Financial Planning When You Have Parkinson’s Disease

During Parkinson’s Awareness Month (April) and all year, we offer tips for combining financial, legal, and healthcare planning for the Parkinson’s Community.

Financial planning takes on greater importance when diagnosed with Parkinson’s Disease (PD). The Parkinson’s Foundation states, “A diagnosis of PD may change your income and expenses.” PD may impact your ability to work and earn wages in the middle and later stages. Due to cognitive decline, PD may also affect your ability to pay bills and manage your retirement funds and stock portfolio in the later stages. Additionally, financial adjacent planning needs to be considered, like estate planning, housing, and family legacy.

“You just don’t know whether you’re planning for something that’s going to progress over five years or that is going to be a 25-year condition,” says New Jersey Financial Planner Jim Kinney. “It’s impossible to know.”

Howard Gleckman, a Senior Fellow at The Urban Institute, gives two pieces of advice when asked what you can do to protect yourself – plan and communicate. “Even in the best of times, it is essential to plan for a time when you cannot care for yourself. Financially, of course, but also plan for your healthcare needs. You can’t anticipate every challenge, but you can be prepared. Life will throw uncertainty at you. What happens, for example, if an adult child who helps care for you gets sick herself? How will that change your life? Talk these risks over with your family and be sure everyone is on the same page.”

A significant burden often falls on the spouse of someone with Parkinson’s. “The biggest risk for a married couple where one person has Parkinson’s is the health of the caregiver,” notes Bryan Hancock, the owner of Timberchase Financial in Birmingham.

The financial and investment plans you made before your Parkinson’s Disease diagnosis must be revisited annually.

Income and Expenses

The financial and investment plans you made before your Parkinson’s Disease diagnosis must be revisited annually. You may have to stop working or cut back work hours before retirement age. You may not be able to work part-time in retirement as planned. If you are retired and living on cash flow from your portfolio, your increased expenses resulting from PD (now or in the future) may change your financial picture. Even modest changes can significantly impact you over 10 to 20+ years. You also need to reassess your financial and healthcare plan as new information becomes available.

The New York Times explains, “As the population ages, the numbers of people diagnosed with Parkinson’s disease, heart conditions, Alzheimer’s disease and other chronic illnesses are rising. A diagnosis may be alarming enough, but equally frightening can be the costs of medical treatments, home renovations and other expenses. Some people with disabling conditions may be forced to retire earlier than they had planned, resulting in a loss of income and potential retirement savings.”

“Ideally, Parkinson’s patients have long-term care insurance or enough savings to self-insure the risk. However, purchasing long-term care insurance after a diagnosis of Parkinson’s is not possible,” notes Bryan Hancock, the owner of Timberchase Financial in Birmingham.

According to Paying for Senior Care, “families spend an average of $10,000 annually on non-medical Parkinson’s care, the vast majority of which is not covered by insurance and is paid out-of-pocket.”

Many financial planning tools are available online and can be a starting point for your planning. Sites like Medicare or Allsup can help assess your long-term care needs. However, many generic programs and articles do not reflect the different financial conditions you may experience due to Parkinson’s disease. Gathering Parkinson’s information from your medical team will help a fee-only financial advisor or CPA review and tailor the financial planning to your progression. Visit National Association of Personal Financial Advisors (NAPFA), an industry trade organization for fee-only financial advisors, to find a local planner. The American Institute of Certified Public Accountants (AICPA) can help you find a CPA with Personal Financial Specialist (PFS) credential to provide financial planning services.

Donald Haisman, CFP, of Carnegie Investment Counsel, suggests creating a team of financial care partners just like you build a team of medical and healthcare professionals. “Someone on your team needs to be the coordinator of all these professionals. This part is crucial because the disciplines overlap and contribute to your personal estate plan. The CFP® is most likely to have the overall training, experience, and background to be your quarterback. Often, if you start with a CFP®, they can refer you to the others, if necessary.” Haisman suggests the following relationships on the financial care partner team: accountant (CPA), estate planning attorney, financial planner (CFP), investment advisor (CFP), insurance agent (CLU).

Meetings with Professionals

human friendly coffee mug — *Photo by CURVD® on Unsplash*

The Parkinson’s Foundation suggests when you hire an attorney to assist you with estate planning documents or a financial advisor for financial planning, be upfront about PD challenges you may face so that you can ensure the process will work optimally for you.

Schedule meetings during the day when you will likely be best able to participate fully.
Ask your advisors for extra scheduling flexibility.
Request or prepare an agenda in advance of any meeting.
Have someone accompany you to meetings to assist by taking notes for you.
Prepare an action list of specific steps after each meeting.
Break legal and financial planning into phases.

Begin your financial and estate planning soon after your Parkinson’s diagnosis and review your plans with these professionals annually. You can then fine-tune your legal documents and financial planning as your feelings and perspectives change. By creating a history of your wishes, you’ll avoid struggles some have faced when endeavoring to sign a will or make other significant financial decisions after their disease has progressed substantially. Additionally, your estate planning attorney may need to take precautions to document your competency to execute legal documents as your disease progresses. It may include a letter from your attending neurologist about the cognitive impact of PD on you, the medications you are taking, etc.

