the current diagnosis? Have beneficiaries been named (or updated) for life insurance policies and other assets? Is there a power-of-attorney that can be enacted once your loved one is no longer capable of making financial decisions?

Meet with experts
With your financial paperwork in order, it's time to meet with your financial brain trust: your financial adviser and attorney. These professionals can help you and your loved one review the situation and come up with a strategy to ease or manage the expected impact the illness will have on your family.

If you've never had a financial planner, you might find such services of particular value during this difficult time. Your family is under extreme emotional duress and having an unbiased professional to evaluate and counsel you can be extremely helpful. Such guidance also is welcome if your spouse handled the family finances and you find yourself ill-equipped to make important financial decisions. If you don't already employ a financial expert, consider hiring one who specializes in elder issues.

Similarly, consider hiring an elder-care attorney for guidance. "He's going to know all the resources and what you'll need to do," says Doug Charney, vice president of the Wachovia Securities LLC's Charney Investment Group in Harrisburg, Pa. "He'll know the best nursing homes."

Set up a budget
To deal with immediate needs, you'll need to create a spending plan. Be sure that it takes into account current and future expenses and income, but also allows for you to save some extra money for the inevitable rise in expenses as the illness progresses.