Advance Care Directives and Living Wills: What Your Clients Need to Know
June 21, 2022
Most financial advisors can agree that relationships with their clients are changing. Conversations are becoming more involved and personal, going beyond the bounds of investment management and into a more comprehensive view of an individual’s financial life.
Clients want to discuss all issues that fall under the umbrella of financial planning — including how their healthcare decisions play a role in their long-term financial plans.
So when clients ask you to provide advice and recommendations on financial healthcare issues with aging parents or end-of-life decisions for themselves, you’ll likely need to guide your clients through the process of preparing an advance care directive.
What are advance care directives?
Advance care directives, also known as living wills, are legal documents that outline an individual’s preferences for medical treatment in case of serious illness or incapacitation. In other words, this document allows individuals to control what medical decisions are made on their behalf in case they can't speak for themselves.
While advance care directives are for healthcare purposes and are not financial documents, planning ahead for health-related emergencies ensures that your clients’ dignity and values will be honored. Just as you help them get the right life insurance policies in place and plan for future long-term care, an advance care directive is an important piece of their long-term plan.
Advance care directives often include a living will and a healthcare proxy designation (see more below). All advance care documents need to be in writing, and depending on which state you live in, they may need to be notarized or signed by a witness.
Your clients can change their advance care directives at any time, so this is a document you may want to revisit with them during annual reviews. If changes are made to the advance care directive, they must destroy the old copies and provide the updated directive to those who need them.
Advance care directives aren't just for the elderly — everyone 18 or older are encouraged to have a living will and be prepared for unexpected end-of-life situations.
Why are advance care directives important?
Living wills only take effect when a person is alive but unable to make decisions for themselves. Not only can they ensure an individual’s wishes are honored, but living wills can also prevent clients and their families from legal complications, arguments, and unnecessary medical costs.
Plus, a living will can ensure that family members don’t have to make medical decisions they’re not sure about on behalf of their loved one. This can result in more confidence and reduce any guilt or regrets down the road.
A living will doesn't always limit medical treatment; it can also be a written request to use specific medical interventions when appropriate. Clients should be as clear and descriptive as possible with their healthcare treatment desires based on different situations.
To help them start the process of creating a living will, you can ask your clients to think about what quality of life means to them and what kinds of medical treatments they would want (or not want) at the end of life. Remind them that their living will only goes into effect if they’re unable to make their own decisions.
It’s important to remind your clients that a living will tucked away in a desk drawer that no one knows about serves little use. For the living will to be honored, your clients must give a copy to the individual(s) they’ve chosen to make medical decisions on their behalf, referred to as their healthcare proxy.
The role of healthcare proxies.
A healthcare proxy is the adult your client chooses to make medical decisions when they can't make them for themselves. Having a designated healthcare proxy in conjunction with a living will is ideal to ensure an individual’s end-of-life decisions are honored.
A healthcare proxy must not be a doctor or anyone involved in your client’s medical care in a professional capacity. The ideal proxy is an adult who can be trusted to enforce your client’s healthcare wishes and be willing and able to advocate for them if any issues arise.
The living will can include the name of the healthcare proxy so that all the information is outlined in a single document.
Why comprehensive financial advisors need to know about advance care directives.
Advance care planning is a tough conversation to have. Not many people are excited to talk about their own mortality or physical dependence, nor that of their aging parents.
While the topic can be emotionally draining, it is worth talking about. After all, the most critical medical decisions are made when a person is declining in their health. End-of-life care is also some of the most expensive medical care an individual will incur during their life. Without a plan in place, the medical bills could be astronomical.
As a financial advisor, you’ve built the trusting relationship necessary to have this kind of conversation. You can help prepare your clients and their families before tough times occur to avoid any unnecessary confusion or tension.
As with life insurance, emergency funds, and other topics in comprehensive financial planning, it's best to address advance care concerns when your client is in good health. Educating your clients and encouraging them to prepare for uncertain circumstances in advance will empower them and ease their fear of letting someone else make their medical decisions for them.
Advance care directives create peace of mind.
Encouraging your clients to prepare for the future with advance care directives may be uncomfortable at first, but it is in your clients’ best interest. Assisting clients with making informed decisions and preparing for worst-case scenarios requires advisors to be educated on the topic.
Although advance care is a difficult conversation to start, your clients will appreciate your guidance and concern for their future. The peace of mind you’re providing is good for your clients, their loved ones, and you as their trusted financial partner.
At Caribou, we merge the worlds of finance and healthcare to help you make informed decisions for your clients’ healthcare planning options. For more information on the role of healthcare in comprehensive financial planning, schedule a call with us.
Content in this material is for general information only and is not intended to provide specific advice or recommendations for any individual.