Your advisor needs to understand that cognitive decline and dementia only impact 40-60% of people with Parkison’s. However, “For some people, it’s a significant issue in the later stages,” notes Bryan Hancock, the owner of Timberchase Financial in Birmingham.

handwriting on yellow notepad — *Photo by Mick Haupt on Unsplash*

Micrographia, when your handwriting gets smaller and smaller, is a common symptom of PD. The Parkinson’s Foundation suggests having your lawyer prepare several formal witnessed and notarized affidavits, which you sign at different times to document the changes in your signature. This can be helpful when trying to convince a bank teller, for example, that your signature is real even though it differs from the signature card on file.

Estate Planning – Adjacent to Financial and Healthcare Planning

Estate planning is more about planning for your life than planning for your death. Proper estate planning will protect you for decades. It is planning for your life with a durable power of attorney (POA), health proxy, and living trust. Additionally, if you have a spouse, partner, children, or others you care about, it is planning to make sure that they are provided for and cared for as your disease progresses. Finally, estate planning also assures the proper disposition of your assets upon your death.

[The Parkinson’s Foundation article on Planning Ahead: Estate Planning offers detailed definitions for these estate planning terms.]

For example, suppose you are diagnosed with YOPD. In that case, you want to consider having an attorney prepare a revocable trust to which you transfer most of your assets (retirement accounts, pensions accounts, professional practices). The Parkinson’s Foundation suggests “a revocable trust funded with assets that name you and perhaps a family member or trust company as trustees might be the most powerful tool to protect you as your PD progresses.”

The Parkinson’s Foundation explains, “Incapacity is a term that is too often viewed by legal and financial professionals as a light switch – you are or you aren’t. The reality is that disabilities can come in infinite shades of grey and you can have rather substantial disabilities yet still remain in control (with proper planning) of your life decisions, finances, and legal affairs. Often fine-tuned planning is really necessary.”

In planning for PD, the Parkinson’s Foundation suggests that having assets held in a properly-crafted trust can be an incredible benefit as a trustee other than the person living with PD can help manage trust assets for the person with a health challenge. They also suggest including a provision in your trust mandating that an independent trustee hires an independent social worker to meet and assess your situation twice a year. It can be a great safeguard to minimize the risk of abuse or neglect that some with advanced PD might face.

A Medicaid, or pay-back, trust is another type of trust that may be useful for people with Parkinson’s. If properly structured, such a trust may be able to protect assets, so they may be passed along to family members or others of your choice while keeping you eligible for expensive care, such as at a nursing home. Visit National Academy of Elder Law Attorneys (NAELA) to find an attorney experienced with Medicaid planning.

It’s important to understand and convey the potential progression of PD and what consequences it may have to your attorney and financial advisor. Be sure that your planning and legal documents conform to those challenges. For example, many POAs ignore compensation because many people think it’s helping someone out by writing checks during a short-term disability. In fact, as your disease progresses, your agent may have increased financial and legal responsibilities that span a decade or more. Should compensation be provided in such a case? If you compensate one child as an agent, will this create animosity for your other children? Your estate and financial planning need to address the personal factors most important to you.

Where do you start?

The Michael J Fox Foundation shares analogies to help you plan.

Rocketship — if you’re off one mile now, you could miss by 100s of miles later.
Sailboat — can’t sail into the wind, tack back and forth — adjust every year.
60 Second Financial Plan — can you live on 4% of your savings, plus other cash flow sources?

In Assess Decision-Making Abilities, SEIA Senior Partner Tom West explains, “Ideally, decision-making priorities are in place before LTSS are required. But in reality, most families without previous experience with LTSS will be unprepared in several predictable ways, according to the National Alliance for Caregiving. Contingent decision-makers identified in legal documents, including medical directives, durable powers of attorney, and revocable trusts, may not understand their new responsibilities or may be unable to act for various reasons. Financial planners can assess the decision-making abilities of a client’s family using this checklist:

Who does the family believe is responsible for health care and financial decisions?
Does the responsible party have: (1) the legal authority to make decisions for someone unable to do so; (2) the legal capacity to make decisions in the current circumstances; (3) the competence to make decisions in the current circumstances; and (4) sufficient information (legal, health, financial) to make effective decisions?
Is the responsible party willing to make decisions required in the current circumstances?
Is the responsible party’s authority accepted by the rest of the family or will the authority be challenged?”

The Michael J Fox Foundation also offers these 12 Steps: Financial and Estate Planning for the Parkinson’s Community.

Organize emergency, financial and advisors information
Set a Power of Attorney
Choose a Health Care Proxy
Create a Living Will
Protect your child(ren)
Make a Will
Set a Revocable Living Trust
Tailor insurance
Set beneficiary designations
Give back
Communicate
Review, revisit, revise

Original Source Content for this blog comes from Allsup, Inc., Mark Rubin, J.D., and Martin M. Shenkman, CPA, MBA, PFS, AEP, JD. Other sources include:

Retirement Living Sourcebook videos on Parkinson’s Disease